Polemic US$ 5billion at Eletrobrás

Group charges for debentures that company and high court say do not exist

A group led by the lawyer Édison Freitas de Siqueira claims that Eletrobrás did not pay a series of debentures, many of them issued over 40 years ago, they would represent losses of 5 billion dollars in the company`s balance sheet. Yesterday it was held an extraordinary general assembly in which this group decide to indicate as member for the Audit Committee at Eletrobrás Daniel Agostini, who works in the lawyer`s office. According to a member of the company`s staff what this group has are Obligations to the Bearer whose expiration date was in 2001.

The group says that these obligations are debentures and charges for their value but Eletrobrás does not agree to do it. For the public electric giant these papers do not have any economic value. On February 12th, the High Court of Justice (STJ) stated that the obligations con not be considered payable debentures. These obligations have their origin in a compulsory loan that was part of light bills in the 60s and 70s, so as to pay for the cost of investments in the grid. Many of these papers were being traded in a parallel market where they were used as warranty in legal procedures.

According to Siqueira, Agostini will check for the nonpayment of debentures. It was also decided that an international independent auditing will be carried out.

\”We are going to ask for the impediment in the trading of Eletrobrás stocks in Brazil and of the ADRs in the USA while these facts are not investigated – said Siqueira, who said he will reinforce the denouncing at the Securities Exchange Commission (SEC), a kind of sheriff in the American stock market.

Eletrobrás, which is going through a process of change in its board of directors did not comment the issue.

Source: Jornal O GLOBO, page 41, Saturday March 8, 2008. (most affluent newspaper in Brazil)