Interview: EPM’s SINPRO Labor Union President Olga Lucia Arango Expresses Grave Concerns On Utility’s Leadership, Political Interference
As Finance Colombia has reported, EPM’s (Empresas Públicas de Medellín) largest labor unión, SINPRO, has issued several demands to the company to provide documentation regarding what it sees as extravagant expenses on offices in Bogotá (even though the company is based in Medellín and does not provide services to Bogotá), dishonesty, a lack of leadership, and the use of the utility as a political pawn in what it sees as the political ambitions of Medellín’s Mayor Daniel Quintero, not having completed his first year in elected office.
Finance Colombia has repeatedly requested comment from Mayor Daniel Quintero, through his press secretary, but to date has not received a response.
The normally quiet utility has been embroiled in controversy after the utility’s board of directors resigned this past summer in protest of what it saw as a collapse of corporate governance, and political meddling of the mayor in the autonomous company’s management and hiring. The turmoil led to a credit downgrade by Fitch Ratings, and widespread consternation throughout metropolitan Medellin that saw a rare alignment of labor and capital in displeasure with the mayor.
Finance Colombia’s executive editor Loren Moss was able to conduct an in-depth interview with Olga Lucia Arango, the president of EPM’s largest labor union, SINPRO. The original interview, in Spanish, is available in video. The English transcript follows below.
Finance Colombia: Well, I’ve been in Medellín for almost six years and EPM has always had since my arrival, relatively good relations between the management and their unions, their labor force and management, but now the situation seems more complicated, more complex. In recent months we have seen more political interference. Fitch, when it lowered its ratings of EPM, said that there was more political intervention at EPM, and that concern them.
One thing we have seen in EPM is that it is an organization that works like a multinational company, that the city is the owner, but EPM works as a company and owns assets in many countries, so it really functions as a multinational, and if someone is a good engineer, we are going to promote him or her. It is not because he or she has political leverage or something like that, you have seen some changes in how this recruitment process or as the norms in which the company uses, talking about work force, the role of the union.
Olga Lucia Arango: OK, but well, before that Loren, I want to be precise regarding what EPM is. Suddenly you may have heard between Colombians, or between the Antioqueños (People from Antioquia, the region of Colombia surrounding Medellín) that we call EPM the crown jewel, and why is that? Because it is a company that being public, whose funds are public, not private, that was constituted by the municipality 65 years ago, is a company that being public has been a very efficient company, so efficient that represents the municipality, whose owner is not the mayor, but the municipality, that for the community, represents more than a billion pesos a year in transfers that serve the city for its development, to invest in health, in education, housing, in recreation and infrastructure.
So any mayor who arrives in the city of Medellín with the support of a company like EPM is going to have very good management, because it will always have that case to invest in the city , so that’s why the mayors of Medellín historically have respected EPM’s management, because a municipality that has money is going to do things very well, as long as it is well respected and managed.
This crown jewel (EPM) Is that institution that we have always defended as autonomous, has always been governed autonomously and has been independent, right? In its management, although the mayor is the president of the board of directors, should not interfere in the management of the company, and that is what has happened now with what you were mentioning with agencies, the risk rating, that with that interference of the mayor in a company such as EPM, 100% public and autonomous, add political risk, his interference and immediately we were alarmed by this situation.
“…what he says is disconcerting, we are convinced he is a liar”–Olga Lucia Arango
And when the mayor begins to take a number of decisions, such as for example, taking to the Medellín city council a proposal to change the social objective of the company, we as a union are the first ones to sound the alarms and we began to carry out a series of forums with the community, with former managers, with former mayors, with the same council members, with academics, so at all the levels, with former ministers, representatives of the unions, in order to treat this issue as a community and have a vision of what the mayor wants and to where we can, as a community allow him this license that the mayor has requested.
But next comes another very sensitive decision, also for the company, which is a lawsuit as I call it, a demand for arbitration to the consortium that is building the Ituango project and it is also a decision taken by the mayor, but that was not consulted with his board, nor was the change of corporate purpose—neither that nor this suit. So that’s where the alarms of the risk qualificators come from, so here there is a clear intervention of the mayor in the decisions of a company that must be autonomous in its decisions.
So what have we lost? we have lost all the rigors, not only in the management of that autonomy of what is the corporate body of the company, what is in its board, that should be its board.
Before answering your question of the changes that we as a union have already seen, and I want to tell you, SINPRO is the union of professionals of EPM, because in 2006, a part of the company that was the telecommunications section, disappeared and went to UNE, right? So that’s why we have part of our members still in UNE, and that you also know that [half of] UNE was bought by a company called Millicom.
