Finance minister: Ministerial responsibility must grow in state-owned companies

To enhance the state's connection with developments in state-owned companies, one option being considered is granting the responsible minister the right to appoint their representative to the company's supervisory board, Finance Minister Jürgen Ligi (Reform) said on the "Otse uudistemajast" webcast.
The issue of appointing members to the supervisory boards of state-owned companies came to the forefront following controversies surrounding Eesti Energia and Nordica, where decisions made by the management boards — and consequently, the supervisory boards — of these companies were called into question. In November of last year, Finance Minister Jürgen Ligi said that it was necessary to assess whether the nomination committee responsible for selecting supervisory board members had been functioning effectively.
Speaking on Wednesday, Ligi noted that, overall, it cannot be said that the entire system for appointing leaders of state-owned companies has gone off track, as the state's involvement in business is inherently contentious. However, he added that there are now proposals and reports that he plans to present to the government. "We need to bring principles for managing state-owned companies to the government," he said.
According to Ligi, part of the problem lies in the current prohibition on politicians participating in the supervisory boards of state-owned companies.
"In reality, the owner's connection to the company has been lost. /.../ I remember a time when politicians were allowed to be part of those boards. We won't be returning to that. However, there are options for changes to the nomination committee. One direction we're considering is to strengthen the owner's contact with the company," Ligi said.
"One current alternative is that the responsible minister could appoint their own representative to the company's supervisory board," he added.
Ligi pointed out that under the current system, if something goes wrong in a state-owned company under a minister's portfolio, the minister takes the political blame, but in reality, the minister has very little ability to intervene in the company's affairs. "A minister has to acknowledge that they haven't really had much responsibility under the current system. We need to strengthen that responsibility a little," Ligi explained.
He also emphasized the need to review the functioning of the nomination committee. "But that doesn't mean we have plans to dismantle the entire system. One idea is to use recruitment firms to find candidates for the boards. There are concerns and challenges with that approach too. Problems can arise there as well, because in the end, the owners will still have the final say on who gets appointed to the boards. We're discussing the pros and cons. I would say that the current system won't remain exactly the same, but that doesn't mean we're throwing out everything we have," Ligi said.
The nomination committee, which is responsible for selecting and removing supervisory board members of state-owned companies, makes recommendations to the general meeting of shareholders, which in practice means the minister responsible for the respective company.
Since May 2023, the nomination committee, appointed by the government, has included four representatives from the private sector: Annika Uudelepp (chair), Kadi Pärnits, Mati Polli and Peeter Saks. The committee also includes representatives from the public sector: the secretary general of the Ministry of Finance and, on a rotating basis, the secretary general of the ministry that oversees the respective state-owned company.
There are approximately 120 members serving on the supervisory boards of state-owned companies.
The nomination committee was established by a government decision on January 26, 2017.
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Editor: Marko Tooming, Marcus Turovski