ECONOMY

Gov’t wants a powerful OTE chief

The government is fighting for the right to veto various issues of major or minor significance in its negotiations with Deutsche Telekom for its stake in the Hellenic Telecommunications Organization (OTE). The state’s aim is to respond to the criticism from the opposition about the concession of OTE’s management to the German group. «Negotiations are continuing and both sides are showing determination for the deal to be completed, but there are still some open issues, the most important being that of corporate governance,» a government source said yesterday. The German side reportedly agrees with the right to veto for the state-appointed president on strategic issues for the future of the company, such as acquisitions, mergers, sale of properties etc. There is a regulation in place about private parties’ investment in state companies, which requires the Economy Ministry’s approval for such decisions of major significance. However, the Greek side wants this to be included in the shareholders’ agreement with DT, in case the regulation is found by the European Commission or the European Court to contravene European law. Furthermore, the state wants the president’s opinion to be required for other issues, too, such as investments, the budget and staff matters. In practice, the government wants a sort of joint management, toward as much as possible a 50-50 balance. The president will have this enhanced role on the governing board for as long as the state maintains a minimum stake in the organization. The exact percentage level of that stake, below which the privileges disappear, is also under negotiation by the two sides. True, the demands Athens has are testing the flexibility of corporate governance rules, which imply that the CEO manages a company and the president just monitors him. Besides the problems created by the double leadership, DT officials are also worried about the strong criticism of the deal by the main opposition party, which is threatening to opt out of the agreement should it ever come to office. For the government, however, the stronger the role of the state becomes in the organization’s management through the office of the president, the more politically manageable the deal, as well as the reaction of the opposition and the employees, will be.