Finance Colombia: I’m connected with you by UNE right now.
Olga Lucia Arango: Of course, yes. Good, then, so SINPRO was born in 2002, in Luis Pérez Gutiérrez’s administration, who was our previous governor of Antioquia, in that administration, the employees saw a high risk. Also a political risk because the mayor at that moment also wanted to make some decisions that were very sensitive for the company and that put at risk its sustainability and viability. So that is when SINPRO was born, with 240 officials from inside EPM.
Even though there was a threat directly against the officials because we have a definition as official workers and that mayor wanted everyone to become public employees (municipal employees rather than of the company EPM). When we become public employees, then our meritocracy ends and we are subject to a term that is called ‘free appointment and removal.’
So the mayor, if he wanted, we would be removed from our positions and then he would appoint other people at his will, so there’s when SINPRO was born. This union that was born 18 years ago with 240 officials, now has about 4,500 workers, it may be more, we could suddenly be approaching 4,600 at this moment, but of those 4,600 workers, more than 4,000 of us are in EPM, and we represent 56% of the current workers at the EPM company parent. From that 56% percent there is 44% percent left represented in five other unions, so we are the majority union, we were growing in these 18 years ago, and for more than 5 years we are the majority union and so that’s why we are the leaders by nature of the company. I don’t know if you’re still listening to me Loren.
So, we became the natural curators of the company to care about the issues that correspond to us, and in our philosophy is the sustainability and viability of the company, to keep the company 100% public, in which there is always a healthy balance of what our company is and the employees, the well-being of our employees.
With previous administrations where we have been critical, for example with the issue of the sale of UNE to Millicom because in some circumstances we have been critical, or when we became a multi-latina and we began to grow organically into a number of countries, so there we also had criticisms, but despite those criticisms as always we are looking for sustainability and viability of the company, take care of the company, take care that this is done with the technical rigors, financial, environmental, social…
So when the company is threatened, we always are there to take care of it and to raise our voice towards the community, and tell them what is happening with the company, so these previous administrations well, yes. In some we have had criticisms, but then we are usually next to the company, usually positioned on the side of the company because it is that healthy balance we seek, if we have no company we will not have jobs, much less a good union, so what have we seen in this administration? That loss of rigor where very sensitive decisions are made that we consider wrong for the company if that autonomy of this company, because of those decisions and that interference by the mayor, the autonomy gets lost and there is a break with the corporate governance.
We lose that governance inside the company, where the current manager (Álvaro Guillermo Rendón) who we already have said should step aside, that he is not the ideal person to manage the company, because he doesn’t know it and because he is making decisions with a group of advisers that don’t know it either, so then we have seen changes in the structure of the company and in what the processes are, the selection that you wrote down, all this change in processes,
selection since we have it, we have reported it because they have more than 300, I think they maybe 400 appointments in this administration in a situation like the one you mentioned yourself, we are in a pandemic, where the manager himself sent an austerity notice and rationalization of expenses, and then it is not sympathetic that there is a notice in that sense, and that are making decisions that are affecting such aforementioned austerity as you have quoted in your writings, the waste in office issues…The office issues that have become unnecessary, and the same appointment of a number of people that in this time the company should be in total austerity but really even the violation of its own austerity notice, is not what seems most serious to us, but the decisions that have been taken and that affect the sustainability of the company.
Because those decisions, look…if we don’t finish the project at Ituango, which has to generate 17% percent of the country’s energy, that represents the energy security of the country, if we don’t start operating Ituango, the country will be greatly affected in its energy supply, we could have rationing of energy if we don’t complete the project in time. In addition to that, EPM is based on the culmination of this project, I mean, its sustainability is in the combination of that project, if the project is not finished, EPM’s sustainability would be seriously affected. In addition, we also enter the new market, which is CaribeMar operations, a fraction of what Electricaribe was, there we have some commitments.
At the beginning they told us that those commitments were of 5 to 6 billion, and today we are talking about 10 billion, so what was the initial investment of the Ituango [project], we are talking about another Ituango, and of course what is going to happen with the company financially post COVID, because this has affected us, so it affects the company and affects our users, so that is another issue that gets us very concerned, if we are thinking about sustainability and viability of EPM.
So if I explain myself, those are like the issues that concern us the most, the other decisions that are already made, in the loss of rigor, in which there is no connection with the management group, or the fact that decisions are being made by people who don’t know the company and in fact the that was said by the managers in their letters, they don’t know the company, they don’t know the management of the company and its acquisitions because it affects us a lot. Yes Loren.
