Pedro Nuno Santos
Pedro Nuno Santos has also been in the news recently for issuing a government dispatch over plans for a remodelled Lisbon airport only to see it cancelled by the prime minister within hours. Photo: Manuel de Almeida/ Lusa

Another fine wrangle over ministerial incompatibility

PS hierarchy rallies round minister for infrastructures and housing

The office of the ministry for the Presidency of the Council of Ministers has come out in defence of infrastructures and housing minister Pedro Nuno Santos today in the case of the company owned by his father (and in which Pedro Nuno holds a 1% share) which benefited from a public contract ‘by direct agreement’ with the State (see update below).

Just as Pedro Nuno Santos himself has already done, the Ministry of the Presidency cites an opinion given by the Attorney General’s office in 2019 which states that incompatibility would exist if the contract had been awarded by a department overseen by the infrastructures ministry.

The exact wording ran: “On September 19, 2019, the Advisory Council of the Attorney General’s Office clarified that an impediment only applies to procedures relating to open public contracts that run under the direction, supervision or merit protection of the body of the State in which the holder of political office exercises functions (roughly speaking, within the scope of the respective Ministry)”.

In other words, it is totally acceptable that a government minister’s family members benefit from ‘direct contracts’ with the State, as long as these do not touch the scope of their family member’s particular ministry.

Regarding the fact that Pedro Nuno Santos is himself a shareholder in his father’s business – that too is ‘fine’, as he holds such a small stake.

Says the note issued by the Ministry of the Presidency, members of government are prevented from acts of public procurement only when the stake in commercial companies owned by them or close family members  “is greater than 10%, or when their share capital is greater than €50,000” – neither of which situations apply in this case.

In other words, this latest case of perceived incompatibility is not ‘incompatible’ at all,  in the government’s eyes – very much like the other cases that have come to light recently, which have been explained with recourse to legal foundation.

Except that Observador online, and other media sources, do not totally agree with the government’s interpretation of the Attorney General’s office’s opinion, referring to the various laws that have been drawn up on ministerial incompatibility since 1993.

Expresso explains: “What the law says is that, if what is at stake are companies owned only by family members, they are only prevented from making public contracts if the public entity that makes the contracts depends entirely on the holder of the position” (in this case, on Pedro Nuno Santos as Ministry for Infrastructures and Housing).

“However this case is different”, says Expresso – certainly very different from the scenario addressed by the Attorney General’s Office in 2019.

This case centres on a company (Tecmacal) which the minister, together with a family member, does indeed “hold more than 10%”.

In addition, says the paper: “the 2019 opinion that exonerates the minister saying that there would only be incompatibility if the deal had been within the scope of the ministry in question or if the minister had more than 10% of the company’s capital, refers to article 8 of the law 64/93, but only for point a).” 

What is at issue in paragraph a) of that article are situations in which companies are owned by family members (without the minister’s participation). 

“The minister’s situation, however, fits into paragraph b),” stresses Expresso – “which concerns companies owned “jointly” by the member of the government and his family member”.

Put another way, this situation – and the latest reasoning proffered on a Saturday by the Ministry of the Presidency of the Council of Ministers – is not looking cut and dried.

If there is an incompatibility, the sanction provided for by law for cases in which a holder of political office, who holds more than 10% of a company together with an ‘ascendant’, and who makes a contract with the State, is dismissal”, says the paper (the definition of ‘ascendant’ being: “persons to whom one is related in the ascending line including one’s parents, grandparents, great grandparents and the like”.)

UPDATE: 

Público now reveals that Pedro Nuno Santos’ father’s business Tecmacal has in fact celebrated other contracts with the State, going back over the years, and amounting to €1.1 million. Of those contracts, nine (involving €509,000) have been sanctioned since Pedro Nuno Santos entered government – the vast majority having been in the regime of ‘direct agreement’ – meaning no other tenders were considered).

natasha.donn@portugalresident.com