Argentina claims more corporate boardroom powers

Argentina's government gave itself more influence in the boardrooms of the country's major corporations Wednesday, eliminating a limit on shareholder voting rights for stock owned by the national pensions agency.

Under an emergency decree published in the official bulletin, stock held by the National Social Security Administration will no longer be covered by rules that limit its voting rights to a maximum of five per cent of a corporation's shares.

The government's influence as a shareholder will now be determined by the full amount of stock it owns, Economy Minister Amado Boudou said. One key result will be an increased ability of the government to name corporate board members, he said.

Boudou said the decree gives the pensions agency just as much influence as private investors.

Critics of the move warned that the change gives President Cristina Fernández's populist government more power to reward unions and other supporters.

Boudou said Fernández's use of her emergency decree power to eliminate the legal limit was justified because this year's annual corporate board meetings will begin soon.

The decree means more government influence in key industries including energy, food, telecommunications, finance, transport and the media.

pension agency

The pension agency, for example, owns nine per cent of the stock in Clarin Group, the leading media company in Argentina and a strong critic of the president's policies. Fernandez may now be able to assert more influence on Clarin's boardroom decisions.

The pension agency owns stock in all the companies on Argentina's Merval stock index, including stakes of 20 per cent or more in steelmaker Siderar SAIC, energy company Pampa Energia SA and food producer Molinos Ríos de la Plata SA. It also has sizable stakes in aluminum producer Aluar Aluminio Argentino SAIC, energy company Petrobras Argentina SA and telecommunications firm Telecom Argentina SA, as well as banks including Banco Macro, BBVA and Banco Galicia.

The five per cent limit on voting rights originally applied to private pension funds, and was kept in place after the funds were taken over by the government in 2008.

Diego Bossio, director of the National Social Security Administration, told state television that the decree "means having more control, influence in investments, power to participate politically and (determine) dividends and provide support so that the company goes well."

One critic of the move, economist Daniel Artana, told Radio 10 on Wednesday that the decree will raise suspicions about the government's motives.

The pensions agency reports to the labour ministry, which has close ties to unions lobbying Congress to force private companies to share 10 per cent of profits with employees.

The General Labor Federation said it is only natural that its member unions have a voice on corporate boards.

"We believe we have the right to ask for this. In any case, it's a decision made by the executive" branch of government, said Juan Carlos Schmid, secretary of professional development for the federation.

The president of one of Argentina's largest asset management companies, Consultatio, said his firm already grants the pensions agency voting power in line with its 26 per cent stake in the company, well beyond the five per cent limit. "What the government's saying is that it's going to exercise the political rights according to its share in each one of the companies. And that doesn't seem out of line to me," Eduardo Constatini said in a radio interview.

- AP