NCCL Stands by FICIL Statement in Regards to Latvenergo Supervisory Board

02 July 2019

In the light of the recent news about the dismissal of Latvenergo Supervisory Council, the Norwegian Chamber of Commerce in Latvia (NCCL), representing Norwegian investors in Latvia, stands by the announcement of the Foreign Investors' Council in Latvia (FICIL) made on June 20, expressing concern about politization of governance of state-owned enterprises and retreating from international corporate governance standards:

"The sudden replacement of Latvenergo supervisory council undermines the foreign investors confidence that the state-owned companies are governed in a professional manner, according to OECD and other standards of best practice.

Latvenergo has issued bonds worth more than 100 million EUR, which are quoted on the stock exchange and have attracted funds from a large number of local and foreign investors. The sudden dismissal of company's previous supervisory council and appointment of a new council chosen in a narrow circle without a proper and transparent selection procedure and clear criteria goes against the international standards of corporate governance and causes concerns about attempts to politicize the governance of one of Latvia's largest strategic companies. FICIL believes that such practice is unacceptable because it undermines the efficiency and competitiveness of state-owned companies, increases the unpredictability of investment environment and sharpens overall risk background of the economy.

FICIL believes that governance of state-owned and municipal companies should be done in a professional and transparent manner in the interests of the entire society and in line with international standards of corporate governance, to avoid situations where political interests are dictating company's operations. This topic was also discussed in the High Council meeting between Latvia's government and foreign investors, which took place in the end of May. Therefore we invite the Minister of Economy and the Prime Minister to take action to prevent these risks, initiate a proper selection process of a new supervisory council which corresponds to international best practice, and restore investors' confidence in predictability of state-owned company governance."

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