Committee created to appoint supervisory board members of state companies ({{commentsTotal}})

The group, headed by banker Erkki Raasuke, was dissolved in April.
The group, headed by banker Erkki Raasuke, was dissolved in April. Source: (Siim Lõvi /ERR)

A committee will be created to appoint supervisory board members of state-owned companies. These members were previously appointed by ministers, often based on party membership rather than qualification. The issue led to a government crisis in November 2016 that brought the end of Taavi Rõivas' Reform Party government.

The committee would consist of one representative each of the minister of finance, the Estonian Employers’ Confederation, the minister of economic affairs and infrastructure, and the minister of entrepreneurship and information technology.

Minister of Finance Sven Sester (IRL) announced Erkki Raasuke as the committee’s chairman. Raasuke is the current CEO of LHV Group, to leave the position in the second quarter of 2017 and head a new bank to be created out of Nordea and DNB’s Baltic branches. Raasuke is also the chairman of Eesti Energia’s supervisory board.

Sester based the choice on Raasuke’s experience, as well as to his year-long contribution to state policymaking. Raasuke’s career in Estonian banking spans many years, including stints at Hansabank, and later Swedbank.

The other members of the committee out of the private sector will be Gunnar Okk of the Nordic Investment Bank and previously Eesti Energia, Sven Pertens formerly of construction multinational Lemminkäinen, and David James O’Brock-Kaljuvee, currently a manager at Baltic Workboats and formerly of rare earth processor Molycorp Silmet.

The public sector will be represented by the secretary general of the Ministry of Finance, as well as one more secretary general as a rotating member of the according ministry the jurisdiction of which the appointment falls into.

For example, if the appointment is for Eesti Energia’s supervisory board, the secretary general of the Ministry of Economics and Communication participates, if it’s about the Health Insurance Fund, the secretary general of the Ministry of Social Affairs participates, and so on.

The committee will make appointments and recall board members based on the recommendation of the minister in whose responsibility the state-owned company or fund falls.

The committee will control some 150 appointments to the supervisory boards of 31 state-owned institutions. Assets of these companies amount to some €6 billion, and they employ some 15,000 people.

The creation of this committee is part of the government’s coalition agreement.

Issue triggered fall of Reform Party government

After several years of the issue flaring up from time to time, the government in November 2016 seemed to have arrived at the conclusion that the way members of the Riigikogu were currently appointed by ministers as members of state companies’ supervisory boards was unconstitutional.

But while the Reform Party’s then junior partners, the Social Democrats (SDE) and the Pro Patria and Res Publica Union (IRL), were in favor of immediate action, the ministers belonging to the Reform party preferred to keep working towards a compromise. Then-minister of Economic Affairs and Infrastructure Kristen Michal (Reform) presented a compromise that would involve a committee in between the appointing minister and the appointee, but the proposal was rejected by the coalition partners.

At that point, the Reform Party by far had the largest share of MPs sitting on state company boards. IRL and SDE ministers then started recalling those in companies in their jurisdiction, after Prime Minister Taavi Rõivas (Reform) had showed no sign of readiness to start resolving the matter promptly.

Within just days, the matter led to a full government crisis. Five days after the issue escalated, the Reform Party’s coalition partners joined a no confidence vote against Rõivas, which brought the end of Reform’s time in government after 17 years.

Editor: Editor: Dario Cavegn

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