According to sources close to the project, the decision to remove the advisors from the project’s management came from the Economy Ministry, without any explanation.
The contract won by Pedersen&Partners in September, following an auction, was supposed to be one-year long and be worth around EUR600,000.
The company’s role was to help the ministry put together the tender documents for the selection of the headhunters that will recruit CEOs for state-run companies and ensure the “transparency of the process.”
Based on the tender documents put together so far, the ministry has managed to finalize two auctions, one won by Egon Zehnder, which was supposed to recruit a CEO for energy company Hidroelectrica and military equipment supplier Romarm and one won by Kienbaum for energy complex Complexul Energetic Oltenia.
It is not known how much the contract is worth or how much the advisors have collected so far, but market sources say Pedersen has not received very large amounts.
On the other hand, the consultants did not have a chance to end their work, considering that no CEO has been changed so far at any of the state-run companies involved in the process.
Representatives of the Economy Ministry has not answered ZF’s request and the advisors involved in the process did not wish to make any comment.
Since the start of this project, there have been three ministers of Economy – Ion Ariton, Lucian Bode and Daniel Chitoiu, who each appointed one or two government advisors to handle this project. But they left every time the Government changed.
The project to introduce private management in state-run companies has been one of the most ambitious projects that the Boc Government committed to. The Government promised to the International Monetary Fund (IMF) that in a first stage four state-run companies – Hidroelectrica, Oltchim, Romarm and electricity supplier Electrica Furnizare would have a new CEO recruited from the private sector by February 2012.
The deadline has been extended until June, but it is not very likely that the current government will continue the implementation of this project and stick to this deadline, considering that the Hungarian subsidiary of executive search company Egon Zehnder, which won the auction to recruit a CEO for Hidroelectrica and Romarm, has not started to look for someone yet.
In fact, sources close to the project say the company will be “lucky” to recoup the EUR40,000-EUR45,000 it set aside as guarantee when it won the auction.
Will the project go on?
In the meantime, though, the government passed an emergency ordinance, 109/December 2011, which completely changes the selection method of members of the boards of directors of state-run companies, whether they are owned by ministries, county councils or town halls. Under the ordinance, a recruitment firm will evaluate and hire the members of boards of directors.
New members of the board of directors were appointed at drug manufacturer Antibiotice Iasi, as part of a replacement process where advisors were paid EUR2,000. The “new” members, Radu Valentin, Ioan Nani, Gheorghe-Gheza Molnar, Nicolae Stoian and Gabriela Ilie, had filled positions in the board of directors before. They were the ones who met the criteria imposed in the tender documents: “15 years’ experience in the management of profitable state-run companies or of profitable drug manufacturers, with a turnover at least equal to that of Antibiotice.”
It will not be possible to appoint the new CEOs from the private sector to run state-owned companies until the members of the boards of directors are appointed, says Ordinance 109, because these managers also have to be validated by the new members of companies’ boards of directors.
But it remains to be seen if this project will continue under the management of the new minister. The removal of the consultants from the project is one more decision indicating that the project will be delayed again and shows the state’s lack of transparency in its spending of public money.
(English version by Daniela Stoican)