June 28, 2016 / 5:32 PM / 2 years ago

Brazil court probes appointments in power distributors to be sold - documents

SAO PAULO, June 28 (Reuters) - Brazil’s TCU audit court said it has begun to collect information on political job appointments in the state-owned power distribution companies that the government hopes to privatize.

Auditors in the court described the debt-laden distribution companies as “closets for hanging political cronies” in nominal positions that bloated the state-owned enterprises with personnel costs, hindering the sale of the assets.

The interim government of President Michel Temer has signaled plans to sell the companies, subsidiaries of the state-owned power holding company Centrais Eletricas Brasileiras SA, as a way to resolve mismanagement and political interference.

The findings of the court’s investigation may weigh on the eventual sale price and success of the auction, specialists said.

The distributors being investigated are in Brazil’s North and Northeast regions, as well as CEEE-D in Rio Grande do Sul and CEA in Amapa and CERR in Roraima, according to documents seen by Reuters.

The court requested that the electric power regulator Aneel compile a list of the personnel at these companies as well as their financial records, which have been marked by massive and recurring financial losses in the past years.

The problems arising from political appointments of officials at the state-owned companies were under discussion at a meeting in June between TCU auditors and Aneel technicians, according to the minutes seen by Reuters.

“TCU representatives expressed concern over the appointment of staff at the bloated state-run distribution companies by individuals with no technical experience,” the description of the meeting said.

Aneel was also harsh in its assessment of the state energy companies, saying they lacked qualified professionals and needed to be sold or to go through a major reorganization, according to the documents.

“The only solution in the opinion of Aneel’s representatives, barring privatization, was to sweep away the management to remove all political bias that has been entrenched in these state distributors, which would leave employees of merit and technical training,” the minutes read.

The distribution companies and Eletrobras had no immediate comment on the investigation. (Writing by Reese Ewing; Editing by David Gregorio)

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