Postal employees in Brazil are demanding that Bank of New York Mellon cover more than $2 billion of investment losses related to the workers' pensions, arguing that the U.S.-based bank mismanaged the funds.
The losses have resulted in reduced pension benefits for hundreds of thousands of Brazilian retirees and higher out-of-pocket costs for current postal workers, according to groups that represent the workers.
More than 100 representatives from the postal workers federations of Brazil and community groups in the U.S. and Brazil gathered in front of BNY Mellon's Wall Street headquarters last Friday afternoon to advocate for restitution. They carried signs demanding the return of funds lost by the pension fund for Brazil's postal workers retirement system, called Postalis.
"We intend to put pressure on BNY Mellon to acknowledge its responsibility and fulfill its obligation to fully reimburse Postalis for the entirety of the losses incurred," José Aparecido Gimenes Gandara, president of the Brazilian Postal Workers Federation (FINDECT), said in a statement.
A BNY Mellon subsidiary managed part of Postalis from 2011 to 2019. Managers of the fund, including the former head of the New York bank's Brazilian business unit, embezzled money from Postalis investment funds and placed other risky bets that contributed to the mismanagement, advocates for the postal workers said.
In a statement, BNY Mellon gave no ground to the protesters.
"Any investment losses suffered by the Brazilian Postal Workers Pension Fund, Postalis, were ultimately the result of Postalis' own conduct," BNY Mellon said.
The advocacy groups said that retired postal workers in the country of 216 million have seen their pension benefits cut by as much as 25%, and that those reductions will last for life.
At the same time, current postal employees are now required to pay more into their pension plans than they were before the pension fund suffered the losses. The losses also led to the scaling down of several benefits, including one that provides a life insurance payment in a lump sum when a worker dies.
An estimated 55,000 retired workers and 117,000 current employees have been affected by the reductions, according to the postal workers unions. Close to 500,000 Brazilians rely on the postal workers retirement system, including current workers, retirees and dependent family members.
BNY Mellon's contract with the retirement system "assigns fiduciary responsibility for the results of the investments to Bank of New York Mellon," Emerson Marinho, president of the Brazilian Postal Workers Federation, said in an interview.
The bank
The dispute is also subject to ongoing legal action, including action by Brazil's federal prosecutor, according to groups advocating for the postal workers.
In 2018, government prosecutors in Brazil tried unsuccessfully to recover the losses from the New York bank. They argued that BNY Mellon failed to monitor the risks facing Postalis and did not comply with relevant asset allocation rules.
At the time, the prosecutors estimated the damage to the pension fund to be worth about 8.2 billion Brazilian reals, or more than 2 billion U.S. dollars.
Brazil's parliament and BNY Mellon have discussed potential restitution, according to recent news reports, but no agreement has been announced. The advocacy groups said they plan to engage with U.S. lawmakers and continue to organize events in both Brazil and the United States to raise awareness about the lost pension funds.
