EPM Governance Crisis Deepens: New CEO Alejandro Calderón Chatet Resigns, 1 Week After Being Appointed

Finance Colombia has learned that EPM CEO Alejandro Calderón Chatet, named CEO and General Manager of the city owned multinational utility conglomerate, Empresas Públicas de Medellín (EPM) just one week ago on April 5, has submitted his letter of resignation the evening of April 12 to Medellín Mayor, Daniel Quintero.

The letter of resignation came just hours after a contentious press conference where Calderón wished to discuss his investment plan for the utility operator, but the press, including Finance Colombia, wished to delve into the numerous gaps and inconsistencies in his qualifications, including:

• He was presented in writing as having a Harvard MBA and degree from The University of California, Santa Barbara—He has neither, but does seem to have a Master of Liberal Arts from the Harvard Extension School.
• His resumé lists his work from 2016-2020 at a firm “C&C Gold” that he founded and owns and has a value according to records Calderón filed of $16,000 USD. During the press conference he stated that the company was inactive, begging the question as to why it was listed as his employment for four years, and if so, what were his activities.
• Other journalists brought up his alleged involvement with entities entangled with the Mossack-Fonseca “Panama Papers” scandal, and whether he was appointed out of personal loyalty to embattled Mayor Daniel Quintero, who is facing a recall campaign in Medellín.
• Finance Colombia’s questions were not answered during the press conference. Afterwards they were re-submitted to EPM. Those questions, now moot, were:
  • What is the largest team of direct reports (hire/fire authority) that Mr. Calderón managed up to this point in his career? (What function, what company?)
  • What is the largest P&L Mr. Calderón has been operationally responsible for—As a manager or executive, not as board member or advisor?
  • If C&C Gold (his company from 2016-2020) was an investment bank as he stated, what is the most outstanding merger, acquisition or capital raise that the firm can take credit for during that time period?
• Meanwhile, opposition Colombian senators leaked damning documents from the headhunting process where Mayor Quintero sought to appoint Calderón as auditor in Tigo UNE, the telecommunications company co-owned by EPM and global telecommunications giant Millicom. In the document, the executive search “headhunters” evaluated Calderon, citing his personal friendship with Mayor Quintero, that he sought to be the mayor’s “eyes and ears” inside of Tigo UNE, but he was not remotely qualified for the position as auditor. The headhunters also indicate that no, Calderón does not have an MBA from Harvard—as EPM later stated in a written communication, nor adequate experience for such an executive position as vice president, much less CEO. Finance Colombia was able to indeed confirm the veracity of the leaked documents.

Marcelo Cataldo, presidente de Tigo Une, pone a disposición del headhunter Carlos Rodríguez, la hoja de vida de Alejandro Calderón Chatet. pic.twitter.com/AcQYQLd0Nl

— Santiago Valencia G. (@sanvalgo) April 12, 2021

Since Quintero took his place at Medellín’s city hall, EPM, a multibillion-dollar corporation with operations from Mexico in the north to Chile in the south, has been plunged into scandal and crisis. The company which is supposed to operate independently according to a governance agreement, has billions of dollars of bonds in public debt markets, and its own rating, even though it is owned by the city of Medellín.

