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| The party line |
| Pierre Brian??on / Oct 01, 2009, 21:08 IST |
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French governance:  The press release reads like a statement from the politburo of a Soviet-era communist dictatorship: the ruling elite’s decision to back the great leader was “unanimousâ€. That’s the way it goes at Veolia, where directors of the French environment services group have bowed down to the wishes of the chairman and chief executive, Henri Proglio.
The board has instructed its nominations and compensation committee to devise changes to the company’s bylaws, with the aim of creating a new non-executive chairman job tailored just for Proglio. Directors also warmly congratulated the boss on his appointment as the head of EDF, the state-owned electricity giant.
It is a shame that not one member of the all-male board thought fit to object, given the serious governance issues raised by Proglio’s new dual role at the two companies. But it is not a surprise. At Veolia, Proglio saw to it that his board would be staffed with friends and allies who would support the mutual back-scratching that has long been a staple of French corporate life. They haven’t let him down at this crucial juncture.
In one sense, it is welcome that Veolia has suddenly seen the light and woken up to the virtue of having a non-executive chairman role separate from the chief executive. That it would discover this when Proglio is leaving, after ten years of one-man rule, is a sad comment on the willingness of Veolia’s board members to please the departing boss.
The new dynamic is already loaded with a major potential conflict of interest. Proglio wants EDF to sell Veolia its share in Delkia, their joint energy services company, in exchange for raising its stake in the water group. But who will decide on the deal’s valuation? Proglio the buyer or Proglio the seller?
The 14-member Veolia board reads like a “Who’s Who†of French corporate aristocracy, with – among others – the non-executive chairmen of Renault and Sanofi, the chief executives of BNP Paribas and Saint-Gobain, the head of Lazard Europe, and the chairman of state-owned Caisse des Depots. They probably don’t even see where the problem is - a scandal on top of the scandal.
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