Source: Folha de S. Paulo - São Paulo / SP - 08/03/2010

The SHAREHOLDERS 'EQUITY in Brazil has grown rapidly in recent years and reached almost R $ 500 billion in late 2009. In addition, there is a strong concentration of resources in funds sponsored by state-owned companies - the three largest in the country (Previ , Funcef and Petros) held in November 2009 an equity of R $ 219 billion, equivalent to 45% of the sector's total.

It is through them - and the BNDES - that the government has been increasing its influence in the main sectors of the economy.

There is no doubt about the relevant role of pension funds and BNDES as providers of long-term capital, so essential to development. They can and should participate in infrastructure projects and maintain investments in major companies.

This performance, however, tends to be harmful to the country if it is not based on independent supervision and solid financial management criteria. Unfortunately, these conditions are not guaranteed.

Pension funds sponsored by public companies are being transformed into instruments of political power, at the service of the government on duty and the union bureaucracy that today dominates the representations of employees and employers. This is not a regulatory problem. The rules are - like so many in Brazil - well made.

The problem is the weakening of the institutional checks and balances that underlie effective enforcement. This opens the way for the fusion of interests between government, unions, pension funds and favorite entrepreneurs, which, if permanent, may even pose a threat to the smooth functioning of democracy.
The fate of billions of reais under obscure criteria is only one side of the problem. In addition to issues of a political and institutional nature, it is also necessary to consider the financial risks incurred by the State - that is, by the taxpayer - in billionaire operations.

The reinforcement of the BNDES 'performance in 2009, made possible by the capitalization of R $ 100 billion made by the Treasury, is an example. The capitalization has as a counterpart the public debt in the same amount. In other words, the federal government is indebted to, afterwards, making investments in companies, together with pension funds.
The history of Brazilian capitalism is marked by a strong state presence, whose peak, in partnership with national and foreign private capital, occurred during the period of President Ernesto Geisel (1974-1979), sometimes praised by Lula. But the deviations of the 1980s, which cost the country so much, are partly a consequence of the previous interventionist model.

Intoxicated by his business voracity, the government does not seem concerned with the risks of possible losses - after all, the economy grows and all projects would be profitable and very solid "this time". If the past is a good guide, there are plenty of reasons for concern.