Fondul Proprietatea (FP) announced it opposes the extension proposed by the Energy ministry of the mandates of the current Hidroelectrica Supervisory Board members.
Therefore, FP ”expresses its indignation and surprise” regarding the amendments proposed by the Ministry of Energy to the current mandate contracts for Hidroelectrica’s Supervisory Board members, as these ”clearly increase the risk of potential corrupt and abusive practices, given that it eliminates or significantly reduces several key obligations of the Board members that were part of the previous mandate’s contracts”, reveals a release.
Under the newly proposed contracts, Board members are no longer held accountable for non-competition obligations, conflict of interest, refraining for requesting various services or preserving the confidentiality of information obtained as member of Hidroelectrica’s Supervisory Board.
This, in the Fund’s view, highly increases the risk for corruption in Romania’s best energy company, which would affect its present and future performance.
“The new mandate contracts set a highly dangerous precedent by allowing Board members to retain Board or management positions in other energy companies. This situation could unlock Pandora’s box and raises serious concerns about the Board members’ willingness and responsibility to act in the best interest of the company and not use their Board position at Hidroelectrica to serve their own personal interests” said Greg Konieczny, CEO and portfolio manager of Fondul Proprietatea.
Commenting on the implications of mandate contracts changes, Johan Meyer, Co-CEO and Co-Portfolio Manager of Fondul Proprietatea, added: “We understand that the Ministry of Energy’s amendments seem specifically designed to encourage a proposed Board member to accept his mandate, which he initially refused due to a conflict of interest, since he had a similar Board position in another energy company. Also, scrapping non-competition obligations removes another flagrant case of conflict of interest. Essentially it leads to condoning another Board member’s position as deputy general manager of an energy company, which is a direct competitor of Hidroelectrica. You cannot serve two or several competing interests / masters at the same time.”
“These utmost grave actions are likely to negatively affect the interests of Hidroelectrica and its shareholders, by leaving the door to potential corrupt practices wide open and the emergence of new <<smart guys>> that would drain Hidroelectrica’s resources” concluded Konieczny.
The Ministry of Energy accuses Fondul Proprietatea for having a “destructive attitude” in the companies where it is a minority shareholder along with the Romanian state, and this can lead to blocking the activity of the respective companies, as happens repeatedly at Hidroelectrica.
