Minister pledges to depoliticize state company boards ahead of possible privatization

Photo: Port of Tallinn
9/2/2015 11:10 AM
Category: Politics

Economy Minister Kristen Michal (Reform Party) said he wants to reorganize the way state-owned companies are run, including kicking out politicians from supervisory boards, adding that the companies may then be privatized.

The idea comes after two Port of Tallinn board members, of whom one was also the CEO, were arrested on corruption charges. Port of Tallinn is one of the state's most lucrative companies, but supervisory board heads, as well as many members, have been Reform Party politicians or former politicians. The CEO, Ain Kaljurand, also has connections to the party and the other board member, Allan Kiil, is a party member.

The idea to remove politicians from supervisory boards has received backing from coalition partners IRL and the Social Democrats.

Michal said state companies should be concentrated under one or a few umbrella organizations, changing the status of supervisory boards.

He said a number of umbrella companies can be set up, such as one for all state infrastructure companies like Saarte Liinid, Port of Tallinn and the airport.

“I would take it to another level and we would not talk about five or six potential companies, but concentrating all Estonian state-owned businesses under one business unit, where politicization would decrease and decisions would be taken on a professional level,” Finance Minister Sven Sester said.

Currently the majority of state-owned businesses are either under the jurisdiction of the economy of finance ministries, although with separate supervisory boards more often than not populated by politicians.

The idea is not fresh, having been debated only last year when Erkki Raasuke, then an adviser at the Ministry of Economic Affairs, advocated the idea, saying it could save 75 to 100 million euros annually thanks to better efficiency. The proponent that time was the Ministry of Finance, saying the state should involve more people from the business world, instead of politicians.

The state has close to 40 companies, employing 16,000 staff, with assets around 4.5 billion euros.

Privatization the next step?

The above named changes could be the first step in selling large state companies, and the government must weigh if it wants to keep or sell state-owned companies, Michal said.

Siim Kallas said today that privatization should be the aim, and now Michal confirmed that he is also on the same page. “Where the market works and there are no obstacles, then the state should not be a major share holder in those markets,” he said.

One such state-owned giant which has been in private hands and could be again soon, is Estonian Air. Michal said the company is not very profitable but it brings indirect investments through good connections to major business centers, and thus might not be sold off.

The company, and the state, is still waiting for a decision by the European Commission on whether finances given to the company were illegal or not.

J.M. Laats

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