BRAZIL: Plebiscite Against Privatisation of Mining Giant

By Fabiana Frayssinet Reprint | | Print |

Fabiana Frayssinet

RIO DE JANEIRO, Sep 3 2007 (IPS) - Ten years after the much-criticised privatisation of the Companhia Vale do Rio Doce (CVRD), Brazil’s largest mining company, some 200 civil society organisations are attempting to undo the process, which is also facing a number of court challenges.

A consultative plebiscite is being carried out around the country from Sept. 1-9, organised by a broad range of civil society groups, including social movements, trade unions, student associations, groups linked to the Catholic Church, and legal experts.

According to Joao Pedro Stedile, one of the leaders of the powerful Landless Movement (MST), the non-binding vote will serve as "an exercise of popular sovereignty" aimed at raising awareness of a tendering process that according to the groups "undermined national sovereignty."

Created in 1942 under the government of Getulio Vargas, the CVRD is the second largest mining company in the world and the leading global exporter of iron ore. It also produces bauxite, gold and aluminum and is active in the shipping and railway industries as well.

Stedile told the Foreign Correspondents Association in Rio de Janeiro (ACIE) that "The Vale Is Ours" campaign is demanding the annulment of the privatisation of the firm.

The campaign is also aimed at informing the public about the privatisation process, which the groups describe as "a controversial operation carried out with financing subsidised by the National Bank of Economic and Social Development (BNDES)."

The organisers of the campaign hope to gather as many as 10 million votes in favour of the central question: "Do you agree that the Companhia Vale do Rio Doce, which was fraudulently awarded in tender and which the judiciary could return to government ownership, should remain in the hands of private capital?"

The idea of the plebiscite, whose results will be presented on Sept. 25 to representatives of the executive, legislative and judicial branches, began to gain more and more adherents in the wake of a December 2005 decision by a court in Brasilia, the capital.

The ruling, which involved only one of the 88 legal challenges brought against the privatisation of the company, upheld an earlier verdict which found that fraud was committed during the process, which provides grounds for it to be annulled.

The sentence can still be appealed, though, and Stedile said that "a lengthy struggle lies ahead in the courts, which will drag on for years."

He added, however, that "mass mobilisation" against the privatisation will not only serve to raise public awareness but will also exercise strong public pressure in favour of restoring the company to state control.

Stedile, who describes the sale of the CVRD as "theft" and a "giveaway" by the government of Fernando Henrique Cardoso (1995-2002), outlined the various fraudulent aspects of the process.

He pointed out that when the company was privatised in 1997, its net worth was assessed at 40 billion dollars by its financial directors, but that 41 percent of the shares were acquired by private firms for just 3.3 billion dollars.

In response to IPS queries on the plebiscite, CVRD media relations manager Fernando Thompson and press officers at the BNDES merely said "no comment."

Besides the undervalued sales price, legal experts like Favio Comparato have observed other irregularities in the privatisation process, such as the link between those who appraised the company’s assets and those who purchased the shares.

"The company that appraised CVRD for the BNDES was the same one that advised the Bradesco bank (one of the current shareholders); in other words, it advised both the seller and the buyer," said Stedile.

The MST leader also said that 700,000 hectares of public property were included in the privatisation and now appear as CVRD property, as do "70 percent of Brazil’s minerals, which are controlled by the firm."