October 16, 2010 / 5:23 PM / in 9 years

Brazil's ruling party denies Vale jobs remark-report

* Workers’ Party head denies Vale CEO remarks - O Globo

* Agnelli’s position at risk, newspaper says

* Vale declines comment on story

SAO PAULO, Oct 16 (Reuters) - Brazil’s ruling Workers’ Party (PT) has denied allegations that some of its officials pressured mining giant Vale VALE5.SA(VALE.N) for jobs, O Globo newspaper reported on Saturday.

The report came a day after O Globo and another newspaper, the Folha de S. Paulo, quoted Vale Chief Executive Roger Agnelli as saying “there are lots of people looking for a seat in the company, and generally those people are from the PT.”

Citing unnamed sources, O Globo said the remarks upset party officials and members of Dilma Rousseff’s presidential campaign. Rousseff, the ruling party candidate, won the most votes but fell short of a majority in the Oct. 3 election.

A second round will be held on Oct. 31.

O Globo said Agnelli’s position at the helm of the world’s largest producer of iron ore might be at risk if Rousseff defeated opposition challenger Jose Serra later this month.

Brazil’s government, through state pension funds and the state development bank BNDES, has a 51-percent stake in Vale as well as a so-called golden share that allows it to veto or change its leadership. But it has no power to interfere in Vale’s strategic decisions.

“The biggest nations in the world discuss strategic options for their biggest companies, and putting this as a problem of job security simply downplays the importance of Vale for Brazil,” Workers’ Party President Jose Eduardo Dutra told the newspaper.

“If Agnelli wanted to serve best the interests of the company’s shareholders, well, this time he exaggerated,” Dutra noted.

The impasse between Agnelli and ruling party politicians comes a year after President Luiz Inacio Lula da Silva and other government officials criticized Vale for dismissing 2,000 employees in response to the global recession and for being reluctant to invest in local steel projects.

In his remarks to the newspapers on Friday, Agnelli said he had a good relationship with Lula.

A spokeswoman for Vale, speaking by phone from New York, said the company would not comment on the Globo story.

Reporting by Guillermo Parra-Bernal; Editing by Paul Simao

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