Written by Marcos Margarido – PSTU/Brasil
Thursday, 08 May 2014 16:33
The scandal on the purchase of the refinery in Pasadena, Texas, shows how the government uses the state-run company as a ‘business center’ for the governing coalition parties.
Petrobras is once again the target of the media and the bourgeoisie plundering as well. However if previously the reason was Petrobras grandeur with the discovery of pre-salt, the dispute over its revenue and the oil royalties, now the news is a questionable business – the purchase of the Pasadena refinery (USA) – carried out by the company management in 2006, under CEO Sergio Gabrielli.
In 2006, Petrobras was in its expansionist heyday, motivated by the easy cash coming from abroad and for its good economic performance. There were talks on turning Petrobras in the largest energy company in the world. The purchase of overseas refineries was part of this plan. Two refineries in Argentina, one in Japan and one in the United States, and the company’s presence in 24 countries including oil refining and exploration/production.
However, the economic downturn which hit the country has caused a change in this scenario. Profit no longer satisfied private shareholders in Brazil and abroad (18% – Brazilian non-gov’t shareholders; 35% – foreign shareholders; while the government owns 47% of both ordinary and preference shares), once it fell 50% in one year – from R$ 35 billion in 2012 to R$ 17.3 billion in 2013. The response to this plummeting profits by the new Executive Board, chaired by Graça Foster, was the release of a program of expenditure cuts, called Procop (Operating Costs Optimization Program), which aims to save R$ 32 billion up to 2016. This program provides for a divestments plan, including the sale of assets (refineries and oil wells) that are located abroad.
Understanding the issue
In 2006, Petrobras decided to buy 50% of the Pasadena refinery for US$ 360 million, which in turn had been bought by Astra Oil for only US$ 42.5 million just one year earlier. That is, the selling company received 17 times more than it had spent on buying half of the refinery!
The deal was regarded as normal by Petrobras’ Board of Directors, chaired by the then Minister of Mines and Energy, Dilma Rousseff, at that time.
In 2008, Petrobras came into litigation with Astra Oil and in 2012 it was forced to shell out another US$ 820 million to buy the other half of the refinery. In six years Petrobras has spent around US$ 1.2 billion in a refinery which was worth around US$ 45 million! Not to mention the millions dollars spent for the refinery revamp, necessary to refine crude oil with high sulfur content coming from the Campos Basin oil fields.
The case reached the media when Senator and right opposition candidate for the presidency, Aecio Neves (PSDB-MG), emphasized the “direct and personal approval” of the operation by the now Brazilian president Dilma Rousseff and claimed that the responsible for the operation, Nestor Cervero, at that time, the Petrobras International Director, was not removed and not even investigated. He was just moved away from his post and appointed CFO – Chief Financial Officer of the subsidiary Petrobras Distribuidora, which operates in distribution, trade and manufacturing of oil products and byproducts.
In addition, Petrobras did not find any buyer willing to pay for the minimum price stipulated for the Pasadena refinery sale, as part of the divestment plan. The proposals ranged between US$ 50 million and US$ 200 million, according to Graça Foster report to the Brazilian Federal Court of Auditors -TCU, which has been investigating the case since 2012. The Federal Police is also investigating the business, on suspicion of overpricing and draft evasion.
Pasadena Refinery: deceit or fraud?
When questioned, president Dilma said, in a statement released on March 19, she had voted in favor of buying the refinery in 2006 – while presiding over the Petrobras’ Board of Directors – based on “flawed” opinion and a documentation that omitted two clauses of the contract called Put Option and Marlim.
The Put Option clause stipulated that, in case of disagreement between the partners, the other party would be required to purchase the remaining shares. The Marlim clause guaranteed to the Petrobras partner, Astra Oil, a profit of 6.9% per year, regardless of the refinery billing.
As a result, the former director, Nestor Cervero, was considered responsible for the failure in providing information to the Council and was fired from his current position at Petrobras Distribuidora. However, Petrobras former president, Sergio Gabrielli, said the deal was a good one and that the clause is normal in business like this. “It is a common clause in the acquisition of companies, because it reflects only the right of who is buying and of who is selling, in certain circumstances, to sell to the other. This is normal in acquisition transactions”, he said.
However, the Board knew that Petrobras would pay a value 17 times higher than its price in the previous year and yet the Board nodded to close the deal.
Petrobras Executive Board: a ‘business center’ of the governing coalition
Meanwhile, other former director, the Supply Director, who was summoned to talk about the refinery by the Public Ministry of Rio de Janeiro, was arrested for involvement in other case. Paulo Roberto Costa is suspected of having participated in money laundering operations which traded US$ 4.5 billion. Police officers have seized at his home US$ 326,000 in cash.
Paulo Roberto is the director appointed by PMDB (one of the center-right coalition bourgeois party); Cervero is in “dispute” between PT and PMDB, but keeps excellent relations with Renan Calheiros (PMDB); many trade unionists are now directors of the company, appointed by PT. And so forth.
This is the price paid for by the Brazilians to satisfy the bourgeois parties aligned with the PT government. Thus, the class collaboration affects not only the decisions at the Presidential Palace, but also the fate of the main Brazilian state-run company.
The distribution of posts among the bourgeois parties and the PT is a guarantee that the government will continue to manage the company to meet the profit interests of Brazilian and foreign capitalists. The Directors appointed by the governing coalition are the guardians of private business in Petrobras.
For a Petrobras totally run by the state and under the workers control
Given the scandal of the Pasadena refinery buying, the media directs all its efforts to the Petrobras main “problem”: the fact of being a state-run company. For these ‘predators’, it does not matter if the transaction main beneficiaries were the Astra Oil owners, a private company; not even that 53% of Petrobras shares are in the hands of capitalists, among them a majority of preference shares, i.e. the ones that entitle the shareholders to periodic dividends income (31% against 12% of the government).
That is, although the government holds the right to manage Petrobras, it does so to favor the private capital and not the Brazilian people, and the result of this kind of management is reverted to private shareholders as dividends of the preference shares.
As the economic crisis hit Petrobras, reducing its earnings to the half if compared to the previous year, the bourgeoisie resorts to their war arsenal demanding the privatization and full control of the company.
The response of the trade unions affiliated to the FUP-CUT that support the government, is the same as PT’s response: mouth shut in order to avoid the debate becoming an electoral debate some months ahead of the presidential race. The latest newspaper of the Unified Trade Union of Oil Workers of Sao Paulo brings, in the week of height of the crisis, an article against Alckmin government (PSDB) due to the water shortages in São Paulo State. Not a single line about the crisis in Petrobras.
In practical terms, the trade unionists that support the government defend the continuation of the Petrobras disastrous management and its focus on meeting the shareholders greed for profits.
It is necessary, at the same time, debunk the privatization defenders as agents of the large foreign multinationals who have keen interest in Petrobras and also demand the return of the state oil monopoly with the renationalization of the company so that the nation may have its ownership and 100% of its shares.
However this is not enough, because we do not rely on this business center management which is the Petrobras Board. It is necessary to have it controlled by the workers, with a Board made up of members of trade unions, social movements and related workers bodies, all of them elected by their rank and file. It is also necessary that the entire Executive Board is elected among the company’s career staff members who must account for their actions to the oil workers, under penalty of having their positions revoked.
However, these measures will only be deployed under a real workers government – without either PT or PSDB or any of the variants on duty that always come up in election periods, as Eduardo Campos (PSB) and Marina Silva (Rede) – that adopt a program focused to the immediate and historical needs of the working class.