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 11^th floor to his office on the 10^th 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.

Here in Colombia, Cartagena has had a notoriously corrupt city administration. Newly elected Mayor William Dau was voted in on an anti-corruption platform and has quickly made some very powerful enemies taking on criminal structures. Bogotá’s political/civic culture can be described as “battle royale” where it is everyone against everyone: Private sector vs. public sector, north side vs. south side; each new administration seems to try to undo and reverse everything that was done before. Many remember former mayor and now Senator Gustavo Petro’s garbage fiasco where trash piled up on the streets of Bogotá in 2012 as Petro unilaterally canceled contracts with sanitation contractors—without a viable plan to replace them. Corrupt contractors are still in jail over the “Carrusel de Contratos” scandal where politicians and corporate thieves conspired to rob millions during the construction of Avenida El Dorado, the main thoroughfare leading to Bogotá’s international airport. Petro kept the fares on Bogotá’s Transmilenio bus system artificially low to buy popularity, creating an operating deficit and financial crisis that the following administration would have to fix, and automatically vilifying whoever would follow and have to make unpopular, drastic corrections.

On multiple occasions, Finance Colombia has reached out to Mayor Daniel Quintero for comment (on various issues), who through his press secretary has refused comment or reply.

On the other hand, Medellín’s professionally managed metro runs on-time, is clean and safe, and used by riders of almost every socioeconomic stratum. Medellín has continued to win international accolades throughout the years, hosting the World Economic Forum’s Latin America event in 2016, several UN events, and many delegations from foreign municipal governments to learn best practices. Many visit the city’s Ruta-N business and entrepreneurship incubator that can be credited, along with ACI (Agencia de Cooperación Internacionál), the city’s investment promotion agency with bringing countless jobs and investment to the Aburrá Valley; home to Medellin and its immediate suburbs like Envigado, Sabaneta, Itaguí, and Bello.

The city is home to several multinationals: Bancolombia, Colombia’s largest Bank; Grupo Sura, an insurance, investment & health care giant; Cementos Argos, which as a cement producer is the 4^th largest in the United States and exports to 27 countries; Nutresa, which is like a Latin American Unilever or Nestle, and newer companies like Viva Air. More precisely in the Medellín Suburb of Rionegro, the low-cost airline operates routes throughout Colombia & Peru, to and from the US, and is currently in expansion mode despite the COVID-19 Pandemic.

EPM Headquarters Building in Medellín’s Plaza Mayor

Another multinational with a very unusual business model is EPM, Empresas Públicas de Medellín. The public utility is responsible for sanitation, sewers, water, electricity, and natural gas in Medellín and much of the surrounding suburbs and rural areas. In a joint venture with global telecommunications provider Millicom called Tigo Une, it provides faster residential internet service than is available in many US cities. Earlier this year, they purchased the formerly insolvent utility networks of much of Colombia’s Caribbean coastal region. EPM already owns utility operations outside of Colombia, with assets of the multibillion-dollar company stretching from Chile to Mexico. EPM, though it does issue debt on international markets is not a publicly traded company. Neither is it a municipal utility. It is a separate company with professional management and (up until now) a board of directors to provide corporate governance, but with the city of Medellín as the sole shareholder. In the form of dividends, EPM provides almost 30% of Medellín’s municipal budget, but the key to this arrangement has been that it operates as a separate entity, expressly not part of the municipal administration, but of course with the city’s input. The mayor by statute is the chairman of EPM’s board of directors and has prerogative to appoint the CEO. As shareholder, the city also appoints board members.

A breath of fresh air?

Many in Medellín were pleased to see Daniel Quintero elected last year as a “breath of fresh air” and change from the traditional power families that have controlled politics, especially as he defeated Alfredo Ramos, son of a former governor and member of Centro Democrático, the party of “Uribistas,” personal acolytes of former President (now under house arrest for witness-tampering charges) Alvaro Uribe. With Medellín & surrounding Antioquia Uribe’s home turf (he was both mayor of Medellín & governor of Antioquia before becoming president of Colombia), it was something of a surprise that this local who was raised by a single mother who died when he was just 14 in a mostly poor neighborhood (Tricentenario) won the election. As a youth, Quintero worked as a street vendor struggling to put himself through college. No one knew quite what to make of him.

