Written by: Tomislav Vuić
How are members of the management and supervisory boards of state-owned enterprises selected, and how do they function? Is the time for change coming? These questions could be answered by the recently published manual of the Ministry of Justice, Public Administration, and Digital Transformation, which bears a long title – Manual for the Application of OECD Guidelines on Corporate Governance in Commercial Companies in Majority State Ownership Applicable to Commercial Companies in Majority Ownership of Local and Regional Self-Government Units. It is the result of the work of an authorial team led by Prof. Dr. Darko Tipurić, with contributions from Dr. Lana Cindrić, Dr. Radoslav Barišić, Doc., and Josip Lovrić, as well as experts from the Ministry of Justice.
It would be beneficial if the Manual were used as much as possible, as it provides guidelines that, if consistently applied, could significantly improve the corporate governance system in state-owned enterprises.
The application of the recommendations from the Manual could reduce political influences, increase transparency, and ensure more effective operations of state-owned enterprises. In this way, it is possible to avoid many problems that the media has been intensively reporting on in recent days, from Jadrolinija, surgeons in Čakovec, to Hrvatske šume. The announcement of public tenders and the election of non-partisan individuals should be welcomed, but only time will show how the tenders will be conducted; they do not guarantee that this structural problem will be resolved by themselves.
Why It Matters
Our lives largely depend on how the state functions. In a country with a significant share of the state, local and regional self-government in GDP and the number of companies in their ownership, this is even more important. It is increasingly growing – in investments, salaries of civil servants, tax burdens… It is particularly important how companies of special interest to the Republic of Croatia operate. Is it realistic to expect that state-owned enterprises will be as efficient as private ones? This is an interesting topic that I will not expand on at this moment (I believe it is not, due to the differing focus, although there are such examples, and I have participated in one myself).
The Manual captivated me with its simplicity, clarity of messages, readability, and, in my opinion, the right measure for potential users. It is aligned with OECD guidelines and is valid not only for us but also for about forty member countries. I will use certain parts as they fit excellently into the topic, starting from the preface: ‘Commercial companies in majority ownership of local and regional self-government units (hereinafter: JLP(R)S) have an important economic and social role in the areas where they operate. The specificity of their ownership structure and the goals they need to achieve often expose these companies to the risk of political influence, corruption, and unethical behavior, especially in the area of appointing supervisory boards and their relations with the company’s management (…). The importance of preventing management problems in publicly owned companies has been recognized as one of the priorities in national documents.’
