»Do We Want to Be the Last Communist Country for another 25 Years, or Would Like to Have a Developed Market«

The Guest Speakers at the American Chamber of Commerce Business Breakfast discussed the current challenge Slovenia is presently facing; namely – how to manage the state property and which model of corporate governance would be the most appropriate. They expressed their critical, yet constructive evaluation whether a country can be a good owner and from their own experiences explained what the foreign investors search for and expect from us. They also stated some good practice examples from Slovenia and abroad. Special attention was devoted to the management responsibilities and to the role of good supervisors for a successful development of a company.

The round table was led by Peter Ribarič, M.Sc., who gained experiences in managing the companies – as the director and company supervisor of domestic and foreign-owned enterprises – as well at launching new companies.

When the top experts from Slovenia and abroad were asked for only one piece of advice on how they would, based on their own experiences improve the corporative management in Slovenia, they replied:

Damian Beaven, Partner, White & Case: »THINK BIG! « (»Think broad-mindedly! «)

Irena Prijović, M.Sc., Secretary General, Slovenian Directors’ Association: »We need small steps, I believe in a new culture and evolution. «

Matjaž Schroll, Executive Director, Templeton Emerging Markets Group: » Slovenia needs to decide what is wanted. «

Yuri Sidorovich, PhD., Managing Partner Deloitte: » Slovenia needs a new model: a fully open state. «

Yuri Sidorovich, PhD., Managing Partner Deloitte, began with expressing his thoughts that a book could be written about the worst cases of audit in Europe, as well in Slovenia. However, he continued more optimistically by pointing out that there have been some positive changes made in the last few years – in his opinion one of them is undoubtedly the opportunity when on an event such as the AmCham Business Breakfast is, the current and highly relevant topics are exposed and discussed and listened by competent people who are interested to follow, comprehend and understand the issue and afterwards seek a solution. According to him it has not been so three years ago.

To the question by Peter Ribarič, M.sc., whether Slovenia is a friendly country – perhaps even for criminals, Sidorovich answered with the example of the construction company Vegrad, where in his view extremely strange things happened. Namely, the audit house was authorized by the court to carry out an internal audit. However, since the management set on fire – and even admitted it- all the relevant and exhibit documents, nothing remained left for the revision. The decision of the judge to close the case since there no evidence against the accused party existed anymore came as an incredible surprise. As a comparison, Sidorovich pointed out the American case law in similar cases where the responsible would definitely end up in prison and bear heavy consequences.

On the other hand he finds it inappropriate that in Slovenia there are no praises or thanks expressed to the CEO at leaving a company in a sense: Thank you for everything you have done for us…, which according to his opinion results poorly in a long term within the companies and in a society as a whole. All too often, instead of gratitude, one gets the audit.

Sidorovich thinks that Slovenia for improving its corporate governance first needs to decide who we are and what we want – do we want to be the last communist country for another 25 years, or would like to have a developed market…

»Slovenia Has to Become a Fully Open State«

Matjaž Schroll, Executive Director, Templeton Emerging Markets Group pointed out that it is of essential importance for the future to make the analysis of Slovene business model in the past. He presented the comparison of work and development of Slovenia and Romania and said that Romania had about the same »set up« as Slovenia did, however the Romanian politicians were powerful enough to have performed the necessary changes. Templeton has been the manager of the state-owned enterprises in Romania for a year and a half. According to Schroll, there are difficult tasks ahead, but the will for big changes exists, the paradigm is turning upside down, the economy is increasingly becoming independent from the politics.

He also pointed out that there is no transparency in Slovenia and noted that good forensics can trace the »lost« assets. »Anyone who claims that the property or assets were lost is lying! « he explicitly expressed as well his surprise over the fact that there are not more lawsuits against company supervisors existing. In his belief the time is yet to come when more such suits will occur.

Schroll has agreed with Sidorovich, that the boards do not put enough pressure on the management. He also called on the Slovenian lawyers to detect and prosecute the »bad guys«. In his view it is typical for Slovenians that “everyone is sleeping with everyone” and it is therefore difficult to control and take action in such an environment. He also thinks that it is only a matter of time before the foreign investors will recognize their opportunities in our companies.

Schroll has according to his experience as a good practice example of the cooperation among owners, investors and supervisory boards exposed the company Studio Moderna and its owner Sandi Češko, who has in his opinion the vision and ability to raise the company to higher levels of business. Češko is able to distance himself from the operational work and stay focused on the strategy, and is furthermore with his vision able to see to the strategy and his excellent »TOP team«. Thus he manages to have successful influence on the decisions on the global level.

As concerns the business and the situation in Mercator he asked himself why the main owners do not for his rich experience ask Češko for advice what to do to retrieve the situation.

Schroll considers that Slovenia in order to improve its corporate governance requires a new model, which consists of the following three important facts:

1. Slovenia needs to become a fully open state

2. We can not any longer rely on banks

3. We need to privatize state enterprises

In his opinion, the realization of the three key points would move things forward. Accordingly, if one does not open oneself fully to the market, remains despite a good strategic position – uncompetitive. However, he stressed out that at the same time, that there are no alternatives for the three main points and there will thus not be any other opportunities for Slovenia. He praised certain measures made by the present government, and especially the Minister of Finance that have already set a few smart moves and solutions.

»Corporate governance is not a luxury, and not a hobby – but a necessity«

Damian Beaven, Partner, White & Case, said, that to him personally the corporative management means above all an opportunity for a good business. He pointed out that for a good business environment, a good government is required, which with its measures develops, promotes and maintains a good management. He also stressed out the fact that the corporate governance is not a luxury and not a hobby – but a necessity and advised Slovenia to focus immediately on this fact. »Consolidation is coming! People from other countries are watching you and are waiting for their opportunities. Therefore, be prepared for their arrival and try to make the best out of it, « Damian Beaven advised Slovenia.

He also pointed out the extreme importance of education, especially in terms of knowledge and awareness of people in order to assume their functions responsibly and at the same time with the necessary risk, the functions are bringing along – however not in terms of spreading fear, but with a good measure of positivism. At work it is helpful to observe and monitor the progress of an individual as such progress means a good investment for a company. He pointed out the importance of the creatives such as Matjaž Schroll is, who can lead the company to a higher level of business. Another important component in order to exit out the situation is in the necessary transparency of the country.

Beaven believes that for improving the corporate governance each country has its specific problems to be solved in their own way. He advised Slovenia to think broad-mindedly: »My advice to you – think big! «

»We need powerful managements and powerful supervisory boards«

Irena Prijović, M.Sc., Secretary General, Slovenian Directors’ Association:

According to her evaluation, we need powerful managements and powerful supervisory boards, as only in such a way the necessary harmony among the owners, management and supervisory board can be established.

In her opinion a good supervisory board should have the courage to expose itself and take bold decisions and should at the same time be aware that certain operations may be wrong and can thus »kill the patient«.

She expressed her belief that especially large companies tend to undergo big positive changes and that Slovenia needs small yet determined, culturally different steps in order to exit the present situation.

»Susak or Singapur – this is now the question«

Peter Ribarič, M.Sc., concluded the discussion with the following thought, namely that the smallness may bring limitation or advantage. He pointed out two alternatives, we, as a small country can choose: example of the Croatian island Susak, which is beautiful, yet abandoned, where on its idyllic cemetery one can find only a few surnames and on the other hand the model of a super successful Singapore. It depends on us what we will choose.