Photo: EPM Image Gallery
In recent days, the board of directors of Empresas Públicas de Medellín (EPM) accepted the resignation of Álvaro Rendón as general manager. However, the event sparked significant controversy because the mayor of Medellín, Daniel Quintero, had requested Rendón's resignation. Rendón responded with a letter highlighting the importance of discussing his departure with the board of directors and considering the potential implications for EPM's image in the capital markets. Other voices have joined the debate.
The situation EPM is currently going through has put the company's corporate governance in question. According to several experts on the subject, the logic behind the implementation of corporate governance practices at EPM aims to create trust, and consequently, the manager's exit should be motivated by objective and technical reasons. The truth is that the concern is related to lenders, credit rating, and bond trading. EPM is a decentralized entity created as an autonomous public establishment. Precisely, this legal nature endows it with administrative and financial autonomy and its own assets, with the municipality of Medellín being its sole owner.
On this occasion, it is necessary to refer to what corporate governance means in an organization of this nature; that set of structures, principles, policies, and processes that must ensure that any company improves its performance, generates value, and is competitive, productive, and lasting. Whatever the case or size of the company, there is a clear relationship between good corporate governance practices and the existence of competitive organizations, that is, capable of overcoming the challenges of the local and global environment, thus making better management decisions.
Good corporate governance is, in essence, a synergy and harmony between the agents involved in a company's operations: investors, senior management, employees, suppliers, and civil society in general. In this sense, corporate governance must ensure that communication and relationships between these agents are fluid, transparent, and participatory. For example, it is within its functions to guarantee and facilitate the participation of investors or shareholders in decision-making.
There are recommendation documents made in this matter by organizations such as the OECD (Organisation for Economic Co-operation and Development) and the European Private Equity and Venture Capital Association. But the truth is that any good corporate governance is based on three fundamental pillars. Firstly, a clear corporate identity, which defines a purpose and organizational values oriented towards the company's interests. Secondly, having a solid structure for decision-making; as this allows for the definition and differentiation of the roles and responsibilities of those involved. Finally, having a strict commitment to respecting and complying with the company's external and internal regulations, thus promoting transparency.
Nevertheless, corporate governance is not an issue exclusive to large companies. Today, markets are rapidly transforming due to the digital revolution, and the entrepreneurial ecosystem is more active than ever. As a result, corporate governance is an approach that has begun to be adapted in the functioning of both start-ups such as small and medium-sized enterprises. It is relevant that in that process of adoption and construction of good corporate governance, progress be made hand in hand with digital transformation processes, which allow improving participation and management processes within organizations.
The EPM case continues to spark intense political debate surrounding Rendón's departure, but this cannot overshadow the technical debate about what corporate governance entails. Amidst debates and theories, the truth is that the public services company of Medellín must comply with the guidelines of its corporate structure and keep political interference and public decisions, which do not align with its business nature, at bay.