RIO DE JANEIRO - Previ is on its own again.
The government ended its 52-day intervention in the running of Brazil's largest pension fund, the Caixa de Previdencia dos Funcionarios do Banco do Brasil, known as Previ, when a new board of governors took office July 25.
One of the three sponsor-appointed governors of the six-member board will have the key tie-breaking vote, said Jose Roberto Ferriera Savoia, the head of the Secretaria de Previdencia Complementar, the pension fund regulatory agency. "The Previ board's new tie-breaking vote should end decision-making deadlocks and make the pension fund more governable," Mr. Savoia added.
Social Security Minister Jose Cechin on June 3 ordered the removal of the fund's board of governors and executive board after a voting deadlock put the $14.6 billion pension fund of the state-owned Banco do Brasil on the wrong side of a May 2001 law that changed how fund participants should be represented on the board (Pensions & Investments, June 24).
The government-appointed "intervenor," Carlos Eduardo Esteves Lima, sought new elections for three participant-elected members, called for the naming of three sponsor-appointed members and changed the Previ bylaws to give a sponsor-appointed board member the tie-breaking vote.
Erik Persson, a participant-elected director on the former Previ executive board who was retained on that panel by the new board of governors, said: "Now that new Previ bylaws give the government, through the tie-breaking vote, all the decision-making power on the board of governors, the board members who represent the participants will only have watchdog powers."
During the government intervention, a panel of existing in-house asset managers made the fund's day-to-day investment decisions. With the changes, the executive board has resumed investment-making decisions; all the decisions must be approved by the board of governors.