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Still too little active follow-up of the State’s ownership policy

The owner ministries do not have sufficient information to be able to follow up the companies in a satisfactory manner. Several of the investigated companies have moved into new areas of activity in recent years without the owner ministry having adapted their follow-up to the companies' new activities. - It is a serious matter that the ministries fail to request relevant information to ensure good follow-up of the Norwegian State's ownership goals, says Auditor General Jørgen Kosmo.
Published 1/17/2012 12:30 PM

Document No 3:2 (2011-2012) The Office of the Auditor General’s control of the management of state-owned companies for 2010 was submitted to the Storting on 17 January 2012. The goal of the control is to assess whether the State’s interests in companies have been managed in accordance with the decisions and intentions of the Storting.

The exercise of ownership is not sufficiently adapted to the distinctive nature of the companies

The Office of the Auditor General's control contains several examples of cases in which the owner ministries have done too little to follow up the companies in accordance with their distinctive nature and the purpose of state ownership:

  • In recent years, a considerable proportion of the profit from Statkraft SF has been invested in new geographical areas and forms of production. In the Office of the Auditor General's view, the Ministry of Trade and Industry has not followed up these investments to any great extent.
  • Mesta AS was to compete for new assignments in the years after it was hived off from the Norwegian Public Roads Administration. At the same time, the company had a substantial contract portfolio which was protected against competition. During these years, the owner ministries failed to follow up the company's results from the parts of their activities that were exposed to competition. This resulted in Mesta experiencing major financial problems after the protected activities were discontinued.
  • Statoil ASA is to be run on a purely commercial basis. For this type of company, there are clear expectations in the ownership reports that the State will formulate targets for financial returns and dividend expectations, and communicate them to the company. So far, the Ministry of Petroleum and Energy has not adopted and communicated targets for a financial return and dividend expectations for Statoil in accordance with the expectations stated in the Government's ownership reports.

In the Office of the Auditor General's opinion, the company legislation and other framework rules stipulated by the Storting leave considerable room for more active exercise of ownership in relation to these companies.

Weak follow-up of sector policy goals

Figures from the Norwegian Patient Register show that there are still great regional differences in the allocation of rights to necessary health care. In the Office of the Auditor General's opinion, this entails a high risk that the practising of patient rights will differ depending on which health region the patient belongs to. The reporting of results shows an increase in the proportion of patients placed in hospital corridors in three of four health regions.

In 2010, the regional health authorities/health trusts purchased health personnel temp services for more than NOK 650 million. Twenty-five per cent of the total temp service costs were paid to suppliers without framework agreements with the regional health authorities/health trusts. The regional health authorities/health trusts have not established systems that show whether purchases from suppliers without framework agreements are due to inadequate capacity on the part of contract suppliers or non-compliance with the regional health authorities/health trusts' ordering procedures.

The Office of the Auditor General's investigation shows that Nettbuss has not had a significant effect on the proportion of public transport use in the passenger traffic market, and that the Ministry of Transport and Communication has done little to follow up the Storting’s goals for the development of public transport. In the Office of the Auditor General's view, this is not compatible with the importance of the Norwegian State Railways’ (NSB) bus operations as a government policy instrument in the public transport area.

Weak return in several companies with commercial goals

Several companies with commercial goals have experienced weak returns over time. This applies to Mesta and Baneservice, among others. During the period 2006-2010, Mesta's average annual return was minus 7.6 per cent.

Executive pay in the regional health authorities/health trusts

The Office of the Auditor General's control shows that wage growth for executive personnel in the regional health authorities and health trusts has been higher than for other personnel in these enterprises. Appeals for moderation have been particularly strong since 2007. Nonetheless, wage growth among executive personnel in regional health authorities/health trusts was higher in the period 2007-2010 than in the period 2003-2007.

External auditors

The Office of the Auditor General's survey of the State’s owner follow-up of the assignments and independence of external auditors shows that the State as an owner often has a potential for more active use of external auditors in its follow-up and control of the companies. This applies in particular in cases where the State does not follow up in other ways whether the companies operate in a cost-effective manner and in accordance with the rules on subsidisation and cross subsidisation.

The document can be downloaded via the link on the right. Public institutions can order the document from the Government Administration Services, tel. (+47) 22 24 20 00, publikasjonsbestilling@dss.dep.no. Others can order it from Fagbokforlaget AS, tel. (+47) 55 38 66 00, offpub@fagbokforlaget.no.

The deferral of public access to documents prepared by or for the Office of the Auditor General in connection with Document No 3:2 (2011-2012), cf. the Act relating to the Office of the Auditor General section 18 second paragraph, is hereby set aside.

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