Fate of Vale, Petrobras CEOs hinges on politics

Brian Ellsworth, Guillermo Parra-Bernal – Reuters/National Post, 01/24/2011

Markets dictate that corporate managers who create the most value for shareholders keep their jobs. But for Brazil’s two biggest companies, state-controlled oil firm Petrobras and mining giant Vale, the reality may shape up to be exactly the opposite.

Roger Agnelli, who over a decade helped transform Vale into the world’s leading iron ore producer, is under fire for not creating enough jobs in Brazil and rumors are swirling that President Dilma Rousseff could lobby for his ouster.

In contrast, Jose Sergio Gabrielli may stay on as Petrobras CEO despite a $38 billion tumble in market value last year sparked by a plan that boosted government control over the company despite complaints from private shareholders.

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2 thoughts on “Fate of Vale, Petrobras CEOs hinges on politics

  1. What the article refers to as “political interference” of the state in private business actually resembles the type of state-capital relationship that characterized the “developmental state” of South Korea. It was this kind of relationship that explained the success of this country, and, in certain aspects, of China.
    If the Brazilian state is stimulating Vale to enter more profitable segments of the global steel commodity chain (as opposed to simply exporting raw materials from Brazil) and to keep jobs during an economic recession it means it’s taming capital to serve development goals (like Korea did).
    Plus, the state is a shareholder and, as such, can legitimate make claims on the company. I understand that it can sound bad for those interested only in individual profits and still speak from a “market-rule” perspective, but the history of international development suggests an appraisal different from the one stated on the article.

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