20 April 2012 - The Corporate Governance Committee discussed the situation in Slovenia on 20 April 2012. The Committee endorsed the conclusions of its Working Party on State Ownership and Privatisation (below). The Committee also welcomed the intention of the Slovenian authorities to provide additional information to the Working Party and agreed to review the situation again at the Committee’s next meeting in the period 26-30 November 2012.
Conclusions of the Working Party on State Ownership and Privatisation
“The Working Party noted Slovenia’s progress report and the additional information provided by the authorities at the meeting. The discussion focused on the recommendations concerning the new central ownership agency and the transformation of the pension fund (KAD) and the restitution fund (SOD) which had been developed at the time of Slovenia’s accession to OECD membership by the Working Party and the Corporate Governance Committee.
The Working Party welcomed the steps Slovenia had taken following its accession to OECD membership in 2010. In particular, Slovenia had established:
- An independent ownership agency reporting to parliament thereby separating the ownership and regulatory functions of government. The Agency had developed a corporate governance code for the SOEs and established corporate reporting. A formal role had been given to an Accreditation Committee in the selection of Supervisory Board members. In addition, the Agency had developed a state ownership policy (strategy) though this had not been adopted by parliament.
- Legislation put the role and objectives of two state funds – the pension fund (KAD) and the restitution fund (SOD) -- on a sounder basis.
However, recently adopted amendments had significantly changed the legislative architecture governing the Agency and the two state funds. The Slovenian Delegation described the changes as being designed to achieve financial stability for the SOE sector and to match powers better with responsibilities in SOE management. Under the new arrangements, the government has become both owner and manager of KAD and SOD and board appointments and voting by the Agency at annual general meetings of SOEs are now subject to government approval to prevent defaults in the absence of a clear strategy and to deal with asset management funds with different strategies. The recent changes were described as temporary and new long term arrangements will be put in place by June 2012 with the objective of establishing a single SOE strategy, a single management company and a single sovereign fund with a single supervisor. The delegation declared that Slovenia is committed to ensuring that the new structures will be consistent with OECD best practice.
Questions were raised about the recent measures and their consistency with the arrangements envisaged at the time of Slovenia’s accession to the OECD. While direct government oversight of SOE agencies is common in OECD countries, the reintroduction of a line ministry role in board nomination and voting at annual meetings is a step away from OECD best practice. Other issues of concern relate to the adequacy of remaining checks and balances to counter the risk of political interference in SOE management decisions on location, funding, management buy-outs or privatisation.
As the new arrangements will not be finalised until June 2012, the Slovenian authorities are invited to make a new submission to the Working Party prior to its next meeting in October. In the meantime, the Slovenian Delegation welcomed the proposal that Working Party experts and the Secretariat might assist them as they prepare the longer term changes to the current law.
The Working Party will discuss the issues further with the Slovenian authorities before reaching possible conclusions assessing Slovenia’s progress on SOE governance.”