Fondul Proprietatea, acting as shareholder of Engie Romania (former GDF Suez Energy Romania, has requested to its board of directors to present a report in relation to the sizable management and consultancy service agreements concluded by the energy company during the period 2011-2015. Engie is controlling the company through its affiliate, Romania Gas Holding BV.
According to a press release, in 2015, the total value of these service agreements related to strategic and management consultancy amounted to an estimated RON 12.9 million (EUR 2.9 million).
The Fund considers that the management and consultancy service agreements with the controlling shareholder were neither necessary nor appropriate, given that the energy provider has its own board of directors and managers, who have been appointed by the general meeting of shareholders with the purpose of making management decisions and acting for the benefit of the company and of all shareholders and not the for the benefit of its controlling shareholder.
“The Fund considers that entering into such service agreements can be also considered an abuse of power by the controlling shareholder, Romania Gas Holding BV (acting in the interest of its affiliate, Engie SA, and not in the interest of the Company and/or its shareholders). The Fund also considers that the service agreements concluded by the Company with Engie SA were needless and the price paid by the Company to Engie SA for the management and consultancy services was unjustified,” the release reads, adding:
“Over the last 5 years, the Fund has engaged on numerous occasions with the management of Engie Romania SA and pointed out the abusive nature of these contracts. The Fund has demanded further clarifications and requested the management to put a stop to this practice. We are pleased to highlight that as a result of our actions, the contracts identified by the Fund were no longer in place starting with FY 2016”.
Consequently, the Fund has initiated a court action in front of Bucharest Court against Board members and managers of Engie Romania for the recovery of damages caused to the Company by approving, concluding and performing management and consultancy service agreements with Engie between 2011-2015.
The board members and managers against whom legal action was initiated are Eric Joseph Stab, Grzegorz Gorski, Alain Marie Louise Janssens, Olivier Bloeyaert, Mihai Adrian Albulescu, Gelu Stefan Diaconu, Maria Gabriela Horga, Pierre Marie Paul Chatain, Bart Josef Irma Boesmans, Valerie Marie Laure Limpens and Simona Claudia Dobre.
“These agreements represented a conflict of interests and a serious breach of corporate governance principles”, in the Fund’s view.
Fund officials consider that it is highly necessary to have in place monitoring controls to make sure such conflicts of interests are avoided in the future. Therefore, the Fund strongly urges the management of Engie in Romania to present a plan of measures designed to avoid the conclusion of any similar agreements with the company in future.