Quintero had politicked at different times as a member of Colombia’s Liberal Party, Conservative Party, and Green Party before establishing the “Tomato Party” as a publicity stunt to get himself noticed (see the headline photo). He gained attention by throwing tomatoes at pictures of politicians and people he didn’t like, such as Alvaro Uribe and then President Juan Manuel Santos, though he decided to support Santos’ re-election in 2014. He was then rewarded with the political appointment of running InnPulsa, Colombia’s national entrepreneurship promotion agency, then becoming vice-minister for ICT (Information & Communication Technologies) under Santos. In the last presidential election, Quintero initially supported mainstream liberal candidate & peace negotiator Humberto De La Calle, before switching his support to controversial former mayor of Bogotá Gustavo Petro’s (mentioned above) candidacy.

So no one knew what to expect, though it is clear they wanted more of the vice-minister of technology or InnPulsa director than the tomato throwing stunt man who once handed former EPM general manager Jorge Londoño a chunk of cheese (nonverbally calling him a rat).

A whiff of Limburger—stinky cheese.

Finance Colombia being primarily a business and finance publication rather than a political journal, heard some low intensity criticism of appointments that Quintero had been making in the city administration and the way he was making them, but did not actively pursue the stories at the time. Quintero made some other moves that seemed politically silly, such as writing the Cuban government to ask for doctors to help with the COVID-19 pandemic. Regardless of the merits of Cuban medical missions (which are very dubious), it is inconceivable that the current national government would permit such activity, and the action could only embarrass the mayor, which it did. Finance Colombia chalked it up to benign political inexperience.

The mayor also fought back a scandal where he was accused on social media of inappropriate sexual conduct before he was mayor, but even more ominous was his reaction to the press, which brought condemnation from Colombia’s Foundation for Press Liberty, FLIP:

“FLIP was able to document that Quintero personally pressured media executives and pointed out journalists as being opponents of his administration as a way to avoid questions about matters on which he must be held accountable…In events related to this situation, administration officials tried to force national and local media to improve the image of the mayor in exchange for advertising. Telemedellín (City government’s official TV channel) officials asked W Radio to rectify a truthful publication and also that the media agree to subscribe and publish a joint statement with Telemedellín to disseminate as true a situation that did not correspond to reality,” said the journalism rights defense group.

In other words, “I will buy advertising with your paper if you help me bury this scandal.” FLIP also denounced the mayor for pressuring newspaper El Espectador to block coverage of the scandal. According to FLIP, and El Espectador’s own account of the misdeeds, the publisher, Fidel Cano, responded by sending the questions to the mayor that his reporters had been trying to ask. “The mayor of Medellín assured the director of the newspaper that he would take legal action if the publication affected his reputation” (he never did).

All this so far and the mayor has served only his first 8 months of a 4-year term.

The mayor’s official press conference, canceled at the last minute, crowing “Why Medellin is the world’s standard in the assertive management of Covid-19” as cases in the city began to skyrocket

On June 27, the Quintero administration scheduled a press conference titled “Why Medellín has one of the lowest contagion and mortality rates in Latin America?” scheduled for July 2^nd, and led by Daniel Quintero himself, backed by Andree Uribe, Medellin’s Secretary of Health, Alejandro Arias, Medellín’s Secretary of Economic Development, and Eleonora Betancur, the director of ACI Medellin. The day before the press conference, it was abruptly canceled. It seemed the mayor wanted to take credit for good news but avoid bad news. The headlines that day in El Colombiano, Medellín’s largest daily? “100,000 cases of Coronavirus in Colombia, Where are we going?” and with 40% of ICU units full, “Doctors of Antioqua appeal for total & obligatory quarantine.”  The last weekend of August the ICUs are now 70.79% full. The day the press conference was to be held, a headline in El Colombiano announced a coronavirus outbreak with 36 infected in the La Paz prison in Medellín’s southern suburb of Itaguí.

The cases—and deaths were just beginning to skyrocket and two months later Colombia has one of the world’s worst mortality rates on a trailing 7 day average. According to the Colombian government, Antioquia department (Medellín is the only large city in Antioquia) alone has had 77,709 cases so far. Colombia now has over 18,000 deaths from COVID-19, most within the past two months. 1,603 in Medellín & surrounding Antioquia.

Last month, EPM general manager Álvaro Guillermo Rendón announced a memorandum of understanding with InnPulsa, the same national government agency formerly run by Quintero himself, that would, if more than just talk, “convert EPM into a laboratory of smart cities, the 4^th industrial revolution, and the orange economy.” All well and good (maybe, but that doesn’t sound like the function of a utility), but what the public did not know was that this fundamental change in corporate strategy and negotiations with the national government were worked out without the knowledge, discussion or approval of the company’s board of directors. EPM was being treated not as a separate entity but part of the municipal administration.

OFFICIAL STATISTICS: As of August 28th, Antioquia had 77,709 total COVID-19 cases, 1.603 deaths and hospital intensive care wards were over 70% of capacity over 80% of Antioquia’s cases are from metro Medellín.

