Bogdan Tudorache
Romania faces a pushback in the corporate governance of the state companies. There is a concerning intention to change the corporate governance law, currently under discussion in Parliament, that may allow corporate governnance to become optional, tells energynomics.ro Greg Konieczny, CEO, Portfolio manager of Fondul Proprietatea.
At the same time, interim appointments in state companies, done in a non-transparent manner, also affect the companies’ future: there’s not enough time for long-term planning. “The practice of interim mandates should cease as soon as possible, but not in a questionable manner, for instance by putting in charge of SOEs the same type of people appointed according to political affiliations”, says Konieczny.
”We have been fighting for corporate governance in Romanian SOEs (state –owned enterprises – e.n.) since the day we began managing Fondul Proprietatea. In 2011, Emergency ordinance 109 was a clear sign that corporate governance principles are not shallow words and that Romania’s political leadership understands the need for such regulations. Undoubtedly, there is still much more to be done before seeing these provisions put into practice, especially as we see these days a clear pushback in this regard. What is extremely concerning is the intention to change the corporate governance law, currently under discussion in Parliament, so as to make it optional for the Government whether to implement the law’s provisions or not in various companies,” he adds.
More than 80% of the Romanian Energy Sector is owned by the State and Fondul Proprietatea is a minority shareholder in the top three energy producers in Romania: Hidroelectrica, Nuclearelectrica and CE Oltenia. ”It is of utmost concern to us that these companies are run in a transparent manner, focused on profitability, by professional Board members and directors, whose experience and expertise give confidence to investors. And this is what the Law on corporate governance stipulates.
Unfortunately, and I am especially referring to Hidroelectrica, we have seen a succession of interim mandates – as short as four months for Boards and one month for Directorates. Moreover, the people holding management positions were not appointed in a transparent manner, through competitive selection processes, and they often have relatively little or no experience in the energy sector,” he says.
”The practice of interim mandates should cease as soon as possible, but not in a questionable manner, for instance by putting in charge of SOEs the same type of people appointed according to political affiliations rather than competence.” Fondul Proprietatea closed the first nine months of this year with a net profit of 906.4 million lei, increasing by about 59% compared to the same period last year.
Operational revenues totaled 979.417 million lei (761.428 million lei in the same period in 2016) and operating expenses 88.607 million lei (89.531 million lei at 30 September 2016). On September 30, 2017, total equity capital was ROL 10,606 billion (ROL 10,520 billion on June 30, 2017) down 6.85% compared to ROL 11.386 billion from December 31, 2016. More in an exclusive interview granted for the next issue of the energynomics.ro magazine.