The Cabinet of Ministers asked on May 2 the supervisory board of state-owned gas giant Naftogaz to stay in place until new member elections due in July. The government reacted to the board members’ decision on April 30 to resign en masse.
The board decided to resign after the firing of the company’s former CEO Andriy Kobolyev on April 28 and his hasty replacement by Yuriy Vitrenko, acting energy minister.
To appoint Vitrenko, the Cabinet of Ministers bypassed the supervisory board and dismissed it for two days to be able to fire Kobolyev directly without the consent of the board members.
Read more: Vitrenko in, Kobolyev out at Naftogaz
The six members of the board will stop working on May 14, even though their contracts expire on June 14, according to Naftogaz.
“The supervisory board will use the coming two weeks of its notice period to help the company as much as it can to deliver an orderly transition,” reads the Naftogaz website.
Clare Spottiswoode, chair of the supervisory Board at Naftogaz, said on April 29 that the supervisory board disagreed with the government’s decision and disputed the process.
“The termination of the chief executive officer by the government in the absence of any engagement of the supervisory board contradicts the requirements of Ukrainian law,” she said.
Energy expert Sergey Fursa praised the supervisory board members for sticking to their principles.
“People who made quite a bit of money… and could keep getting it couldn’t give up on principles,” he wrote on Facebook on May 1.
The cabinet justified its decision to fire Kobolyev by calling his work and his team “unsatisfactory,” adding it would search for new members for the Naftogaz supervisory board but didn’t expect to look for them before June.
Kobolyev was ousted the day after Naftogaz reported it lost $684 million in 2020, its first unprofitable year since 2015. Naftogaz’s net income in 2020 dropped massively compared to 2019 when the company made $93 million in net profit.
However, the company still managed to pay $5 billion in taxes in 2020, which made it far and away the country’s biggest taxpayer, supplying 17% of state revenue.
Many believe the decision to replace Kobolyev with Vitrenko violated Ukraine’s corporate governance rules.
International donors, including the European Union, the European Bank for Reconstruction and Development, the European Investment Bank, the World Bank and International Finance Corporation issued a joint statement on April 30 expressing their concerns over Kobolyev’s sudden ousting.
They called on the Ukrainian government to “make critical management decisions in state-owned enterprises in full compliance with the principles of recognized corporate governance standards.”
Read more: Worried over reforms after Naftogaz reshuffle, IMF recalls senior economist from Ukraine
On April 29, U. S. State Department spokesman Ned Price wrote on Twitter that the Ukrainian government’s “respect for corporate governance, transparency and integrity in the appointment of personnel in the energy sector — whether government or state-owned enterprises — is key to maintaining confidence in Ukraine’s commitment to reform.”
His view was shared by the ambassadors of the G7 countries, including Canada, France, Germany, Italy, Japan, the U.K. and the U.S.
The diplomats issued a joint statement on Twitter, saying that “effective management of state-owned enterprises, free from political interference, is crucial for Ukraine’s competitiveness, prosperity and fulfillment of its international obligations.”