Finance Colombia: I wanted to understand for example the mayor, who is director ,to name the manager of EPM and in a way as the president of the board of directors, he just officially announced that he has the right to appoint other officers or managers within or from EPM.
Olga Lucia Arango: Let’s see, the mayor has the power of to appoint the board, so it is with law 142 and so it is in the 2007 agreement framework. The framework agreement was celebrated between a mayor and [EPM] management which has been in place since 2007, respected by all the administrations following. He has the right to appoint the manager, despite that, he in his campaign promised he would name an ideal person for the management of the company and that was going to be done with a headhunter firm, from there is where it the lies start, because we are very concerned for all the lies that the mayor tells, so he has the right to that, but not the right to appoint officials within the company, because that’s what the manager is for, and that’s why the company is an autonomous company that makes its own decisions and the manager should be making their own decisions, now the manager himself has the power to appoint his first line of vice presidents, at this time that is about 12 VPs, that is the power of the manager, but historically already from that line to lower positions, other vice presidencies and the other management positions have taken other business rules, following all the rigor of a selection process and what is let’s say a merit contest, however the current manager has also accommodated the business rules with which we came then this year they have made several changes to make also a type of appointment that does not obey that transparency, to that ethic, to the rigor that we have brought historically Loren.
Finance Colombia: Yes, what do you know about the new board of directors? Do you have some knowledge with any of the members?
Olga Lucia Arango: Well, the new board of directors worries us a lot and not because we are defending the previous board of directors, it was a meeting that was coming with a rigor, right? With a knowledge of the company. Because it is very important that the board of directors also knows the company, so that the planning of the company is fulfilled and is not affected in the decisions they make, so it doesn’t affect the organic functioning of our company, so that is why is very important that in the framework agreement therefore is previously spoken of having at least, if I am not mistaken, there are three members that always continue in the administration, not the same ones, but they are having seniority, and what concerns us now with this board change? And it is first that you really don’t know the company, they are not members who know the company.
We don’t have, let’s say, anything against anyone in particular but they don’t come with that knowledge of the company, in fact they already took the first decision that was to support the mayor in that conciliation demand, in the first meeting without knowing EPM and to know all those dynamics, because a minimum of training is required, a training for the assembly members when they first arrive. A training that is done as managers and as public officials, so as I just mentioned, how can they take such a big decision and with a very high risk, and it is that decision they took without taking into account a matrix of risks; a matrix of risks that we already receive from right to petition that we have requested and we confirm that meeting didn’t consider the matrix risk, a risk matrix already which was there already but that this administration didn’t want to take it into account, because they saw that it was not convenient to its interests, but it is something that cannot be done by personal or political interests, but really at the interests of the operation of the company, so that the company can guarantee us that that it continues to be sustainable in time.
So, we think that first, we didn’t get to know a resume of the people as the mayor promised, we understand that there are three people of the community that, well, that are not qualified for such a position, right? EPM isn’t any company, it’s not any store, so the people have to be very qualified. On the other hand, it’s certainly visible the intromission of political groups in the inside of current board, so we are really concerned. There’s a lady, named Bernardita Pérez, who is a lawyer, that we believe is the most competent person, but I’m not sure how a single criterion could have balance there with other members who don’t know the company, so we are very concerned about the current board and the decisions that we already saw that have begun to take.
Finance Colombia: The mayor seems to not have the strategy of being conciliatory and it’s ironic because the name and the process that they have entered in is called conciliation, but for example, with other actors and other—let’s say people who count on EPM and haven’t tried to be conciliatory. And before being mayor he was against the, for example, the former mayor Londoño, but you still asked for some documents in a petition and he came out in El Colombiano calling out, saying that SINPRO has told lies, because I think, that he wants to try to negotiate or say look, If they say they want to be transparent, you ask for our documents, you ask why if there is a gym, if there are luxury offices, I know very well that building of GHL in Bogota, in El Salitre. How is the relationship between not only SINPRO, but you understand the climate within EPM, with the employees, how is the climate? How do the employees feel and why do you think he wants maybe more combat, using words in Spanish like “mentira” (lie) which is even stronger than what it is in English, what do you think is behind that tactic?
Olga Lucia Arango: Well since the mayor was pre-campaign, he began a smear campaign with EPM and with the Ituango project, and then he began to talk about the project and the employees of EPM saying that…I think you know a viral video and it is a conversation that we, as SINPRO we do in electoral campaigns, we do them with all candidates to know precisely what their position will be in front of the company, how the management of the company will be and what can we expect as workers from that future mayor.