The $2.7 billion dollar WTF

On August 10, EPM sent out a press release (and the mayor tweeted) that EPM would be initiating legal proceedings in the amount of  approximately $2,7 billion US dollars against the consortiums responsible for construction of EPM’s troubled Hidroituango dam that suffered catastrophic setbacks due to unexpected flooding in 2018 and design flaws that were thus revealed. Whether such legal action is a good idea is debatable: On one hand there certainly were defects that have cost the company millions and delayed the project by over a year. On the other hand, litigation could potentially bring the project to a halt, as EPM is still depending upon the parties it is suing to complete the project before certain deadlines, or it faces economic penalties in power generation commitments of over $150 million USD. It is also far from certain that EPM would prevail in its legal crusade against all the parties named, some of which have nothing to do with the construction defects that led to a tunnel blockage during construction.

The shocking thing is that Mayor Quintero along with Rendon and Alexander Sánchez Pérez, EPM’s vice president for legal affairs, declared this multibillion dollar action without discussion, input or even knowledge of the company’s board of directors!

The next day, the entire board of directors, except for Quintero himself, resigned.

Soon Quintero tried to justify his actions saying “there was no time” and he had to act, but he had already been mayor for 8 months and ran on a campaign of rectifying the Hidroituango situation (remember his cheese stunt with the former general manager?) and so was aware of the situation. If not, he had 8 months to be brought up to speed. At any rate, without board ratification, such actions have dubious legal force, and as bad or worse, prove a lack of corporate governance at EPM and direct political control. CEO Rendón clearly answers not to the board of directors but to a politician.

One day after the board of directors of EPM resigned, the entire board of directors of Medellín’s storied Ruta-N also resigned, along with its executive director, Juan Andrés Vásquez. Ruta N was already under its third executive director in Quintero’s 8 month old administration. Vásquez learned that Quintero was replacing him after Quintero announced Trump-style, in the media, saying he “had drifted away from the administration.” Like EPM, Ruta-N is not a city agency directly under the administration, but a public-private partnership with professionalized management and governance, and internal merit-based personnel policies.  Sources inside Ruta-N say that Quintero had been trying to circumvent the qualifications-based hiring of the business incubator to install friends and supporters into sinecures. People inside both organizations indicate that morale is at bottom.

Beverage giant Postobón rescinded its financial support of a health initiative spearheaded by Ruta-N saying it no longer had confidence in the entity’s governance. Postobón had already spent $4 billion pesos on the initiative to build respirators for coronavirus patients but said it would continue to donate, just elsewhere after the board resignation.

That same week, in reaction to what it called “a deterioration of corporate governance controls at the company,” global ratings firm Fitch downgraded EPM’s credit as a bond issuer to one notch above junk bond status. In a statement, the foreign, independent agency stated:

“Fitch believes recent actions taken by the company are contrary to the Governability Agreement, signed on April 23, 2007, between the City of Medellin and EPM’s management, in which the municipality agreed to respect the autonomy of EPM as an industrial and commercial enterprise of the state and to act exclusively through the board of directors.”

Flailing about

The mayor scrambled to assemble a new board of directors for EPM, which as an issuer of debt in the international capital markets, must answer to institutional bondholders. Over the ensuing days, Quintero variously announced that Claro Colombia CEO Juan Carlos Archila would join EPM’s board (creating a conflict since Claro competes with Tigo Une), Grupo Santo Domingo’s Alberto Preciado,  Luis Fernando Rico, formerly of Isagen, another Colombian utility, and Sandra Suarez, the former general manager of newsweekly Semana all rejected Quintero’s oddly public nominations. Did he not confirm with them beforehand if they would accept the appointments, or did they publicly reject the nominations as a rebuke to the mayor?

Meanwhile, EPM’s board representative to Tigo Une, Federico Arango Toro also resigned in a public letter saying he wanted no part of Quintero’s administration.

Banks and insurers are already turning their back on EPM, citing a lack of control at the organization. EPM had to admit that certain loans and lines of credit had been shut off after the board resignations. An internal document seen by Finance Colombia stated that the firm may have difficulty finding or renewing certain insurance coverages.

In the midst of all this, Colombia’s human rights tribunal set up as part of the 2016 Peace Accords, the JEP (Special Jurisdiction for Peace) has subpoenaed general manager Rendón under threat of arrest for ignoring during his 8 months as the utility’s legal representative, a year old subpoena for documents regarding possible obstruction of the search for the remains of victims of violence during the construction of Hidroituango, before Rendón’s appointment.

