09:22 20.05.2021


To leave is the easiest, but not most effective, way to solve complicated problems

4 min read
To leave is the easiest, but not most effective, way to solve complicated problems

Clare Spottiswoode, Naftogaz Ukrainy Supervisory Board Chairwoman


The situation around Naftogaz can hardly be called ordinary. The easiest solution for each Supervisory Board member was to leave. But I am deeply convinced that constructive dialogue is the only way to avoid stagnation on the path of reform, one that allows us to go through the full cycle of transformation and avoid situational strategic course change.

Everyone who has children knows that in a case of a difficult dialog with a child, the easiest way is to say: ‘Do as you wish, just don't cry.’ But this path can lead to controversial results.

The main goal of the Naftogaz Supervisory Board is to protect the interests of Naftogaz and ensure the stability of its operations.

I am sincerely glad that we had a productive dialogue with the Government. This dialog allowed all five members of the Supervisory Board to accept the proposal of reappointment for up to one year on the terms of our previous contracts. I appreciate the fact that the Government fully supported the roadmap we shared last week. 

There are crucial things that I’d like to emphasize:    

•  The future development of the Company should be based on the existing and already approved strategy, without any further changes unless approved by the Executive Board first and the Supervisory Board next; 

•  We need to initiate and manage the process of transition to a future Chairman of the Executive Board starting no later than 1 November 2021 and previously respond to the outcome of the evaluation of the conflict of interest of the designated Chairman of the Executive Board under Article 26 of the Law of Ukraine “On Prevention of Corruption” and the risks it poses for the effective functioning of the Company (including with corporate partners); 

• To ensure the satisfactory assessment of the Company’s accounting policies in line with the requirements of Ukrainian law and IFRS standards; 

• To evaluate jointly the Company’s strategy, operating model, and senior team appointments with the designated Chairman of the Executive Board, as well as recommend and approve potential refinements and establish a process of leadership review, selection and change for the whole Executive and Supervisory Boards, as well as initiate the launch of an orderly leadership transition; 

•  To secure Supervisory and Executive Boards’ powers under the current Charter of the Company and other relevant regulatory documents; 

•  The Government commits to and publicly supports the Company to execute the offshore seismic program as planned, scheduled to be operational by mid 2021; 

•  The Supervisory Board and the Shareholder commit to retain the Executive Board in position until at least 31 December 2021 and enter into addenda to Executive Board members’ existing contracts; 

• The Shareholder confirms that a new (independent) member will be found to replace Amos Hochstein, while Robert Bensh will be terminated no later than 17 May 2021. 

We will carefully consider any good ideas and changes in implementing our roadmap that the Chairman of the Executive Board puts before us. In evaluating these ideas we will ensure that they make sense for Naftogaz, the country and are affordable. We are mindful of the contribution the company makes to the country’s finances. 

We are open to suggestions for new members of the Executive Board.  Obviously such candidates will be considered in a proper Board nomination and approval process.

We are also delighted that the Government not only wants us to continue the transformation of Naftogaz into a modern company, but to deepen and accelerate that process. We believe this is essential to deliver the results Naftogaz is capable of achieving. 

We are also delighted that the Government wants us to use our potential to increase gas production, continue market reforms and attract large-scale foreign direct investment. This accords with our own views too - with the obvious proviso that the investments must make proper returns so that we can continue to make dividend and other payments to Government and to invest for the future. 

To conclude, we, the Supervisory Board, are all ready to cooperate on these and other matters of the Company and Naftogaz group, with the Chairman of the Executive Board appointed by the Government. We will need excellent  corporate Governance standards to be upheld by all of us.