Public Sector Governance by Mr Olli

Public Sector Governance by Mr Olli

• 1.
  Conference on ‘Governanceand Board Effectiveness in Public Sector Enterprises’ April11, 2012
• 2.
  State Ownership Steering-The Finland Case Study By: Olli V. Virtanen Virtanen Associates Oy Virtanen Associates Oy
• 4.
  Background in Finland After the WW2 state involved in heavy industries  Forest industry, metal and engineering, mining, fertilisers, tele…  SOEs accounted for about 20% of GDP (now 5-7%)  Companies poorly run, heavily in debt, state budget financed, and helped with periodical devaluations  Wake-up in the 1980s  Government statement on profitability in 1982  Concern over balance sheet and governance Virtanen Associates Oy
• 5.
  Development phase (late80s, early 90s)  Politicians recognised and approved development  Clean-up on Board of Directors  Abolishment of Supervisory Boards  Strengthening of the balance sheet  Stock market listings (SOEs)  No wholesale privatisations  Gradual expansion of ownership base  International capital markets  Last restrictions on foreign ownership abolished in -93 Virtanen Associates Oy
• 6.
  Structure of stateownership steering 126 PARLIAMENT 74 OPPOSITION GOVERNMENT PRIME MINISTRY OF MINISTER’S DEVELOPMENT MINISTRIES OFFICE AID MINISTER IN CHARGE OWNERSHIP STEERING DEPT. Virtanen Associates Oy
• 7.
  CATEGORIES OF STATEHOLDINGS Strategic interest Investor interest Companies with Companies with Strategic Special importance assignment s
• 8.
  STRATEGIC INTREST INVESTOR INTEREST Companies with strategic Companies with special assignments importance COMPANIES OPERATING ON MARKET TERMS SPECIAL ASSIGNMENT COMPANIES 1. OWNERSHIP STEERING UNDER THE PRIME MINISTER’S OFFICE 2. OWNERSHIP STEERING UNDER SEVERAL MINISTRIES Group 1 a Group 1 b Group 2 Altia Oyj Arctia Shipping Ltd) Alko Inc STM Arek Oy Boreal Plant Breeding Ltd Arsenal Oyj VM Art and Design City Helsinki Oy Ekokem Oy Ab Certia Oy OKM Destia Ltd Fingrid Oyj CSC-IT Center for Science Ltd OKM Edita Plc Finnair Plc Finavia Corporation LVM FCG Finnish Consulting Group Oy Finnish Seed Potato Centre Finnpilot Pilotage Ltd LVM Helsinki Business and Science Park Ltd Ltd Finnvera Plc TEM Kemijoki Oy Fortum Corporation Governia Oy VNK Mint of Finland Ltd Gasum Corporation Hansel Ltd VM Opetusalan koulutuskeskus Educode Oy Itella Corporation HAUS Institute of Public Management Ltd VM Raskone Oy Municipality Finance Plc 1) Horse Institute Ltd OKM (11) Meritaito Ltd Solidium Oy VNK Motiva Oy Suomen Erillisverkot Oy, State Security VNK Neste Oil Corporation Networks Ltd Patria Holding Oyj Finnish Aviation Academy Ltd OKM Suomen Lauttaliikenne Oy Finnish Industry Investment Ltd TEM Suomen Viljava Oy Tietokarhu Oy VM Vapo Oy Finnish Fund for Industrial Cooperation Ltd UM VR-Group Ltd (FINNFUND) (18) Veikkaus, Finnish Lottery for Finns OKM Yleisradio - Finnish Broadcasting Company LVM Yrityspankki Skop Oyj (20) VM
• 9.
  Key principles ofstate ownership steering  No separate state ownership code  Principles of ownership in Government Resolution  Separation of regulatory and ownership functions  In listed companies no state priviligies  Commercial companies run on commercial basis  Efficiency and profitability  State support measures equal to all  In all companies professional non-executive board members  No politicians, maximum one civil servant  Candidate Bank Virtanen Associates Oy
• 10.
  Responsibilities of theOwnership Dept. Source: Ownership Department  Located in the Prime Minister's Office, but not under the Prime Minister  Directly accountable to the Minister responsible for Ownership Steering  Ownership strategy, analyses and monitoring, legal matters and communications  Independent organisation enables sufficient ability to react and exercise criticism Virtanen Associates Oy
• 11.
  State role inSOEs OWNERSHIP STEERING CS CHAIR 1 Chinese wall CS APPOINTED CS 2 2 MEMBER OWNERSHIP SOE STEERING BOARD DEPARTMENT Virtanen Associates Oy
• 12.
  Premises and decisionmaking Source: Ownership department  Essential legislation, corporate governance, government resolution and statement by the Cabinet Committee  Parliament sets shareholding limits, allocates budget resources and approves incorporation arrangements  Decisions on sales and acquisitions and on the overall governing principles are made in government plenary sessions  The Minister responsible for Ownership Steering exercises the right of action and is accountable to the Government and Parliament  Companies operating on market terms are under the Ownership Steering Department in the Prime Minister's Office Virtanen Associates Oy
• 13.
  Lessons learned  Pragmatism Take your time  Motivate population (voters)  Focus on governance  Define categories for different interests  Find best people  Remember national interests Virtanen Associates Oy
• 14.
  Steps forward  StepOne  Owners will = Political will  Categorisation  Professionalism roles and responsibilities  Legal framework  Code  Step two  Competence, training  Evaluation  Driver’s licence Virtanen Associates Oy
• 15.
  Olli V. Virtanen Virtanen Associates Oy Hiidenkuja 6 B 4 02750 Espoo Finland Tel. +358-500-600462 [email protected] www.virtanenassociates.com Virtanen Associates Oy
• 16.
  Thank you VirtanenAssociates Oy