How to make a noticable footprint

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How to make a noticable footprint

  1. 1. BICG ConfidentialReform, Results, Respect
  2. 2. 1 BICG ConfidentialWho we areBICG represents Baltic board professionals and theircompanies by:MISSIONBICG delivers value to its stakeholders by promoting globalcompetitiveness of Baltic companies through adoption ofleading corporate governance practicesVISIONBICG is an internationally recognized driver of best practisecorporate governance in the Baltic region.ValuesTrust, Integrity & Excellence
  3. 3. 2 BICG ConfidentialGuidance forthe GovernmentThe state needs to have completeand accurate information on GOEsin order for it to develop soundpolicy and exercise responsibleoversight. Information must beavailable both in the aggregateand for all individual GOEs.Baltic Guidance on the Governance ofGovernment-owned Enterprises waslaunched on June 2, 2010
  4. 4. 3 BICG ConfidentialFirst Annual reports
  5. 5. 4 BICG ConfidentialPrime Minister with the Working group
  6. 6. 5 BICG ConfidentialFirst independent NED’s in LT
  7. 7. 6 BICG ConfidentialInternational support“Your work to reform State-OwnedEnterprises sends a strong messageacross the region aboutthe importance of transparency andaccountability.As you continue to grow strongereconomies and increase opportunity,know that the United Statesstands with you“US Secretary of StateHillary Clinton
  8. 8. 7 BICG ConfidentialLocal Support“The Baltic Institute of CorporateGovernance is a reliable partnerin implementing good managementpractices in all Lithuania.The results that you have achievedin reforming state-owned enterprisesare impressive and provide strongvalue to the State.“President of Lithuania,H.E. Dalia Grybauskaite
  9. 9. 8 BICG ConfidentialMaking people happy to change
  10. 10. 9 BICG ConfidentialGOVERNANCE OF STATE-OWNEDENTERPRISES IN THE BALTIC STATES• Public perceptions• Regional & national rankings of SOEs• Board structures and composition• The legal and institutional frameworkfor SOE governance
  11. 11. 10 BICG ConfidentialPublic perceptions (LT)Public Perceptions of the State Public Perceptions of SOEs0%Agree10% 20% 30% 40% 50% 60% 70% 80% 90% 100%Neither agree nor disagreeDisagreeThe national government is accountable to thepublic for its own performance in overseeing SOEs.The national government keeps the public wellinformed on the performance of SOEs.SOEs are not used for political purposes or forpersonal benefit by government or politicians.The national government as a shareholder takes aleadership role in making sure SOEs performoptimally.Municipal-owned enterprises (MOEs) operate aswell or better than federal enterprises (SOEs).SOEs are performing well and making financialcontributions to the state budget.SOEs perform as well as private sectorcounterparts.The national government is effective in detectingirregularities at SOEs.The national government as a shareholderprovides good strategic guidance, and does a goodjob overseeing and managing SOEsThe national government as a shareholderappoints the most competent people as boardmembers and executives.0%Agree10% 20% 30% 40% 50% 60% 70% 80% 90% 100%Neither agree nor disagreeDisagreeSOEs provide good services at a reasonable price.Audits of the SOE and its financial statements areeffective in turning up any irregularities.SOEs can be held accountable by the public whenthey perform poorly.High-level SOE executives are competentto manage SOEs.SOE employees are motivated and provide the bestpossible service to the public.The financial accounting and control systems ofSOEs are trustworthy.Boards of directors in SOEs are competent to fulfiltheir responsibilities.SOEs operate effectively and efficiently.SOE boards, executives and staff do not usethe SOE for their own personal benefitBoards, executives and staff are appointed for theircompetence (not for their connections).
