Brazil’s securities regulator fined one of the country’s largest pension funds Tuesday for violating rules regarding the election of board members of Brazilian companies in which the pension fund is invested.
Brazil’s securities industry watchdog CVM fined late on Tuesday the pension fund owned by workers of state-controlled oil producer Petróleo Brasileiro SA (PETR4.SA) for participating on the election of board and fiscal council members that was reserved only for minority shareholders.
In a statement, the CVM imposed total fines of 800,000 reais ($311,700) on Petros, as the fund is known. The watchdog also issued warnings to but did not fine the workers’ pension funds of state-run banks Banco do Brasil SA (BBAS3.SA) and Caixa Econômica Federal SA [CEF.UL] for the same cases.
The decision underpins the mounting conflict of interest between pension funds like Petros and the government, which joined forces in recent years to boost their decision-making power in Petrobras, as the oil producer is known, at the expense of minority shareholders.
While funds belong to workers in those state-run companies, their management is usually tapped among union members with strong ties to the government.
The hefty stakes that Previ, Petros and other funds in state companies have amassed in a handful of Brazilian companies for years allow them to appoint board members and key personnel.
Petros and the other two funds, known as Previ and Funcef, respectively, can appeal the CVM decision before the National Monetary Council – which is Brazil’s highest economic policy-making body.
Petros is Brazil’s second-largest pension fund.