Government of Rio de Janeiro in connection with an irregular loan related to the privatization of a utility company

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Rioprevidência, a retirement fund for civil servants of the government of Rio de Janeiro, is said to have taken on a debt under illegal contracts, which was partially repaid by the sale of a state-owned water utility. Cedae

Cedae assets were acquired at auction Aegea and the Igua group just a few weeks ago.

The Committee of Parliamentary Investigation (CPI) of the Rio de Janeiro State Parliament revealed that the management of Rioprevidência, a pension fund representing some 300,000 former employees of the state government, received a large bank loan, backed by a pledge to privatize Cedae.

The CPI report was submitted on Friday and is due to be released in full on Monday (June 14). The document, which will be turned over to state and federal prosecutors, the attorney general, the federal police and the Rio de Janeiro State Audit Court, points to a number of irregularities regarding the loan with BNP Paribas, including contracts written in English. , not in Portuguese, which is mandatory, among various other violations.

In November 2017, BNP Paribas reportedly provided a loan of 2.9 billion reais ($ 567 million) to the government of Rio de Janeiro to pay government salaries and pensions to retirees. The federal government guaranteed the loan but demanded the sale of Cedae’s assets in return, according to an article in the Le Monde Diplomatique newspaper published in February and signed by CPI vice chairman Flavio Serafini.

The CPI report argues that reckless and fraudulent leadership existed at the head of the government of Rio de Janeiro and in the finance, planning and management secretariats and the executive board of Rioprevidencia between 2007 and 2018, which worsened the financial situation. the balance of the pension fund and increased the state’s debts by 17 billion reais.

The original loan amount for BNP Paribas is significantly lower than the net profit received by Cedae between 2012 and 2016, which amounted to about R $ 4 billion.

“Due to the fact that the debt with BNP will mature at the end of last year and its revision on a still unclear basis, in addition to the increase in debt, there is a risk that BNP will take part of Cedae’s capital. noted that although the utility’s water distribution, collection and wastewater treatment services have been privatized, Cedae remains in charge of water production, ”Serafini wrote in the article.

According to state congressional sources, the report paves the way for further investigations by the prosecutor’s office and the Brazilian federal police and could lead to the termination of the loan agreement between the Rio government and BNP Paribas, and could even lead to the end of the privatization of Cedae. in reverse order.

BNamericas contacted Aegea and Iguá to comment on the report, but neither of them responded at the time of this posting.

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