Estonia, Markets and Companies

International Internet Magazine. Baltic States news & analytics Saturday, 04.07.2020, 14:44

Supervisory boards of Estonian state companies may be in for major cleanup

BC, Tallinn, 17.01.2020.Print version
The powers of 92 members of the supervisory boards of 28 state owned or state invested companies in Estonia are about to expire this year, and the changes made by the government to the composition of the supervisory boards' appointments committee may indicate a possible politicization and major cleanup in the supervisory boards, according to the Postimees information wrote LETA/BNS.

In addition to appointment to office, the appointments committee also can change the size of remuneration of members of supervisory boards. Three years ago, for instance, the appointments committee raised the remuneration for the chairman of the supervisory board of state-owned energy group Eesti Energia from 472 euros to 2,000 euros.

The first of the supervisory boards to see its powers expire this year is the board of Transpordi Varahalduse, owner of the aircraft of Nordica, whose powers will expire in February. Of other more important businesses, the powers of the supervisory boards of Eesti Energia, Eesti Post, of some members of the supervisory board of Operail, of most members of the supervisory board of Tallinn Airport, and of the supervisory board of Tallinna Sadam will expire between May and September. 

The government's decision to man the appointments committee with politicians has put managers of state-owned companies on guard, with most managers either declining comment or saying only vague things when asked about the change. While both Eesti Energia and Omniva declined comment, Operail CEO Raul Toomsalu praised the system in place now but remained vague on the new arrangement. 

"From our viewpoint the previous appointments committee, which consisted of apolitical members with experience in business, was very good. We had very good cooperation with the chairman of the appointments committee, Erkki Raasuke, as a result of which a very constructive and supportive supervisory board was selected in whom supporting the company's business interests and meeting the expectations of the owner were balanced. We hope that these principles will remain in place with the new appointments committee and good cooperation will be preserved and will continue," Toomsalu told Postimees.

The rationale behind the creation of the appointments committee system three years ago was to keep the supervisory boards of companies and logically also relevant appointment committees away from political whirlwinds. Decisions made by the Juri Ratas government have in fact violated that principle, however, as last Thursday businessman Argo Luude, a prominent member of the Estonian Conservative People's Party (EKRE), and Reet Roos, active member of Isamaa and one of the party's biggest donors, were appointed to the committee, Postimees said.

According to Postimees, Prime Minister Juri Ratas last spring allegedly blocked the nomination of Luude for the post of minister of the environment for absence of an impeccable reputation. As a result, a little known person, Rene Kokk, got the environment portfolio belonging to EKRE under the coalition agreement.

Luude is the owner of Eesti Keskkonnateenused, one of the largest waste handling companies in Estonia. In February 2012,  Luude received a punishment under settlement procedure for an agreement undermining competition which concerned a public procurement for street cleaning services in Tartu. Luude received a pecuniary punishment of 17,040 euros, while the company AS Veolia Keskkonnateenused managed by him had to pay 100,000 euros as punishment.

Speaking on the "Raagime asjast" broadcast of the Tre radio station associated with EKRE, Finance Minister Martin Helme said explaining Luude's appointment that the connection between the government and state-owned companies had become too  loose.

"It could freely happen, and in fact did -- not during this government but the previous one -- that the management of a company would say that we absolutely don't care about what you think. We have a supervisory board here that has been appointed by the appointments committee. Talk to them if you want to change something, otherwise we will not do a thing," Helme said, adding that he philosophically doesn't agree with it that the government doesn't have a say in companies belonging to it. 

The EKRE minister also said he believes that it's better to have people on supervisory boards who have made their world view known by joining a political party than ardent champions of one world view or another who pretend to be impartial. 

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