Fondul Proprietatea (FP) is appalled by the adoption by the Chamber of Deputies on Wednesday of amendments to OUG 109/2011 on corporate governance, which for all intents and purposes exempt over 100 major state-owned companies (SOEs) from the application of this law, thus rendering the content of the law inapplicable.
The exempted companies, some of which are listed, include some of the most valuable Romanian SOEs: Hidroelectrica, Nuclearelectrica, Bucharest Airports, Romgaz, Transelectrica, Constanta Maritime Ports SA and CE Oltenia.
“If 2017 was a difficult year, marked by blatant disregard, attacks and systematic abuses of corporate governance, yesterday we witnessed the darkest day in the history of corporate governance in Romania. The changes adopted yesterday are a huge step back in time for SOEs and the country, while the risks to integrity via corruption and value destruction in these companies are growing dramatically. It is extremely sad to see that initiatives, which had a proven positive impact, such as the corporate governance legislation, are practically demolished by the Parliamentary majority at an accelerated pace, thus sending an extremely negative signal to investors,” Greg Konieczny, CEO and Portfolio Manager of Fondul Proprietatea commented in a press statement.
In turn, Johan Meyer, Co-CEO and Co-Portfolio Manager of Fondul Proprietatea added: “Clearly no consideration is being paid to the far-reaching implications this will have on the financial markets and the well-being of these companies. These amendments are nothing but an intention to protect and enrich the few at the expense of Romania in general.”
In FP officials’ view, The implications of the amendments voted yesterday include among others: removing the obligation to appoint professional and politically independent management and Boards in SOEs; removing the transparency and reporting obligation for SOEs to publish their annual and half-yearly financial statements; removing the obligation to publish the identity, professional experience and remuneration of the executive management of SOEs; removing the possibility of minority shareholders to appoint members of the Boards of SOEs and restricting their access to information within the company; removing the obligation of SOEs to publish transparently the resolutions adopted by shareholders on their Internet webpages.
Concluding, FP believes that exempting SOEs from corporate governance legislation poses a direct threat to their financial health, opening the door to political cronies’ appointments serving other interests than the well-being and development of these companies, bringing a negative impact on the foreign investments and international relationships for Romania, as country.