Finance Colombia » In Deepening Crisis At EPM, Labor Union Demands CEO Explain Private Gym, Luxury Office Remodel Despite Austerity Orders

Adding to the turmoil at EPM (Empresas Públicas de Medellín) since Medellín’s mayor Daniel Quintero took office and appointed CEO Álvaro Guillermo Rendón (above photo), the utility’s primary labor union SINPRO has issued a public demand for information on Rendón’s alleged multi-billion peso office remodel, and installation of a private, personal gym, even though the company headquarters already has, just on the next floor from Rendón’s offices “one of the most complete and well equipped gyms in the city.” “Please explain to us how circular 1573 of April, 22, 2020 referring to austerity measures and rationalization of spending was complied with in this remodeling and adjustment, and if the general manager (Rendón) authorized them,” asked union president Olga Lucía Arango Herrera in a formal petition to EPM. The union alleges that the cost of these luxury upgrades in the public utility along with new luxury office leases and remodeling in Bogotá’s Capital Center would be worth at least $900 million pesos, or approximately $778,000 US dollars. Though EPM’s headquarters are in Medellín, the union is demanding information about Rendon’s lease of luxury office space in Bogotá and extensive discretionary remodeling he has allegedly contracted while ordering the rest of the company under austerity measures. In 2003, EPM General Manager Edith Cecilia Urrego was fired after caught purchasing approximately $50,000 of tableware with company money. The union’s demands come while EPM is in a crisis caused by Medellín Mayor Daniel Quintero and his CEO, Álvaro Rendón by ignoring the board of directors and taking major decisions such as issuing a $9.89 billion peso lawsuit (approximately $256 million USD) against several contractors, without discussing or even informing the board. This could cause contractors to halt the already late project, increase costs, and delay the facility coming online. Mayor Quintero also blindsided the board and EPM investors (though EPM is owned by the city of Medellin, it is operated as a private company, ostensibly insulated from political tampering) by announcing that he would be transforming EPM into a company involved in tourism, software development, and highway tunnel boring. The board of directors resigned in disgust, and almost immediately Fitch Ratings downgraded EPM’s credit & default risk rating. EPM is a significant issuer of bonds in the public debt markets. Medellín’s business community is in open revolt against the mayor, and multiple board members have refused appointments, even after the mayor publicly announced them. Rendón was also subpoenaed last week for his failure to respond to earlier subpoenas by Colombia’s JEP (Special Jurisdiction for Peace) human rights tribunal regarding EPM’s possible obstruction of investigations into the remains of victims of Colombia’s armed conflict taking place where EPM’s Hidroituango hydroelectric dam was being constructed. Though the possible violations would have taken place during earlier leadership, the JEP charges Rendón with ignoring the legally binding subpoenas. Should he continue to do so, he is subject to arrest. The original petition filed by the union appears below (click to enlarge).