Medellín’s city council is on scheduled recess, but they have publicly asked the mayor to reconvene a session to discuss the governance crisis. Under law, (article 23, law 136 of 1994), they can only formally convene during a recess at the mayor’s request.

Labor unions & business community united

EPM’s largest labor union, SINPRO has called for a protest on Wednesday, September 2nd, for everyone in the city to turn out their lights for 30 minutes at 8pm, and for workers and the public to gather outside of the company’s headquarters in Plaza Mayor at that time for a rally in defense of EPM.

“When Medellín turns off, we hope that our leaders will understand that this is everyone’s problem, and that a city shut down doesn’t serve anyone. If EPM is in crisis, it doesn’t just shut down the city, it shuts down the country,” said union President Olga Lucia Arango.

The union is also demanding explanation of EPM general manager Rendon’s alleged private gym and luxury remodel during a time the company is under self-imposed austerity orders.

Civic leaders, executives, and nonprofits from across the region have begun to organize in reaction to the mayor, forming on August 25, a veeduría, or citizen’s oversight group ”made up of people with no particular economic interests in either EPM or the mayoralty that will work to take care of the heritage of the city and the interests of all Medellinenses.”

The initiative, called “Todos por Medellín” (Everyone for Medellín) is backed by over 40 groups, including the Chamber of Commerce of Medellin (in Colombia, chambers of commerce perform a quasigovernmental function, for example, as the registry of corporate and nonprofit organizations, and their articles of incorporation), the Intergremial committee (a grémio is a trade group or business association), and Proantioquia, the region’s primary civic benevolent foundation.

The mayor gets combative

Last Thursday, Mayor Quintero showed no contrition, but tried to dismiss the concerns as political machinations. “The oversight is fine, but we need oversight agencies to see everything. They didn’t see a lot of things, for example, $17 trillion of debt in the last 15 years. How come they didn’t see Orbitel, UNE, Antofagasta, Porce III and Hidroituango? A mayor appears to them who responds, has character, then a lot of politicians come out to do oversight. The veeduría is welcome but we are going to review everything. That the mayor is the one who manages the networks and they govern? No!” he said in a press conference.

Taking a page from the playbook of his preferred presidential candidate and apparent ally Gustavo Petro, who had a disastrous term as mayor of Bogotá and was temporarily removed from office by the national government, Quintero frames it all as a nefarious plot against him (does he think international ratings firm Fitch is in on the plot?)

“There are some groups full of politicians who want to carry out processes to revoke the mayor, that have been moving for a long time, we are ready, we have no problems in showing results and what we have done. They are worried because a long time ago they did not meet an independent mayor, a mayor who is not beholden to politicians or businessmen, but to the people,” said Quintero.

Navegamos entre fuerzas oscuras que se resisten al cambio. Con fe y sin miedo seguiremos adelante con transparencia, honestidad y contra la corrupción y la politiquería.

— Daniel Quintero Calle (@QuinteroCalle) August 26, 2020

CAPED CRUSADER? Quintero seems to fancy himself a hero navigating “between dark forces that resist change. With faith and without fear we will continue forward with transparency, honesty, and against the corruption and politicking” he tweeted last week after learning of the group Todos por Medellín.

Analysis

Quintero’s plan seems to be to blame his woes not on his own actions, but on former President Alvaro Uribe. Uribe’s reputation has steadily declined since his presidency, and where he was once seen as the man who rescued Colombia from communist rebels and drug cartels, his legacy has steadily soured as an avalanche of allegations and evidence piles up that tie him directly to paramilitary death squads during his time as governor, and indirectly to narcotraffickers and civilian massacres committed during his presidency. As if that were not enough, he is currently under arrest and confined to his northern Colombia ranch on charges of witness tampering, attempting to frame leftist senator Ivan Cépeda, a nemesis of Uribe in the Colombian senate.

Quintero wants to blame Uribe & his Centro Democrático for his woes, but since Uribe founded the party in 2013 it has never won a mayoral election in Medellín. The last Uribe supporter to hold the office was Luis Pérez from 2001-2004. Perez later abandoned Uribe for President Santos, working in 2015 as his regional campaign coordinator to defeat Uribe’s chosen presidential candidate Ivan Zuluaga.

Blaming the Uribe bogeyman may be a good tactic after the damage that has been done, but those aghast at recent developments extend far outside Uribe’s sphere of influence. Uribe did tweet support for the citizens movement, and Petro in support of Quintero, but opponents of Uribismo are also speaking out against Quintero. Former mayor of Medellín (2004-2008) and governor of Antioquia Sergio Fajardo immediately wrote a letter of concern, on August 12, admonishing Quintero’s actions.

