The Brazilian government has delayed the privatization process of two of its main technology companies for the second time, amid concerns over potential risks to national sovereignty relating to the sale.
According to the new schedule released by the government’s privatization program, the sale of the Social Security Technology and Information Company (Dataprev) and the Federal Processing Service (Serpro) has been postponed to the second half of 2022, when the presidential campaign will be taking place.
The Covid-19 pandemic had already impacted the government’s plans to sell both companies, a process that was expected to conclude in June 2021. According to the revised schedule, the plan was to dispose of the assets in the first semester of next year.
Dataprev provides technology information services to the Brazilian social welfare system. It treats and stores data related to millions of citizens on benefits. Serpro provides systems across all government bodies and is staffed by about 6000 employees. The massive IT estate overseen by the firm includes all the tax-related information on individuals and businesses.
According to Brazil’s Federal Court of Accounts, there are potential risks relating to the sale of the main federal IT state companies. The rapporteur of the process at the Brazilian federal accountability office, Minister Vital do Rêgo, said in December that the privatization of the technology companies deserve “special attention.”
“[That is] due to the fact that the services provided by these companies support the technological infrastructure of relevant federal public administration bodies, as well as some of the main information systems and government programs related to the process of digital transformation in Brazil”, the minister noted.
When the sale was announced in August 2019, Dataprev staff released a manifesto raising concerns over the future of information belonging to millions of citizens.
“[Serpro and Dataprev data] could shift to private servers – this would undermine the security of information of almost all citizens that are in the social security system. This could compromise national sovereignty over extremely sensitive data,” the manifesto argued.
The concerns raised by Dataprev employees were echoed by a study published in April by the Inter-Union Department of Statistics and Socio-Economic Studies (DIEESE). The study noted two crucial factors that would justify retaining control of Dataprev and Serpro. “First, [government control of the state-owned tech companies] prevents the privacy of – potentially – the entire Brazilian population from being exposed to companies private companies, including multinationals”, the study noted.
“Second, and perhaps even more relevant, it avoids handing over to the private sector-especially to large international information technology companies-strategic information that allows not only to deeply know the private data of each Brazilian citizen”, it added. The research also mentioned the risk of “large scale manipulation”, through use of psychometric and micro-targeting technologies for commercial and even military purposes.
In December 2020, the Brazilian Development Bank (BNDES) announced the winner of a tender for the modeling the process relating to the privatization process for Serpro and Dataprev. The consortium comprising of the Brazilian subsidiaries of global consulting firm Accenture and PR firm Burson-Marsteller, as well as law firm Machado, Meyer, Sendacz, Opice e Falcão Advogados are working on the privatization modeling work and conducting market research, national and international sectorial diagnosis and regulatory studies.
The companies were also tasked with proposing “alternatives to privatization, and conduct other specialized professional services necessary for the structuring and implementation of privatization processes” relating to the state-owned companies.
Telebras, the state telecommunications company, will be sold in the first half of 2022 as originally planned. The firm is responsible for projects such as Brazil’s satellite program – a sensitive issue, according to the government itself.
As part of the government privatization program, National Center for Advanced Electronic Technology (CEITEC), is undergoing a liquidation process. The center located in Porto Alegre, in the southern state of Rio Grande do Sul, was created in 2008 as part of a set f government initiatives intended to increase Brazil’s competitiveness in technology.
The company, which develops and produces circuits for RFID and other specific applications, has manufactured over 70 million chips per year. Sensors produced by CEITEC are used in large scale in areas such as cattle control chips and product tracking. Other areas of application include traffic management, passports and ID cards.