State corporations have finally got audit committees monitoring them, after a three-year delay, in the hope that they will improve their performance to the benefit of the state and its other stakeholders.
A report by the Hellenic Corporation of Assets and Participations – also known as the hyperfund – for the first quarter of the year showed that the entity set up to maximize the value of state assets has appointed 14 presidents to head monitoring committees at the boards of as many state corporations, including as Public Power Corporation (PPC), Athens Water (EYDAP), Hellenic Post (ELTA), etc.
The audit committees constitute the first line of defense against mismanagement in a company. According to the law dating from 2017, each entity of public interest should have an audit committee with at least three non-executive members on the governing board. At least one member needs to be a retired certified accountant or someone with adequate knowledge in auditing.
Monitoring committees are aimed to prevent scandals such as the one that broke out at Folli Follie, but with the exception of some large business groups and banks, the majority of private companies do not have any such inspection mechanisms, according to market sources with extensive experience in auditing.
Besides the appointment of the heads of the committees, the hyperfund also appointed 85 members to 15 governing boards in entities in its portfolio of state assets during the first quarter of 2020, “through open, professional and transparent procedures,” as the Q1 account says.
Especially for Hellenic Post, which faces serious liquidity problems, the report says that the strategy and the transformation plan of the mail company needs to be defined.
Due to the pandemic, the company’s costs increased by about 35 million euros, with the only lifeline for Hellenic Post being state compensation of €200 million for the supply of public services in the period from 2013 to 2020.
Even in that case, though, a share capital increase will not be avoided for Hellenic Post, given that most of that €200 million will have to go towards covering various financial obligations.