So in that video, he had already said it in his campaign, that corruption ran through the veins of EPM, and I asked him: hey, come on, candidate you say that corruption runs through the veins of EPM, we, as employees of the company, what can we expect from his mayoralty and he says that it is not true, that we should show him where the video is, we show him the video when he says it in the council to Mr. Jorge Londoño, to the manager, and he brings him a case, so we demonstrated that he actually said that.
So from there we, as employees had many precautions with what to expect from this mayor, however, when he was elected, academia supports him, some economic unions as well, in short, people very connected from the city. We kept the hope that what he said before changes, as well as his perception and management. We had that hope, however, when he arrived to the company and months passed, we see that things keep being the same, so he spent his campaign, in first place, discrediting the company after saying that it was going to be the best, and that he was going to work with all sectors, and now he comes with a number of things that affect decisions, that are very sensitive, and that affect the company, so what do we feel at the inner core of the company?
Look, the word liar. He comes out with a bunch of things that confuses the citizenship, he wants to enter using the seriousness and rigor of our company in a social class struggle, in a struggle between the mayor and the economic group, which was represented on the board, so for us what he says is disconcerting, we are convinced he is a liar, we are convinced that he wants to confuse some sectors of the citizenship, the most numerous, those who support him, and on our side, inside of the company it’s a situation of a lot of uncertainty, stress, which is really concerning
Finance Colombia: It’s something that really impacted me as a journalist and business observer. It’s not something very common, it’s not an everyday thing when you see, from the unions to the businessmen all united, but it seems like the situation is very worrying here in Medellin, what do we know exactly? I don’t know if the management has answered your request. What do we know of the remodeling that supposedly was made by the general manager, a private gym, and I don’t understand, if EPM is based here in Medellín, those luxury offices that are being built near the airport in El Dorado (Bogotá)? To be more specific, have you learned more? They have submitted documents, what do we know about those issues?
Olga Lucia Arango: Well, that subject Loren is very delicate because when we make petition rights to the company, let’s not forget that our affiliates are our employees and we previously have the information of our employees. When we make a right of request to the administration, we already have it supported, but however we do it to have that official answer and we can go out officially and show what is happening, what is the situation that is worrying us, so in the case that you ask me about that right of petition on the issue of austerity on spending, on the remodeling of the offices, it was thought, as the mayor says, that SINPRO was lying, and that it was exaggerating a figure of 3 billion, and they answered us.
They answered with a made-up report, with a figure below the real one, so after the analysis we made from that response, as we already had it previously, we return and send it to our affiliates and to the press indicating the subject of these expenses are in this contract, therefore in this contract in there was a total of more than three billion (Colombian pesos). That was without identifying the carry the expenses of the office here in Medellín, which are close to 300 million, and the answer that they give us is that the expenses that were made are for 29 million, on behalf of the company and that the manager takes out of his pocket 31 million to invest in the office, an office that is public, that is not his, that is not his house, so this is the answer they give us and that the remodeling in those offices of Bogota are on a total of 645 million.
So we, with documents in hand, showed them that they are lying, that they haven’t told us the truth and we sent that comptroller and prosecutor’s office, which are the entities of control, so that they check it. First, the actions when the manager violates his own notice report, but also the actions when they respond to us in a public document, they respond to us with lies, right? And that is a lie, so these entities should start some investigations of the officials that respond and the manager as well. And to clarify a little what the remodeling consisted of, what we are less worried about is if [Rendón] has two machines in the office. If he took two machines from the gym on the 11th floor to his office on the 10th floor, that’s no big deal. What worried us is that they speak of report 1573.
I’m going to send you all those documents through the communicator so that they send you all those files, so in this notice, the report said that we should not incur any overtime spending and then with the issue of the gym is not because of the machines but because he relies on officials that accompany him in his physical conditioning, so he incurred in a few extra hours on Saturdays, Sundays and holidays, so the expenses there, which we didn’t even refer to in our findings, but it is also a further expense.
Also, the other hours he spends at this office; if you have ever been to EPM’s offices here, they were recently remodeled by the previous administration, that even was addressed because already when we entered the Hidroituango emergency and its rationalization, and in fact we still have a floor in the building that is not remodeled, which is the second floor, because of this same rationalization of spending. So yes, it is unreasonable that they spent on some absolutely beautiful offices, that would sober any public entity or even a private entity.
So the expenses here in Medellin are not that high, but the work was done close to $300 million and they didn’t respond to the right of petition, but also the office in Bogota. What you are pointing to is that the company leases the floor of the capital center building, and now he [Rendón] asked for more offices, enough for the activity that we have in Bogotá but now he asked for another floor for rent, which is floor 7, which represents 1,366,000,000. We are going to send you the contracts regarding that, so, a whole floor for what? And in addition it’s about 1,366,000,000 and he wants to put in around 1,700,000,000 for renovations to a facility that isn’t owned by the company, which is a waste, so we thought in this pandemic situation, you translate $3000,000,000 into food, into so many people, right? Because if one makes that conversion then a company like EPM doesn’t work like that, because of the high social responsibility. If they tell us we are going to invest 3,000,000,000 in food for this crisis situation, surely there would be no criticism.
