June 27, 2018 / 5:43 PM / in a year

Brazil Supreme Court justice rules Congress must approve all privatizations

BRASILIA (Reuters) - Brazil’s 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 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 (PETR4.SA) and power holding company Centrais Eletricas Brasileiras SA (ELET6.SA).

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 biggest change in the law 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.

Reporting by Ricardo Brito; Additional reporting by Brad Brooks in Sao Paulo; Writing by Tatiana Bautzer and Brad Brooks; Editing by Dan Grebler

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