Five Naftogaz board members officially reappointed

At its May 19 meeting, the Cabinet of Ministers voted
to re-appoint five members of the Naftogaz (NAFTO) supervisory board “for up to
one year”, PM Demys Shmyhal wrote in social media the same day. The five board
members, who decided in late April to resign as of May 14, agreed to be
re-appointed, Interfax-Ukraine reported.

Recall, last week, lb.ua news site reported that the
five insurgent supervisory board members listed the conditions under which
they would be ready to stay, including no changes of their working conditions
for one year, no management board reshuffle in the company for one year, as
well as the firing of the sixth board member, Robert Bensh.

In her comments to Interfax-Ukraine on May 20, the
head of supervisory board, Clare Spottiswood, officially listed the conditions
under which the board have agreed to stay for up to one year, thus confirming
the information provided by lb.ua. The conditions are: 1) no changes to the
approved company strategy, unless they are approved by the board, 2) initiation
of the process of the new CEO selection by Nov. 1 and concluding an assessment
of the conflict of interest  that CEO Vitrenko
may have, 3) ensuring that the board’s power, as prescribed by legislation, is
not undermined, 4) ensuring that there are no changes in the executive board by
end-2021, 5) the vacancy of the new independent board member will be filled,
while Bensh would be fired no later than May 17. At this stage, it is not clear
whether the government has fully accepted such demands (at least, there is no
information that Bensh has been fired from the board, while his biohgraphy is
absent in the list of Naftogaz board members on the company’s website).

Recall, the supervisory board members were unhappy
with the Cabinet’s decision to replace Andriy Kobolev with Yuriy Vitrenko as
Naftogaz CEO on April 28. To make this appointment happen (bypassing the
supervisory board), the Cabinet dismissed the entire supervisory board of
Naftogaz on April 28, and re-appointed it just after it made the CEO
replacement.

Alexander Paraschiy: On the one
hand, this re-appointment secures the continuity of the company’s strategy developed
under CEO Kobolev. On the other hand, neither the Cabinet, nor Vitrenko seem to
be happy with that strategy, – otherwise Kobolev wouldn’t have been fired.

Clearly, the Cabinet’s move to re-appoint supervisory
board members was a result of pressure from the IFI community. However, it does
not look optimal for Naftogaz, in our view. The supervisory board and executive
board, which are hostile to CEO Vitrenko, will inevitably lead to internal
conflicts which promise nothing good for Ukraine’s biggest company in the
coming months.