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Union infiltration in Petrobras

|Includes: Petrobras - Petroleo Brasileiro S.A. (PBR)

O Globo, the largest Brazilian newspaper, has been raising attention to the problem of union infiltration in Petrobras management.

First, as background, the Lula administration has bought the unions by distributing lucrative posts to union leaders in government, pension funds, and state-owned enterprises (SOEs). It worked: union militancy has been practically eliminated. Labor Day (May 1st in Brazil) now are gatherings with artists singing popular songs. No protests whatsoever.

Union leaders are not the only beneficiaries of this type of largesse. The Lula administration has distributed about 150 thousand jobs in the public administration to members of his party, the PT, and allied parties, like the PMDB (the largest political party in Brazil), and their friends and family members. Sociologists have spoken about the emergence of a "new class." The fiscal impact has, of course, been devastating: public investment is almost nil.

On Sunday O Globo published a report on the infiltration of Petrobras' management by the unions. In other SOEs union infiltration was limited to the pension funds (SOE pension funds are notoriously corrupt), but not in Petrobras. According to the report the unions are also present in the lucrative area of institutional communication, in the presidency, in human resources, in the administration of the gas sector, and in the Transpetro subsidiary.

O Globo also points out that Petrobras is an instrument at the service of Lula's administration projects, which have no relation whatsoever with oil production and distribution. Among other things, Petrobras finances (officially!) the MST, the "Landless Movement" that has all but abandoned its demands for land reform to become an extremist revolutionary organization. And warns that as we approach the 2010 elections the trend will be an increasing subordination of Petrobras to Lula's power plays.

The reader should not think for a moment that Petrobras is (and will be) milked only by the union leadership. But that would be a topic for another post.

Disclosure: No position in PBR, long other oil producers and service companies.