  12. 12. 11 BICG ConfidentialRegional & national rankings of SOEsThe 5 Largest SOEs (in alphabetical order)Estonia Latvia LithuaniaEesti Energia Citadele Bank Klaipeda State Seaport AuthorityElering Lattelecom LESTOEstonian Railways Latvenergo Lietuvos EnergijaPort of Tallinn Latvian Railways Lithuanian RailwaysTallinn Airport Latvian State Forestry Litgrid
  13. 13. 12 BICG ConfidentialFinancial 1Forestry 1Telecoms 1Energy 6Transportation 6Regional & national rankings of SOEs
  14. 14. 13 BICG ConfidentialRegional rankings of SOEsRegional Ranking of 15 Largest SOES Based on Corporate GovernanceCitadeleEesti EnergiaLattelecomEleringEstonian RailwaysLatvian State ForestryTallinn AirportLestoPort of TallinnLatvenergoLietuvos EnergijaLitgridKlaipeda SeaportLithuanian RailwaysLatvian Railways-100 -50 0 50 100 150 200 250 300 350 400
  15. 15. 14 BICG ConfidentialNational rankings of SOEsEstonia: National Ranking of 5 Largest SOEs1 Eesti Energia2 Elering3 Estonian Railways4 Tallinn Airport5 Port of Tallinn
  16. 16. 15 BICG ConfidentialSOE Rankings and EvaluationsCITADELECitadele is a full-service financial group for both private individuals andcompanies offering a complete portfolio of banking, financial and private capitalmanagement services in its home market Latvia and through its internationalpresence.• Answers to Ministry of Economics, Ministry of Finance and LPA• €22.8 billion total assets• €2.7 million net profit for 2011• 1,762 employees• 75% owned by the state, 25% EBRD• Board structure: Two-tierSTRENGTHS AREAS FOR IMPROVEMENTEBRD is a professional owner and apartner committed to best practicegovernanceStrengthening of board skills in thearea of risk and risk managementBenign state oversight marked byminimal interferenceIntroduction of annual self-evaluation of bank governanceBoard committed to improvement Development of a corporategovernance improvement planExcellent independent boardmembers with capacity for objectivejudgmentDisclosure of a detailed governancereportBoard members with banking,distressed banking and internationalexperienceSystematic disclosure of moreand better information on boardmembers and their backgroundsBoard is effective and size is correct Disclosure of policy on relatedparties and conflicts of interestBoard member link to government isuseful in period of restructuringBoard size may deserve considerationOverall rating15-5 35 55 75 950Ownership and stakeholder structureThe control environment includingcompliance, audit and disclosureState intervention and politicizationOperating within reasonablecommercial principlesBest practice governance structures andpractices including boards and independenceRelated party policy andconflict of interest disclosure869268824011
  17. 17. 16 BICG ConfidentialFinancial Reporting:AuditorPricewaterhouseCoopersAccounting StandardInternational Financial Reporting StandardsAudit StandardInternational Standards of AuditQualified or unqualified opinionUnqualifiedSupervisory Council Members:Klavs VasksChairman of Supervisory CouncilLaurence Phillip AdamsMember of Supervisory CouncilSiblu Holdings Ltd., DirectorGeoffrey DunnMember of Supervisory CouncilConsultDunn, Managing DirectorGirts FreibergsMember of Supervisory CouncilJuris VaskansMember of Supervisory Council
  18. 18. 17 BICG ConfidentialSOE Rankings and EvaluationsCITADELE LATVIAN RAILWAYSCitadele is a full-service financial group forboth private individuals and companiesoffering a complete portfolio of banking,financial and private capital managementservices in its home market Latvia andthrough its international presence.• Answers to Ministry of Economics,Ministry of Finance and LPA• €22.8 billion total assets• €2.7 million net profit for 2011• 1,762 employees• 75% owned by the state, 25% EBRD• Board structure: Two-tierLatvian Railways is thenational, state-owned railwaycompany of Latvia. It is thebiggest payer of social andresident income taxes to thestate budget.• Answers to Ministry of Economics andMinistry of Transport• €520 million Euros of total assets• €1.4 million net profit for 2011• 11,958 employees• 100% owned by the state• Board structure: Management boardOverall rating Overall rating15-5 35 55 75 950Ownership and stakeholder structureThe control environment includingcompliance, audit and disclosureState intervention and politicizationOperating within reasonablecommercial principlesBest practice governance structures andpractices including boards and independenceRelated party policy andconflict of interest disclosure869268824011 15-10-20-30-40-50-60 0 10 20Ownership and stakeholder structureThe control environment includingcompliance, audit and disclosureState intervention and politicizationOperating within reasonablecommercial principlesBest practice governance structures andpractices including boards and independenceRelated party policy andconflict of interest disclosure14-4-30-45-5-2
