How a Boardroom Feud Left Brazilian Steel Giant on the Brink

On a warm September morning in 2014, the 10-man board of Brazilian steelmaker Usiminas met on the ninth floor of a blue glass tower in Sao Paulo.In the room, the board members grappled over whether to fire the company’s chief executive and two vice presidents after an audit found they’d claimed excessive bonuses.The battle lines were clearly drawn, according to accounts given to Reuters by several people who attended. On one side, Japan’s Nippon Steel & Sumitomo Metal Corp, a part of Usiminas since it was founded 60 years ago, insisted the executives had to go. Rallying to their defense was the company they used to work for, Ternium, a steel producer that is part of closely held Italian-Argentine conglomerate Techint. Ternium had bought into Usiminas in 2012 to get a foothold in the continent’s largest and most protected steel market. The tense impasse marked a new deterioration of a conflict between the two controlling shareholders that has now left the survival of Brazil’s largest producer of flat steel in doubt. Brazil’s most tempestuous boardroom feud in years was rooted in a broad clash of corporate cultures and mutual suspicion over supply contracts, according to Reuters interviews with over a dozen former and current employees, including board members and senior executives, as well as union heads and lawyers.

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