Rome plays Russian roulette with business top brass

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If they were to be judged on merit alone, the recent performances by the heads of Italy’s top trio of state-controlled industrial champions should have already comfortably secured their jobs and the renewal of their three-year mandates.

Paolo Scaroni, the chief executive of Eni, has strengthened the oil group’s position through a series of deals in Venezuela, Libya, Algeria and Angola, not to mention delicate negotiations in Kazakhstan and a significant alliance with Russia’s Gazprom.

Pier Francesco Guarguaglini, chairman and chief executive of Finmeccanica, has transformed the conglomerate into a focused aerospace and defence group.

Fulvio Conti, the boss of Enel, has over the past three years turned the national electricity utility into an international heavyweight through two transformational deals in Spain and in Russia.

The problem is that top appointments at these large, partially privatised companies, in which the state holds stakes of about 30 per cent, have traditionally involved arcane political considerations and compromises that have little to do with merit. And with Italy in the middle of yet another general election campaign, the political climate is inevitably more charged than ever.

But until this week, there seemed to be some encouraging signs that the outgoing government of Romano Prodi and the opposition led by Silvio Berlusconi had decided to adopt a sensible bipartisan approach in renewing the mandates of these three executives. It looked as if all three would be reconfirmed in coming weeks, irrespective of who wins next month’s election.

This was clearly expecting too much from a political establishment with a dismal record in its decision-making processes. In this case, the outgoing government originally said it would decide on these appointments before the election. Then, it suggested it would make no decision. Subsequently, it announced the decision would be taken on a bipartisan basis. Now, government and opposition have agreed to put everything on hold until June, well after the election.

The three managers should still be reconfirmed, especially if – as the polls suggest – Mr Berlusconi wins. All three were originally appointed by the media tycoon’s former government. But there is no rock-solid guarantee this will happen in Italy’s murky nomination system for state sector jobs. And once again, Rome is playing Russian roulette with its national champions, whose top managers can never be quite sure – however good they are – if there is a political bullet in the chamber that could strike them down.

There could be no more poignant example than the predicament facing Mr Conti on Thursday. The Enel boss will be standing up in London to deliver his annual results and announce his new five-year plan in front of the international investment community. Yet he will be doing so with no guarantee that the achievements of the past three years will secure him his job.

Return to sender

The German government’s decision to introduce a minimum wage for postal workers risks backfiring badly and turning into an embarrassing legal battle. A Berlin court ruled last Friday that the minimum wage was illegal, and on Wednesday Axel Springer sought to increase the pressure by threatening to sue the government.

The influential German publisher of Bild, the best-selling tabloid, and Die Welt, the more staid daily newspaper, has plenty to complain about. It recently made €572.4m in writedowns to cover its failed bid to set up a German postal service to compete against Deutsche Post, the country’s main postal company in which the government holds a major stake.

Springer last year took a 64 per cent stake in the now insolvent PIN group, which had sought to take advantage of the deregulation of the German postal market. As a result, the publishing group was pushed into reporting a €288m loss for 2007, a sum roughly equivalent to its profit the previous year.

Dutch group TNT, which had also been banking on German postal deregulation, has also expressed outrage over the introduction of a minimum wage for postal workers.

All this is highly embarrassing for Chancellor Angela Merkel. Deutsche Post and former chief executive Klaus Zumwinkel (who was caught up in the Liechtenstein tax evasion scandal) had successfully persuaded its political allies on the left of the grand coalition to introduce a minimum wage. This was not so much a socially responsible gesture to its workforce but rather a clever way of shielding it from competitors that clearly could not afford such largesse. So far, the chancellor has tried to duck the issue. But she will have to say something, especially if registered letters start flying from the courts.

european.view@ft.com

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