Skip Ribbon Commands
Skip Navigation LinksHome > For media > Press releases > Execution of state ownership must be bolstered

Execution of state ownership must be bolstered

The ministries' work with board elections and ownership dialogue must be strengthened.  - Corporate governance must furthermore be adapted to the distinctive characteristics and risks of the companies, says Auditor General Jørgen Kosmo.
Published 11/28/2013 12:00 PM

Document 3:2 (2013–2014) The Office of the Auditor General’s supervision of the management of state-owned companies for 2012 was submitted to the Storting on 28 November 2013. The purpose of the supervision is to assess whether the management of the State’s interests complies with the Storting’s decisions and intentions.

For 2012 the OAG has found grounds for remarks on the ministers' administration of the State's interests under the Ministry of Health and Care Services, Ministry of Education and Research, Ministry of Trade and Industry and Ministry of Transport and Communications. Furthermore, the OAG has remarks on the implementation of the government's ownership policy.

Work on board elections and documentation of ownership dialogue must be strengthened The ownership exercised by the Ministry of Trade and Industry and the Ministry of Transport and Communications shows challenges concerning compliance with board election deadlines.

There is a big difference in the documentation of the ownership dialogue in the Ministry of Trade and Industry and the Ministry of Transport and Communications. While the Ministry of Trade and Industry generally has good routines, the Ministry of Transport and Communications has weaker and less systematic documentation. The execution of ownership within the Ministry of Transport and Communications is handled differently in the various ownership sections.

- The OAG questions whether the Ministry has ensured systematic documentation of the ownership dialogue, says Kosmo.

The regional health authorities' (RHFs’) management and follow-up of underlying trusts varies

There has been a positive development reflected in a more long-term perspective and predictability in the processes involved in establishing the frameworks and requirements of the trusts. There are nevertheless differences as regards how often the RHFs initiate formal follow-up dialogue with the health trusts, the board's involvement in the follow-up and the extent to which the follow-up regime is actually adapted to the characteristics and risks of the individual health trust.

The board of the South-Eastern Norway Regional Health Authority sets itself apart in being more passive in executing the State's ownership role compared with the other RHF boards.

- The performance requirements for the underlying health trusts have not been adopted by the board of the South-Eastern Norway Regional Health Authority and follow-up has been largely turned over to the administration, says Kosmo.

While companies with state ownership interests show progress in their work on gender equality and diversity, the ministries must do a better job of following up In recent years, companies with state ownership interests have increasingly initiated measures to promote gender equality and prevent discrimination of women and people with immigrant backgrounds. Nevertheless, many companies are unaware of the requirements and do not comply with the statutory activity and reporting obligations in their work on gender equality and diversity.

- More active follow-up by the ministries will better promote gender equality and counteract discrimination in companies with state ownership interests, says Kosmo.

The restructuring of Oslo University Hospital (OUS) has failed so far to produce clear improvements

Although progress has been seen in some areas, the restructuring of OUS has not provided clear improvements to date in treating patients or utilisation of resources. Even though the restructuring process resulted in responsibility for fewer patients, OUS has persistent challenges marked by bottlenecks, waiting times and failure to meet deadlines. Introducing more effective treatment chains still remains for several forms of treatment and there is significant potential for utilising expertise and working methods of the previously separate medical disciplines. In the OAG's opinion, the management has done too little to ensure the reduction of bottlenecks through restructuring.

The reorganisation of OUS did not clarify what was to improve, and when improvements can be expected.

- The OAG finds it disconcerting that such a comprehensive reorganisation was carried out without a plan for realising gains. In the OAG's opinion, it is crucial in future reorganisations that the owners secure a solid basis for ensuring that restructuring measures actually produce improvements, says the Auditor General.

Poor socio-economic effectiveness for rail freight transport

The Norwegian State Railway (NSB)'s freight business, CargoNet, has performed poorly and the company has consistently posted negative earnings, affecting NSB's bottom line and the State's dividend.

The Ministry of Transport and Communications' corporate governance has been weak and unclear. The Ministry has emphasised sector policy considerations in following up its ownership and accepted losses over time. While the Ministry has implemented measures to improve the framework conditions for the carriage of goods by rail, it has not been very successful in improving the competitiveness of rail transport.

- The Ministry of Transport and Communications has not responded to the OAG's questions about whether a continued and sustained lower dividend basis entails illegal subsidisation. We expect the Ministry to deal with the issue, says Kosmo.

Too much capital in companies managed by universities and university colleges

Over the years, companies managed by universities and university colleges have built up considerable bank deposits and other current assets, despite the fact that the companies are not supposed to have capital beyond what is necessary for daily operations.

- The OAG will emphasise the importance of owner institutions ensuring that the finances of the companies are appropriate and conducive to efficient and economically viable operations, says the auditor general.

The OAG's control for 2012 comprised 44 wholly-owned limited companies, 31 partly-owned limited companies, eight public limited companies (ASA), four regional health authorities, eight state-owned enterprises, six companies organised through special legislation, and 24 student welfare organisations.

Riksrevisjonen, Storgata 16, P.O. Box 8130 Dep, 0032 Oslo, Norway

Phone: +47 22 24 10 00

Org.nr: 974 760 843