(Corrects quote in third paragraph to show surprise refers to Ternium action)
SAO PAULO, Nov 10 (Reuters) - The chairman of the board of embattled Brazilian steelmaker Usiminas said on Monday judicial action by shareholder Ternium that blames him for firing three executives was misguided.
Ternium said on Thursday it would take “all legal measures” to hold Usiminas Chairman Paulo Penido accountable for the departure of former CEO Julian Eguren, as well as executives Paolo Bassetti and Marcelo Chara in September.
“I was surprised; the (Usiminas) council took the decision within the norms of the company,” Penido, who cast the decisive board vote that resulted in Eguren’s dismissal, said of Ternium’s legal action.
The executives left amid a tug of war over who will run the company between Usiminas’ controlling shareholders Nippon Steel & Sumitomo Metal Corp and Ternium.
The uncertainty surrounding who is in control also comes at a difficult time in the Brazilian steel industry, with demand faltering as auto-industry production wanes. Usiminas posted a loss in the third quarter for the first time in a year.
Japan’s Nippon says the executives received illegal payments, while Ternium - where Eguren worked before joining Usiminas - says Nippon used a minor accounting error to gain greater control over the Brazilian steelmaker. Ternium also argues the dismissal breached the controlling shareholder accord under which decisions must be taken by consensus.
“The law was broken,” said Penido, who is a Nippon representative on the board, referring to the alleged illegal payments.
Penido said he was confident Nippon and Ternium would resolve their differences. The day-to-day operations of Usinas Siderúrgicas de Minas Gerais SA, as the company is officially known, were not affected, he added.
“The company has 3 billion reais ($1.2 billion) in cash on hand, a well-defined plan of operations and the president knows the company and is respected,” he said.
Romel Erwin de Souza, head of technology, was appointed temporary CEO in addition to carrying out his regular job.
Usiminas’ board will meet on Nov. 27 and new leadership is expected to be on the agenda.
Ternium did not immediately respond to request for comment.
$1 = 2.55 reais Reporting by Alberto Alerigi Jr.; Writing by Caroline Stauffer and Stephen Eisenhammer; Editing by Alan Crosby