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Brazilian government wants to sack CEO of the country’s largest corporation

Friday, March 25th 2011 - 01:14 UTC
Full article 11 comments
Vale CEO Roger Agnelli has powerful enemies in the political establishment Vale CEO Roger Agnelli has powerful enemies in the political establishment

Brazilian government is facing a political backlash over its apparent efforts to force out the head of mining giant Vale, the world’s largest iron ore miner. Opposition leaders on Thursday demanded Finance Minister Guido Mantega explain reports he asked a shareholder of Vale to help seek a replacement for CEO Roger Agnelli.

The incident could tarnish President Dilma Rousseff's mostly market friendly image earned during her first three months in office through strict fiscal discipline and defence of central bank autonomy.

“She believes in a big, strong government and has issues with Agnelli. I have no doubt this pressure is coming directly from Dilma,” said Jose Luciano Dias, a Brasilia-based political analyst.

According to government sources, Mantega had approached Brazilian bank Bradesco, a key Vale shareholder, to request help replacing Agnelli with another CE. Another government source said Rousseff hopes to have Agnelli out of his post before she travels to China in mid-April.

Relations between the government and Vale have been tense for years as politicians complained Vale was not doing enough to create jobs by investing in steel production and was not sufficiently involved in the country's economic development.

Rousseff's predecessor Lula da Silva, who speared the revival of Brazil's shipbuilding industry, was also upset with Agnelli because he bought foreign-made vessels.

Agnelli, 51, a former banker, has further aggravated government officials in recent weeks with his tough stance over a mining royalties’ debt the government says could reach 2.4 billion US dollars.

He may benefit in the short term from having politicians rush to his defence, analysts say, but in the long-run government pressure on Vale will remain because state pension funds are major shareholders.

Most investors believe Vale's strong iron ore project pipeline and low operating costs make it attractive despite the political risks.

They have hailed Agnelli for turning the firm into a global mining giant and the world's top iron ore producer, but the country's top political leaders never forgave him for laying off workers and cutting investments in the wake of the 2008 financial crisis

Opposition leaders say Mantega's move foreshadows a government takeover of the former state-run firm, which was privatized in 1997.
 

Categories: Economy, Politics, Brazil.

Top Comments

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  • GeoffWard

    Well!

    100 days ago our private lunchtime discussion group said that this would happen before Dilma´s first 100 days were up.
    There was no bet because it was a no-brainer.

    THIS is the great divide between state ownership and private ownership corporations that Forgetit and I have been debating in Mercopress postings.

    It heralds complete re-nationalisation of Vale, politicised management and Board, party-political manipulation of company direction and investment, and a retrenchment from the world-vision of Brasil´s leading company towards a parochial and insular path.

    Sad.

    Mar 25th, 2011 - 08:03 pm 0
  • Forgetit87

    Happy. :)

    Mar 25th, 2011 - 09:48 pm 0
  • Fido Dido

    This indeed good news for the Brazilians. When the bogus Free marketeers want A, you do B.

    Mar 25th, 2011 - 09:59 pm 0
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