by Davi Madalon Fraga

Next week, the STF will resume the judgment of MS 35506, which discusses the TCU’s power to disregard the legal personality of private companies in order to order the freezing of their shareholders’ assets.

The specific case challenges the decision issued by the Court of Accounts in Judgment 2014/2017-Plenary which, after disregarding the legal personality of a company contracted by the Government, ordered the freezing of the assets of one of its shareholders, in an amount equivalent to BRL 653 million.

When the writ was filed, the then reporting justice, Justice Marco Aurélio, granted an injunction setting aside the TCU’s order. At the session that began the judgment on the merits of the writ, in June 2020, the Justice maintained his position and granted the writ. Following the reporting justice’s vote, there were successive requests for review, the last by Justice Nunes Marques at the session of April 4, 2022.

So far, in addition to the vote led by the then reporting justice, which was not followed by any of the other members of the Court, there are three other lines of reasoning, all denying the writ and recognizing the TCU’s power to order measures disregarding legal personality.

Justice Ricardo Lewandowski believes that the TCU may apply such measures on an interim basis, since the final decision on the fate of the assets will rest with a judge. Justice Luiz Fux followed him.

Justice Luiz Edson Fachin points out that the TCU has exceptional power to order the freezing of assets on an interim basis, provided it gives reasons, and to disregard a company’s legal personality when fraud is identified. This vote was followed by Justices Gilmar Mendes and Carmen Lúcia.

Finally, Justice Alexandre de Moraes voted to rule out any illegality in the TCU’s act, stressing that preventing it from adopting interim measures would amount to reducing the maximum effectiveness of constitutional rules, which must be given the meaning that brings the greatest possible efficiency to the Court of Accounts’ oversight process.

The writ was included in the virtual judgment list, scheduled for the period from September 30 to October 7, 2022. Justices Nunes Marques, Rosa Weber, Dias Toffoli and Luís Roberto Barroso have yet to vote. Justice André Mendonça does not vote in this case, as he succeeded Justice Marco Aurélio, who has already cast his vote.

Article published on Portal Infra (in Portuguese), on 09.23.2022.