  19. 19. 18 BICG ConfidentialBoard Structure and CompositionMINISTRY ECONOMIC AFFAIRSAND COMMUNICATIONSKalle PallingMember of the ParliamentParliament of EstoniaRein KilkPärnu PortJüri KäoNG InvestmentsMärt VooglaidManutent OÜ Andres SaameRannamoise Arenduseand otherMeelis AtonenTavid ASToomas TautsOmex ConsultingToomas LumanNordeconMember of theSupervisory BoardMember of theSupervisory BoardMember of theSupervisory BoardChairman ofThe SupervisoryBoard Member of theSupervisoryBoard Member of theSupervisoryBoardMember of theSupervisoryBoardMember of theSupervisoryBoardMember of theSupervisory BoardMember of theSupervisoryBoardMember of theManagementBoardChairman ofThe ManagementBoardMember of theSupervisory BoardMember of theSupervisory BoardChairman ofThe Supervisory BoardChairman ofThe SupervisoryBoardChairman ofThe SupervisoryBoardChairman ofThe SupervisoryBoardChairman ofThe SupervisoryBoardMember ofthe ControlCommitteeMember of theManagementBoardChairman of theManagement BoardOwnerOwnerOwnerOwnerPartnerTALLINNA LENNUJAAMTavid ASEesti Post ASNordic InvestmentBankPärnu PortNG Investments LtdManutent OÜ Rannamoise ArenduseJärvakandi PuidutehasCross HoldingsOmex ConsultingEstonian ReserveOfficers AssociationNordeconNational DefenseSupport FoundationTallinn Universityof TechnologyFoundation of NõmmePrivate EducationCulture Fund of thePresident of the RepublicDefense Advisory BoardNordic Contractors ASEESTI ENERGIA
  20. 20. 19 BICG ConfidentialThe Legal and Institutional Frameworkfor SOE GovernanceDegree to which the Local Framework Reflects the OECD BenchmarkI. Ensuring an Effective legal and RegulatoryFramework for State-Owned EnterprisesII. The State Acting as an OwnerIll. Equitable Treatment of ShareholdersIV. Relations with StakeholdersV. Transparency and DisclosureVI. The Responsibilities ofthe Boards ofState-Owned Enterprises0% 20% 40% 60% 80% 100%0LithuaniaEstoniaLatvia
  21. 21. 20 BICG ConfidentialThe Legal and Institutional Frameworkfor SOE GovernanceDegree of Implementation of the Local FrameworkI. Ensuring an Effective legal and RegulatoryFramework for State-Owned EnterprisesII. The State Acting as an OwnerIll. Equitable Treatment of ShareholdersIV. Relations with StakeholdersV. Transparency and DisclosureVI. The Responsibilities ofthe Boards ofState-Owned Enterprises0% 20% 40% 60% 80% 100%LithuaniaEstoniaLatvia
  22. 22. 21 BICG ConfidentialCountry Ranking:Combined Framework and ImplementationCombined Framework and ImplementationEstoniaLithuaniaLatvia6.35.73 3.53.86.7ImplementationFramework
  23. 23. 22 BICG ConfidentialItem by Item Comparison of Countriesto the OECD BenchmarkI. Ensuring an Effective Legal and Regulatory Framework forState-Owned EnterprisesOECD Benchmark EE LV LTA. There should be a clear separation between the state’s ownership function and other statefunctions that may influence the conditions for state-owned enterprises, particularly withregard to market regulation.B. Governments should strive to simplify and streamline the operational practices and thelegal form under which SOEs operate. Their legal form should allow creditors to press theirclaims and to initiate insolvency procedures.C. Any obligations and responsibilities that an SOE is required to undertake in terms of publicservices beyond the generally accepted norm should be clearly mandated by laws or regulations.Such obligations and responsibilities should also be disclosed to the general public and relatedcosts should be covered in a transparent manner.D.SOEsshouldnotbeexemptfromtheapplicationofgenerallawsandregulations.Stakeholders,including competitors, should have access to efficient redress and an even-handed ruling whenthey consider that their rights have been violated.E. The legal and regulatory framework should allow sufficient flexibility for adjustments in thecapital structure of SOEs when this is necessary for achieving company objectives.F. SOEs should face competitive conditions regarding access to finance. Their relations withstate-owned banks, state-owned financial institutions and other state-owned companiesshould be based on purely commercial grounds.
  24. 24. 23 BICG ConfidentialBoard Member BackgroundsEESTI ENERGIAJüri Käo Chairman Supervisory BoardEducational background Leningrad Institute of Transportation (1983 – 1988) (degree not specified).Professional experience • Eesti Raudtee, Member of the Council (2001 – 2007).• NG Investments Ltd., Chairman of the Board (1997 – present).• Eesti Energia, Chairman of the Board (1997 – 2002).• Norma, Director of Development, Director and Chairman of the Board (1988 - 1999).• NG Capital, Chairman of the Board (dates unknown).• Tallinna Kaubamaja AS, Chairman of the Board (dates unknown).• A-Selver AS, Chairman of the Board (dates unknown).• ABC King AS, Chairman of the Board (dates unknown).• KIA Auto AS, Chairman of the Board (dates unknown).• Kitman AS C, Chairman of the Board (dates unknown).• Liviko AS, member of the Council (dates unknown).• Balbiino AS, member of the Council (dates unknown).• Ülemiste Autokeskus OÜ, member of the Council (dates unknown).• Roseni Majad OÜ, member of the Board (dates unknown).• Roseni Kinnisvara OÜ, member of the Board (dates unknown).• Estonian Employers’ Confederation, Vice-Chairman of the Board (dates unknown).• Estonian Chamber of Commerce, Vice-Chairman of the Board (dates unknown).• Estonian Business Association, Board Member (dates unknown).Political or party affiliations Information not available.Independent No.

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