June 27, 2018 / 4:55 PM / 19 days ago

UPDATE 2-Brazil Supreme Court justice rules Congress must approve privatizations

(Adds context and Eletrobras share price)

By Ricardo Brito

BRASILIA, June 27 (Reuters) - Brazilian Supreme Court Justice Ricardo Lewandowski ruled on Wednesday that the sale of shares of state-controlled companies, including subsidiaries, must be approved by the nation's Congress, according to a court document seen by Reuters.

The decision, which Lewandowski wrote and must eventually be taken up by the full court, could significantly impact the asset programs of massive companies like state-led oil company Petroleo Brasileiro SA and power holding company Centrais Eletricas Brasileiras SA.

The ruling threatens to derail the privatizations underway at Eletrobras. And with an upcoming recess at the Supreme Court it may be months before the ruling could be overturned, if at all

Shares of Eletrobras closed down more than 5 percent at 13.72 reais following the news.

The decision came in response to a 2016 request by unions representing bank workers to knock down a revised law governing state-controlled companies that was passed by Congress that year.

The law's biggest change was that it ordered state-run companies to create risk-management and internal controls and make public codes of conduct.

That came in response to Brazil's unprecedented fight against corruption in recent years, which has jailed scores of powerful businessmen and politicians and uncovered a multi-billion-dollar political kickback scheme centering on state-run firms.

Lewandowski ruled that because the law does not specifically say that congressional approval is not needed to approve privatizations, the requirement that legislators must weigh each privatization is therefore implied in the law. (Additional reporting by Brad Brooks in Sao Paulo Writing by Tatiana Bautzer and Brad Brooks; Editing by Dan Grebler and Leslie Adler)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below