14 July 2021, Wednesday, 09:01 411

RBK-Ukraine: How the suprevisory board of Naftogaz undermines corporate governance reform in Ukraine

Редактор: Микола Поліщук

НАК "Нефтегаз Украины". Фото: delo.ua

Corporate governance reform at state-owned companies in Ukraine broken down and the supervisory board of Naftogaz has played a key role in this process, according to a new article published by RBK-Ukraine.

Major doubts over the effectiveness of this reform arose after news emerged of huge bonuses to the supervisory board and the board of NJSC Naftogaz of Ukraine for 2020 against a backdrop of record losse and a drop in gas production.

Members of the supervisory board did not fulfill the tasks assigned to them by the shareholder, which is the state. In addition, the supervisory board formed at the end of 2017 was assigned without competition, which is fundamentally inconsistent with the principles of corporate governance.

For example, Clare Spottiswoode was a member of several supervisory boards of various companies in Ukraine at the same time. In addition, she has not been in Ukraine for long and was related to American company Enron.

Another member of the supervisory board, Bruno Lescoeur, is accused of questioning the role of Ukraine as a gas transit country. During hearings held by the Energy Committee in the Italian Senate, he allegedly expressed support for the construction of Nord Stream 2. He said that after the expiration of the agreement on the transit of Russian gas through Ukraine, Italians needed to import gas via the German rather than Ukrainian route.

As CEO of Edison, in 2015, Lescoeur visited Gazprom head office to discuss cooperation with Alexey Miller regarding Russian gas supplies.

Board member Otto Waterlander recently announced that it is necessary to revise the procurement system at Naftogaz. In particular, he called for an end to purchases through the Prozorro system. This directly contradicts the recommendations of the OECD and endangers the fulfillment of Ukraine's obligations.

The only way out of this situation should be a return to the principles of the OECD, namely: the immediate holding of a transparent competition for the selection of professional members of the supervisory board who can restore confidence in reforms and the European integration aspirations of Ukraine.

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