The Congressional approval of the use of Brazilian state workers' fund FGTS for the capitalization of Caixa Econômica Federal could create a dangerous precedent, according to Júlio Marcelo de Oliveira, a legal prosecutor for federal audit court TCU.
In an interview with O Estado de S.Paulo, Marcelo de Oliveira said other financial institutions, including private players, could ask for capitalization from FGTS and claim that they are entitled to the same treatment as that which Caixa could receive.
The prosecutor also said that this type of operation is not under the objective of FGTS, adding that it flirts with the idea of "creative accounting" that hounded the country's PT political party.
However, congressmen involved in the approval of the proposal said the transaction will be advantageous for FGTS. The text of the proposal was discussed with the Brazilian central bank and has legislative advice, Deputy Roberto de Lucena said.
Deputy Fernando Monteiro, the author of the proposal, also denied that the bill was fast-tracked due to Brazil's upcoming 2018 elections. The bill will now be discussed in the Senate.
The FGTS funding would help Caixa comply with Basel III rules starting January 2019. According to the bill, Caixa could negotiate with FGTS the exchange of the bank's debt with 15-year perpetual bonds.
The Congress approval opens the room for Caixa to use the FGTS funds without the approval of TCU, which is proposing to prohibit the transaction due to the perceived violation of the law that governs the FGTS.
