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Paper: Imminent state company board spring clean indicates 'politicization'

Eesti Post/Omniva is one of the many state-run companies whose boards may be due a clean sweep.
Eesti Post/Omniva is one of the many state-run companies whose boards may be due a clean sweep. Source: Urmas Luik/Pärnu Postimees/Scanpix

In an atmosphere of controversy over the claimed politicization of board appointments to state-run enterprises, a spring clean is due of just under 30 of these, affecting just under 100 board members, according to daily Postimees, quoted by Baltic News Service.

Claims of "jobs for the boys" and a quid pro quo regarding the recent appointment of a Conservative People's Party of Estonia (EKRE) member to the Appointments Committee (Riigifirmade nõukogu) – the body which actually appoints directors to state enterprises, along with a leading Isamaa member and donor (both parties are in the coalition government) have also been implied; the EKRE appointee to the Appointments Committee has also been seen as a delayed quid pro quo since he was blocked from becoming environment minister when the coalition was formed, according to BNS.

Supervisory board members' remuneration may also change, BNS reports.

Concerns include Eesti Post/Omniva, and Tallinn Airport

Transpordi Varahalduse, owner of the aircraft of Nordica, is the first such supervisory board to see its powers expire, which will happen in February, later in the year to be followed by the Eesti Energia, Tallinna Sadam (Port of Tallinn) and Eesti Post/Omniva, as well as some board members at freight rail company Operail and most members of the supervisory board of Tallinn Airport, along with many smaller concerns.

While both Eesti Energia and Omniva declined comment when approached by BNS, Operail CEO Raul Toomsalu praised the system in place now but remained vague on any new arrangements, according to BNS.

"From our viewpoint, the previous appointments committee, which consisted of apolitical members with experience in business, was very good," Toomsalu said.

"We had very good cooperation with the chairman of the appointments committee, Erkki Raasuke, as a result of which a very constructive and supportive supervisory board was selected, whose supporting the company's business interests and meeting the expectations of the owner were balanced. We hope that these principles will remain in place with the new appointments committee and good cooperation will be preserved and will continue," Toomsalu told daily Postimees.

Political factors behind the developments include tension within the coalition government following the appointment of businessman Argo Luude, a prominent member of the Estonian Conservative People's Party (EKRE), to the appointments committee, the body, created three years ago, which appoints members to the supervisory boards.

EKRE's finance minister thinks government losing control over state bodies

Speaking on Tre radio broadcast "Raagime asjast", finance minister Martin Helme (EKRE) claimed that the government had too little say in supervisory board appointments, which could lead to the state concerns becoming too autonomous from the state.

"It could freely happen, and in fact did - not during this administration but the previous one - that the management of a company would say 'we absolutely don't care about what you (i.e. the government-ed.) think. We have a supervisory board here that has been appointed by the appointments committee. Talk to them if you want to change something, otherwise we will not do a thing'," Helme said, adding that he believes the government should indeed have a say in the goings on on these boards.

Helme also said he finds it preferable to have people on supervisory boards who have made their world view public by joining a political party, than ardent champions of any world view who pretend to be impartial. 

The rationale behind the creation of the appointments committee system three years ago, by which time Jüri Ratas (Centre) was prime minister, was to keep the supervisory boards of companies, and by extension also relevant appointment committees, away from the maelstrom of politics, according to BNS.

Argo Luude (EKRE) and Reet Roos (Isamaa) appointments to nominations committee may be sign of things to come

Recent decisions made by the government have in fact violated that principle, however, according to BNS, following the Argo Luude appointment to the nominations committee, as well as that of Reet Roos, an active member of Isamaa and one of its biggest donors.

Both parties are in the coalition together with Center, the largest in terms of MPs but one which, or at least whose leader, critics often say have the shots called to it by EKRE and even the much smaller Isamaa.

According to Postimees Ratas allegedly blocked the nomination of Luude for the post of minister of the environment last spring as the current coalition was being formed, on the issue of his track record, with a relative unknown Rene Kokk, getting the spot. In other words the daily is suggesting that the Luude appointment was a quid pro quo.

Luude is the owner of Eesti Keskkonnateenused, one of the largest waste handling companies in Estonia. In February 2012,  he received a punishment under settlement procedure for an agreement undermining competition which concerned a public procurement for street cleaning services in Tartu. Luude was fined €17,040, while his company, AS Veolia Keskkonnateenused, had to pay €100,000 as well.

On the issue of supervisory board members' remuneration, according to BNS, these are to a certain extent nominal fees, at least by top-earner standards in Estonia, though less so than was earlier the case. The appointments committee raised the remuneration rate for the chair of the supervisory board at Eesti Energia from €472 to €2,000, according to BNS.

Long-term resident's comment

Commenting on the development, commentator, observer and long-time Estonian resident Dario Cavegn questioned how realistic arriving at a wholly impartial, independent board for nominating officials to companies actually was, if committee members were also to be experts in their fields, partly because of the size of the country, and partly because such a committee cannot accurately reflect the interests of the populace as a whole.

"First off, this is Estonia, a country of 1.3 million, where the lion's share of elected and appointed officials as well as business people share their alma mater and sit in the same fraternities and sororities," Cavegn told ERR News earlier in the week.

"There is no such thing as independence in this country: it's simply too small for it."

"Second, a naming committee made up of experts is an ideologically 'professionalist' body. Given that 70 percent of Estonian citizens don't hold a degree, and that we are talking about companies owned by the public, this means that at least in principle, an expert committee can't represent the economic interests of well over half the nation," he added.

Cavegn also noted that, on the contrary, the politicization of the committee via the mores of leading members of the three coalition parties was a starting point, moving towards accountability to the legislature, rather than an endpoint to be retreated from.

"Politicizing the naming committee in fact doesn't go far enough. As it plays a decisive role in the administration of assets owned by the public, it should be made up exclusively of elected officials. It should be made subject to parliament, and represent the proportional make-up of the Riigikogu," he said.

Members of the business community, as well as opposition politicians such as Jevgeni Ossinovski (SDE), have recently criticized the drift towards political appointees on state boards.

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Editor: Andrew Whyte

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