Raasuke: many companies held back by state ownership
Former ministerial adviser and current LHV board member Erkki Raasuke said the state is usually a bad owner of businesses and it has many limits, although in some cases state ownership is the lesser of the evils.
Speaking at a BNS-organized workshop on state-owned businesses, Raasuke said many companies are state-owned because they have been so from the very beginning.
Taavi Veskimägi, Elering CEO and former finance minister, said shares or companies are an additional source of income for the state. “To say that a state-owned business is a priori bad, is not for me,” he said, adding that private companies can also be mismanaged.
He said privatization would be an easy solution, but life is not easy. The best solution may lie in finding a balance, he added. “If shares as state assets are a good combination with owners of different ambitions, then this guarantees representation by the taxpayer and a chance for the state to make money, as well as efficiency through strong supervision by the owners,” he said.
Business daily Äripäev deputy editor in chief Aivar Hundimägi said the opinion that the functions and activities of state-owned companies are somehow safer, is wrong. He said politicians need state companies to win and keep power.
“If we give the Port of Tallinn away to the stock market, to different capital sources, then our influence diminishes, as do our chances of staying in power,” Hundimägi said.
Veskimägi said politicians on supervisory boards can better relay what the state, as the owner, wants from a state-owned company, adding that problems arise when supervisory board members are unable to define the owner's will.
Veskimägi, who was an IRL minister, but quit the party five years ago, said banning all politicians from supervisory boards is too resolute.
“Supervisory board members of state-owned companies are largely major financiers of political parties, with only a few exceptions […] If you have business interests, you give a party money and signal that you want to be on the supervisory board of a certain state business and you get your wish, and can carry on there. We just do not know what these business interests are and how they are played out,” Hundimägi said.
Raasuke said the aim should be that a supervisory board is professional and knowledgeable, adding that with state-owned companies, it is the ministries, not supervisory boards, who define the goals of a company.
Raasuke added that when he began as adviser to the economy ministry, he was sure the state can be a good owner to businesses, but changed his mind shortly after. “I would like to say that state is a bad owner. There is no quick evaluation on the good-bad or successful-failure spectrum. The success of a company requires many qualities or basic things, which the state, as an institution, and the way it functions, has great difficulties in providing. There is a clear volume of limits which stop the state from being a flexible, good, foresighted owner. This puts it in a somewhat unfair position,” Raasuke said.
He added that in some cases there is no better alternative.
The debate on state-owned businesses reemerged last week after the CEO and a board member of the Port of Tallinn were arrested on large-scale corruption charges. The Port of Tallinn has been one of the state's most lucrative businesses.
The Estonian state owns a number of large companies. A few markets have been deregulated, such as electricity, but the state recently won a tender to take over domestic ferry services, saying it can offer the service far cheaper than the private sector.