Medellín’s Governance Crisis Spreads To Tigo Une: Federico Arango Toro Resigns Board Via Scathing Repudiation Of Mayor Daniel Quintero
“The recent acts under your responsibility as manager of EPM, and being mayor, as the president of its board of directors, reconfirms to me that the necessary identity of principles no longer exist to continue acting in the representation of EPM, for that I am presenting my irrevocable renunciation,”
With that paragraph (translated) terminating his short letter (full letter below), Federico Arango Toro resigned from telecommunications provider Tigo UNE’s board of directors after representing EPM’s interest as shareholder for the last 14 years.
Medellín Utility EPM once provided telecommunications services along with gas, electric, water and sanitation, but spun off its telecommunications operations in 2006 into a joint venture with global telecommunications operator Millicom, which operates under the Tigo brand name. This gave UNE (EPM’s telecommunications operations) the scale and technology platforms to stay competitive and deploy new technologies such as advanced mobile communications and fiber optic connectivity to residences and businesses.
EPM and Medellín’s sports & recreation utility INDER (Institute of Sports & Recreation) retain 50% + 1 share, with the rest belonging to Millicom corporate entities. Millicom is the operating partner of the joint venture. Until Sunday, Álvaro Rendón served as board member representing EPM’s interest.
Medellín Mayor Daniel Quintero has sparked something of a revolt in Medellín’s business community by allegedly interfering in the operations, governance and personnel decisions of several of Medellín’s institutions including the public utility EPM that generally is run at arm’s length from Medellín’s city hall and political infrastructure. The entire board (minus Mayor Quintero) resigned in protest of the Mayor’s repeated circumvention of the board of directors. This gained global attention as EPM owns and operates assets from México to Chile, and issues bonds on international capital markets. Fitch Ratings has already downgraded EPM’s credit rating in response to the turmoil, and some banks have refused to do business with the multibillion dollar utility.
One day after EPM’s board resigned in protest, the board of directors of business incubator Ruta-N resigned in protest, accusing the mayor of attempting to politicize the institution and appoint political friends, circumventing personnel and civil service policies.
This week, over 300 local entrepreneurs, business people and civil society actors signed a letter denouncing the mayor’s actions and governance, only 8 months into his term. When offered the opportunity to comment or respond, the mayor through his press representative declined comment for this article.