Romanian restitution fund Fondul Proprietatea (FP) warned on August 22 that amendments proposed by the energy ministry regarding the supervisory board of state-controlled nuclear power company Nuclearelectrica may have a negative impact on the company’s performance and share value.
The changes refer to the replacement of the company’s supervisory board with another four-month board and to the fact that the proposed contracts eliminate key obligations that scrap non-competition obligations.
FP noted in a statement that Nuclearelectrica’s supervisory board will be replaced by another interim board, despite the fact that the expiration of the current board members mandate was known to all shareholders for months.
“The company urgently needs a solid, full-term competent supervisory board, to help deal with the challenges and the opportunities Nuclearelectrica faces,” FP said in a statement.
In addition, under the new mandate contracts, board members are no longer held accountable for non-competition obligations, thus permitting flagrant conflicts of interest, or preserving the confidentiality of information obtained as member of Nuclearelectrica’s supervisory board, FP claimed.
“In the fund’s view, this clearly increases the risk of potential corrupt and abusive practices at Nuclearelectrica. Moreover, it endangers the company’s performance, as it may impact the share value of this listed company and the investors’ confidence in its future due to the lack of accountability and transparency,” FP said.
The warning comes just one month after FP expressed its disapproval and warned that amendments proposed by the energy ministry to the contracts for hydropower generation company Hidroelectrica’s supervisory board members increase the risk of corrupt practices.
“Following the similar situation at Hidroelectrica, making detrimental changes to the board mandate contracts seems to be a common practice of the Ministry of Energy. Yet again, a new interim board with watered down mandate contracts, allowing board members to retain similar positions in other energy companies, including competitors, as well as scraping confidentiality provisions seems to be the Ministry of Energy’s way to elude the corporate governance law and potentially pursue other vested interests. This situation raises serious concerns about the energy sector board members’ accountability to act in the best interest of the company and not use their Board positions in companies like Nuclearelectrica and Hidroelectrica to serve other interests than those of the companies,” Johan Meyer, FP Co-CEO and Co-Portfolio Manager, said.
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