Better management needed

  • 2010-10-06
  • From wire reports

RIGA - State-owned companies are not being managed efficiently and transparently enough, said NASDAQ OMX Riga’s board chairwoman Daiga Auzina-Melalksne in an interview with the magazine Kapitals, commenting on a report on state-owned assets prepared by the Baltic Institute of Corporate Governance, reports

“One of the main conclusions is that state assets are not being managed efficiently and transparently enough. Gathering this information took a long time because a number of ministries have been assigned to administer state property. In my opinion, this is not quite right because a minister’s influence is, to some extent, formed by the portfolio of these state-run companies. The more such companies in a ministry’s portfolio, the more influential the given minister is. That diverts the attention from the development of a given economic sector to other motives,” said Auzina-Melalksne.

“The decisions that are taken by the major state-owned companies will have their effect on us in ten, twenty, even thirty years. The liquidation of supervisory councils in an attempt to deal with the problem of incompetence at such companies attained a certain short-term effect, but this is not right in the long-term. This has not worked anywhere in the world, so why should it in Latvia?” said Auzina-Melalksne.

Another conclusion is that a single organization is necessary to hold the property rights to state-owned enterprises, be responsible for their management, financial operations, choosing the goals for the company. “I believe that it should be an organization covering all of them. Because this organization would then be able to decide in which companies the presence of the state is justified, and in which it is not,” explained the stock exchange chief.

She also believes that state-owned minority interests in various companies must be sold. A majority of these companies do not pay any dividends, and holding a stake in such companies is of no use for the state.