TALLINN, 28 August 2003 - The SAO is about to begin with auditing the activities of the Supervisory Boards of public undertakings. The main focus is on the remuneration and benefits granted to the Members of Management Boards by the Supervisory Boards. The audit aims to give a description of the current practices and to examine the basis of remuneration.
According to the law, the Supervisory Board as the government’s representative serves the purpose of ensuring the protection of the interests of the shareholder of a certain company or the founder of a certain foundation and the implementation of national economic policy. In the performance of these functions the representative of the government is required to observe the guidelines of the official (usually a Minister) appointing him/her to the Supervisory Board.
The Government Property Act provides that when concluding any transaction with public property, the administrators of state assets and authorised bodies shall be guided by the principle of avoiding any loss and increasing the benefit that the government may gain from the transaction.
Thus the SAO finds it appropriate to examine whether the Supervisory Boards of public undertakings have observed the law in their relations with the Management Boards and whether the regulatory framework and the rights and responsibilities of the Supervisory Board are adequate.
It its past audits of the SAO has found, among other things, that the remuneration system of companies in which the government has a majority holding should be improved. For example, it has also come to the conclusion that the payment of annual bonuses to the Chairman of the Management Board of AS Eesti Loto was unreasonable and economically unjustified.
In this context, the SAO has sent a proposal to the Ministry of Finance to develop a single transparent system and to adopt it on the Government level. Also, the SAO has suggested that the power of awarding bonuses to the management staff of public undertakings should be given to the Government.
In the "Consolidated report on the business operations of public undertakings, foundations founded by the government and legal persons governed by public law in 2001" also the Ministry of Finance has found that the quality of administration of shares varies considerably from one Ministry to another. It also came to the conclusion that several Ministries do not have an adequate overview of the activities of the companies they administer and that on the ministerial level companies are not managed in accordance with the objectives.
Sven Soiver
Press Representative of State Audit Office
Telephone: (372) 640 0787
GSM: (372) 53 414464
E-mail: [email protected]
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Posted:
8/28/2003 12:00 AM
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Last Update:
10/2/2015 4:48 PM
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Last Review:
10/2/2015 4:48 PM