Finance Colombia: I have seen the arrangement or act of EPM when they said that there is austerity, I have seen that and it seems curious, as if they say that they cannot spend on this or that, but we are going to do like a luxurious super-installation, not in Medellín, not in their own building, not in…I wonder about Bogota, I don’t understand what’s the relationship…Having a presence because is the capital and for legal and legislative issues but it seems a bit too much, I don’t know, maybe there is a reason, but I find it curious and it is something that we want to investigate more. You’ve been very generous with your time; I have one last question…
Olga Lucia Arango: But I can answer the question, when I can talk, everything I am saying is reality and I’d like that you as a journalist, you have the whole panorama. The objective of that office in Bogotá is something that we are very concerned about due to the interference that we have seen in politics from the city of Bogotá, so the concern is—and maybe you realized that in the beginning that many of the members that they appointed for the new board, they came from the city of Bogota so what worries us is that a company that has been antioqueño, paisa, is being transferred in its direction to the city of Bogota, right? That we lose control of our company and that’s our reality, we are a local company, right?
Finance Colombia: I’ve been told that there is a plan to jump to the presidency and he [Mayor Daniel Quintero] is trying to create a base of support in Bogota in order to have followers already in charge, and who politically owe him if his next step is the presidency.
Olga Lucia Arango: That’s right. So that is what we are concerned about, the migration happening with the control of the company to the city of Bogota, so we presume that for that end he wants very suitable facilities and offices, more capacity and more comfort, and there’s something we cannot forget Loren, if you don’t have on your radar and that is the origin of the present manager, who being from Antioquia, but has lived many years in Bogota and his companies are indeed in Bogota. In fact, we are going to file another right of petition to ask, how many days from all of these eight months has Mr. Guillermo Rendon spent in Bogota, and how many days in Medellin, because…
Finance Colombia: That’s something we would like to know.
Olga Lucia Arango: That point is the one we have to root for, and you had another question which I interrupted.
Finance Colombia: We have asked many times for the mayor through his representatives; we have said that we want to give him due space and they are never interested, which is fine, we are not allied with any side, I don’t know any supposedly group here in Antioquia, we are not part of any plot, but our readers, there’s a lot of interest in the owners of the bonds, buyers and the investors, and many are asking what is happening in EPM? What is happening, not only with Hidroituango, and what would be your message to the investors, who are also counting and have trusted on EPM? What would be your message to the international world, the multinational banks, who have supported EPM, Ituango and all of that?
Olga Lucia Arango: Well, the funds have told me that they are worried about the political interference of the mayor, right? So what can we tell them? That is a risk for the sustainability and viability of our company that the mayor manages our company, that is autonomous, is being managed as if it were a dependance of the mayor’s office, that such interference harms the corporate government and the decisions that are made, because they are not making them with the rigor that the company requires as a public company of Medellín.
With this interference, you lose all the rigor that our company has brought, you lose the planning, which was carried out and you lose continuity of the important decisions of the company to complete projects such as Hidroituango, culminating inclusion the incursion in CaribeMar and the real finances of the company post-Covid and the situation in which the company would be post-Covid, and that is what concerns us when decisions are made that are not adjusted to the rigor of the company and even more, our concern is that decisions are made by people who do not know the company and not with us, the employees who know it and who have taken it to the efficiency that we have demonstrated in 65 years.
Finance Colombia: Yes, I’ve always said like wow, I’m very satisfied, and not as a journalist but as someone who lives here. When I travel I say wow, as in Medellin the utilities were as good as in Europe or the US, we don’t have blackouts in the neighborhood, we have fiber optic as good as in the US, we don’t need backup batteries here as in the Caribbean, as in other countries, and one thing that scares me and now I speak as a resident more than as a journalist is that I’m worried as a consumer about mismanagement and what would happen next? They would have to increase the rates. There are many companies that when they think where to invest, they ask how much a kilowatt of electricity costs, how much energy costs and here we have very competitive power and rates. It turns out to be cheaper to operate here than in many other places and also as with your mobility, you do not have to put in so much extra equipment. In other countries you have to put in super generators and motors because the light always goes out the Caribbean.
Olga Lucia Arango: Yes, we work to serve, to provide excellent quality services and that is what makes us recognized.