Naftogaz supervisory board head initiates Vitrenko dismissal

Clare Spottiswood, head of the Naftogaz supervisory
board, has called a board meeting to consider the dismissal of CEO Yuriy
Vitrenko, Interfax-Ukraine reported on June 16 citing the initiator. The
initiative is a consequence of the June 15 resolution from the National Agency
on Corruption Prevention (NACP) against Vitrenko and Spottiswood considers that
it is in the interest of Naftogaz, Interfax-Ukraine reported. According to
Spottiswood, PM Denys Shmyhal is obliged to decide on Vitrenko’s dismissal in ten
days.

Recall, the NACP ordered the Cabinet to
dismiss Vitreko as his appointment allegedly
violated anti-corruption legislation. Namely, the agency found a conflict of
interest in this appointment, as before that Vitrenko had occupied the position
of acting energy minister and had influence over Naftogaz. Legislation
prohibits Vitrenko from occupying top positions in Naftogaz for one year, the
NACP stated. Meanwhile, justice minister Denys Malyuska commented on June 15
that the NACP decision is impossible to implement as the Cabinet has no power
to dismiss the Naftogaz CEO.

Recall, Spottiswood and two other independent members
of Naftogaz supervisory board wrote a letter to Ukraine’s PM in early May
pointing at possible conflicts of interest in Vitrenko’s appointment. They also stated that
Vitrenko was never considered by the board “as a feasible CEO candidate.”
Vitrenko was appointed as Naftogaz CEO on April 28 by the decision of the
Cabinet, bypassing the company’s supervisory board. To make this possible, the
Cabinet adopted a scandalous ruling to temporarily dismiss the entire
supervisory board.

By Naftogaz charter, its CEO is elected and dismissed
through a shareholder meeting (i.e. by the Cabinet of Ministers) only based on
the recommendation of the supervisory board. The board consists now of three
independent members (including the head) and three government representatives.

Alexander Paraschiy: The
initiative of Spottiswood is in line with our expectations. Taking into account
that two other independent members of Naftogaz supervisory board share her view
on Vitrenko, it is highly likely that the board will vote for Vitrenko’s
dismissal (the votes of three independent members are enough to adopt such a
decision). In such a case, the Cabinet will have few reasons to ignore the NACP
order to remove Vitrenko.

However, if there is “no political will” in Vitrenko’s
dismissal, all the government representatives to the board would ignore the
board meeting and in this way block adoting the decision on Vitenko. This is
not an unlikely scenario, taking into account that the Cabinet yesterday stated
(via the justice minister) that it would appeal against the NACP resolution in
courts.

Meanwhile, we agree with the assessment of Spottiswood
that Vitrenko’s dismissal would be in the interest of Naftogaz: as we stated before, the
situation in which the CEO is surrounded by rival supervisory board members and
unfriendly executive board members would only generate conflicts in the
company.