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FONDUL PROPRIETATEA URGES THE MANAGEMENT OF ENGIE ROMANIA TO REVISIT THEIR CORPORATE GOVERNANCE POLICIES
Franklin Templeton Investment Management Limited UK Bucharest Branch, in its capacity of Investment Manager of Fondul Proprietatea S.A. (“the Fund”), announces that the Fund, acting as shareholder of ENGIE Romania SA, previously named GDF Suez Energy Romania (“Company”), has requested the convening notices of the Ordinary General Shareholders Meetings of ENGI Romania SA, a press release sent to ACTMedia informs.
The agenda of the meeting includes a request to the board of directors of the Company to present a report to shareholders concerning the procedures approved by the board of directors in relation to the sizable management and consultancy service agreements concluded by the Company with its controlling shareholder ENGIE SA (former GDF SUEZ SA) during the period 2011-2015. ENGIE SA is controlling the Company through its affiliate, Romania Gas Holding BV.
According to data available to the Fund, in 2015, the total value of these service agreements related to strategic and management consultancy amounted to an estimated RON 12.9 million (the equivalent of EUR 2.9 million). Based on the limited information made available by the Company, the Fund considers that the management and consultancy service agreements with the controlling shareholder were neither necessary nor appropriate, given that the Company has its own board of directors and managers, who have been appointed by the general meeting of shareholders with the purpose of making management decisions and acting for the benefit of the Company and of all shareholders and not the for the benefit of its controlling shareholder.
The Fund considers that entering into such service agreements can be also considered an abuse of power by the controlling shareholder, Romania Gas Holding BV (acting in the interest of its affiliate, ENGIE SA, and not in the interest of the Company and/or its shareholders). The Fund also considers that the service agreements concluded by the Company with ENGIE SA were needless and the price paid by the Company to ENGIE SA for the management and consultancy services was unjustified.
Over the last 5 years, the Fund has engaged on numerous occasions with the management of ENGIE Romania SA and pointed out the abusive nature of these contracts. The Fund has demanded further clarifications and requested the management to put a stop to this practice. We are pleased to highlight that as a result of our actions, the contracts identified by the Fund were no longer in place starting with FY 2016.
The Fund cannot, however, ignore the significant damages caused by the management and consultancy service agreements from 2011- 2015. Consequently, the Fund has initiated a court action in front of Bucharest Court against Board members and managers of ENGIE Romania SA for the recovery of damages caused to the Company by approving, concluding and performing management and consultancy service agreements with ENGIE SA between 2011-2015. The board members and managers against whom legal action was initiated are Eric Joseph Stab, Grzegorz Gorski, Alain Marie Louise Janssens, Olivier Bloeyaert, Mihai Adrian Albulescu, Gelu Stefan Diaconu, Maria Gabriela Horga, Pierre Marie Paul Chatain, Bart Josef Irma Boesmans, Valerie Marie Laure Limpens and Simona Claudia Dobre. These agreements represented a conflict of interests and a serious breach of corporate governance principles, in the Fund’s view.
The Fund considers that it is highly necessary to have in place monitoring controls to make sure such conflicts of interests are avoided in the future. Therefore, the Fund strongly urges the management of ENGIE SA in Romania to present a plan of measures designed to avoid the conclusion of any similar agreements with the Company in future.