Timeline

1. December 2019 — Former CEO Jorge Londoño Resigned days before Quintero assumed office. Quintero publicly insulted Londoño during Quintero’s mayoral campaign, and Londoño didn’t want to be around to hand the baton to whoever the new CEO would be.
2. January 2020 — Mayor Quintero appoints Álvaro Guillermo Rendón Lopez as new CEO of EPM.
3. August 2020 — EPM’s entire board of directors resigns, except for the mayor himself, accusing Quintero of precipitating a collapse in corporate governance
4. August 2020 — EPM’s representative to the board of directors of Tigo UNE resigns in protest of the mayor’s governance and politicization of the entities.
5. August 2020 — Ratings firm Fitch downgrades EPM, citing a “deterioration of corporate governance.
6. August 2020 — Several financial entities with credit exposure to EPM suspend commercial relations with EPM, as revealed in a filing submitted by EPM to the Colombian government.
7. August 2020 — SINPRO, EPM’s largest labor union, holds a protest at EPM headquarters, and demands explanations for the CEO’s private gym despite the COVID pandemic, lease of an office complex in Bogotá, despite EPM being headquartered in Medellín. See Finance Colombia’s interview with SINPRO President Olga Lucia Arango here.
8. August 2020 — EPM announces a new board of directors, hand-picked by Mayor Daniel Quintero. The new board includes preschool teachers, politicians & attorneys, but is notably light on governance experience in large issuers of corporate debt like EPM.
9. January 2021 — At Mayor Quintero’s direction, EPM took legal action against the consortium of contractors building EPM’s Hidroituango hydroelectric project. Quintero moved several months earlier to initiate mandatory mediation. When those collapsed in January, Quintero instructed EPM to launch lawsuits against the consortium CCC Ituango, comprising Coninsa-Ramón H, Conconcreto, and Brazilian firm Camargo Correa.  Additional parties to the conflict include insurers Mapfre, Chubb, and Sura.
10. February 2021 — A conflict that has been simmering behind the scenes between Mayor Daniel Quintero and his own appointed EPM CEO, Álvaro Rendón becomes public, with the CEO of EPM daring Quintero to fire him, and accusing him of attempting a personal takeover of the utility, appointing friends and personal representatives, though EPM is expected to be independent and professionally managed.
11. February 2021 — EPM’s board of directors, installed by Quintero, fires Álvaro Rendón
12. February 2021 — Former CEO Álvaro Rendón denounces Mayor Quintero as a menace to EPM’s corporate governance and independence.
13. February 2021 — SINPRO, EPM’s largest labor union, warns the battles between Medellín’s Mayor Quintero and former CEO Álvaro Rendón are jeopardizing the health and stability of the conglomerate.
14. March 2021 – Rendón deposes Quintero: Colombia’s 18^thCivil Circuit Court of Medellin accepts a motion for evidence requested by former EPM CEO Älvaro Guillermo Rendón associated with a possible lawsuit, that requires a written deposition by Medellín Mayor Daniel Quintero.
15. April 2021 — Daniel Quintero via Twitter, & EPM via press release, announce Alejandro Calderón Chatet as the new CEO of EPM. In its announcement of the appointment, EPM clearly states (in Spanish) that Calderón is an economist with a specialization in business administration and economics from the University of California (it does not say which), and a masters in business administration (MBA) with an emphasis in finance from Harvard University. Both statements would later be revealed as false. Finance Colombia in its initial reporting, left out Calderon’s listed educational qualifications, because they seemed suspect.
16. April 2021 — Calderón holds a press conference with the media, while both the mayor and EPM send out statements in support of Calderon. Colombian media questioned Calderón’s qualifications, educational background, career, and connections with people implicated in the Mossack Fonseca “Panama Papers” scandal. Finance Colombia submitted questions, but they were not addressed during the press conference. Meanwhile, documents are leaked that show the headhunting firm that considered Calderón for a lesser position at EPM affiliate Tigo UNE rated him as significantly underqualified for the role.
17. April 2021 — The night of April 12, just hours after the press conference, Calderón submits a letter of resignation to Mayor Daniel Quintero.

EPM is now without a permanent CEO, facing lawsuits along with the challenges of finishing and bringing the mammoth multibillion-dollar Hidroituango hydroelectric dam online before facing a multimillion-dollar penalty for breach of electrical supply commitments, and facing the lawsuits of the very contractors building the dam, along with absorbing its recent purchase of the electrical utility for Cartagena and the surrounding regions. The Electricaribe purchase (now called Afinia) was organized by the Colombian government because the coastal provider, owned previously by Spanish utility Fenosa, literally “could not keep the lights on” and now faces significant capital investment and operational overhaul to bring local electrical service up to OECD and even Colombian local standards.

As if these challenges were not enough, Mayor Quintero himself is facing a recall election that was organized less than a year into his term as mayor of Medellín. He has somehow managed to unite labor and Medellin’s corporate leaders…against his leadership. The drama of the past 16 months has left EPM in a precarious position, struggling to maintain its managerial independence, corporate governance, and international creditworthiness.

Quintero’s appointment of Calderón in the first place, speaks loudly-in a very negative way, about Quintero’s own judgement or ability to govern effectively. Will Mayor Quintero and his board back off and seek professional, independent  management, or will they double down in their attempt to convert EPM into a tool of political loyalty? Will a professional CEO with the experience that EPM requires, even be willing to step into a politically charged dumpster fire? The next two months will be critical for the utility’s future.

Since his inauguration, Finance Colombia has, through his press secretary, offered numerous occasions to Mayor Quintero to interview, or even respond with comments to written questions. The mayor’s office has chosen not to engage.