Medellín’s previous mayor, Federico Gutierrez, nicknamed Fico, surprisingly upset Uribe’s candidate Juan Carlos Vélez to win the mayoralty in 2016. His letter, also dated August 12 is even more blunt. “EPM & Medellin are in danger.”

Letter from former Medellín Mayor Federico Gutierrez: “EPM & Medellín Are In Danger”

“The discourse of Quintero is based on lies. He talks of social struggle, of a class struggle, the same ideas of Gustavo Petro, who furthermore was the first to celebrate and support the mayor’s decision to deinstitutionalize EPM, which obliged the board’s renunciation. But look at the contradictions: What kind of social struggle destroys the motors of progress? EPM is that very thing, an incalculable help for the most vulnerable communities, a tool to breach social divides.” – excerpt from Federico Gutierrez’s letter.

Paisas, as people from Medellín & Antioquia call themselves tend center to right on the political spectrum and have less appetite for the far-left adventurism much more popular in Bogotá. Marxist talk like “class struggle” doesn’t go over so well here. Before this editor started Finance Colombia or even moved to Colombia, representatives from the city (going back to before 2013) would call and extend invitations: “Come to Medellín, let us show you what we are doing” with genuine pride. At the time, this editor was an analyst covering the Latin American services sector for a Connecticut-based research firm. “Look, we want to show you the good things we are doing!” Apparently with no other motivation beyond civic pride and attracting investment and positive attention. “We are building the Metrocable system” a network of cable cars extending far up into low income hillside neighborhoods on the valley walls. “We are building it so everyone can participate in our economic growth,” they said, beaming with pride. Not politicians or political appointees, but entry-to mid-level civil servants.

After moving to Colombia, first to Bogotá and launching Finance Colombia, the outreach didn’t stop. Medellín kept calling. “Come see what we are doing!” In 2015, Finance Colombia published “Social Inclusion: The Secret Sauce To Medellín’s Incredible Renaissance.”

They were going about it pragmatically, person to person, neighborhood to neighborhood, but without any ideological polemics or Marxist-Leninist babbling. There was no talk of class struggle, no attack on the city’s beloved institutions, whether well-established like EPM or new innovations like Ruta-N. Generally, each succeeding administration handed the keys over to the next politely, and with decorum.

One thing that unites Paisas, especially those in Medellín is the progress the city has made, going in less than 3 decades from one of the most dangerous on earth to an international showcase. Startups and international businesses have entered Colombia by first setting up operations in Ruta-N then moving out into larger spaces as they gain a foothold in the country. Get in a taxi and instead of trying to rip you off like in some parts of the country, if the driver realizes you are a foreigner, they will inevitably ask “What do you think of Medellín?” and beam with pride like you just presented them their firstborn child if you have something nice to say.

When protesters rioted in Bogotá last November, partially destroying their own transportation infrastructure and battling with police, Paisas marched peacefully. A few vandals were quickly confronted by peaceful protesters, and students came to undo the defacing they caused.

Medellín has built a strong credit rating in international markets for municipal debt, and EPM has enjoyed an investment grade credit and risk profile. There has been a level of peace between labor and employer, business and government rarely seen elsewhere in Latin America. Is it run by saints? Of course not. But that is precisely why the checks and balances of good governance are important, and Quintero seems to either not understand this, or have other priorities. EPM provides the city with more than electricity, water, and natural gas services. The international corporation provides almost 30% of the city’s revenue by way of operating profits. The fortunes of every residence and business in the Aburrá Valley (where Medellín is the largest city) are tied to EPM. The vitality of the city’s foreign investment attraction is tied to Ruta-N. Investors, both institutional and global-minded individuals are attracted by collaboration and progress, and repelled by scandal, conflict and controversy.

Being a crusader is easy. Throwing tomatoes at pictures is easy. A child can do it. Governing is complex and requires accountability. Medellín Mayor Daniel Quintero is sawing at the very foundations of Medellín’s success, by attacking its governance and institutionalism. It may very well be a good idea to take legal action against the consortiums that are (still) building the Hidroituango dam. But to launch a multibillion-dollar lawsuit behind the back of your own board of directors? No deliberation by the body designed to deliberate such fundamental issues? Are we seeing dictatorial tendencies, the likes of which one would expect from a Banana-Republic Caudillo?

When criticized, the new mayor goes into attack mode. Seeing everyone from the labor unions to civic leaders as a cabal “out to get him.” This editor remembers seeing such behavior at the beginnings of Chavismo in Venezuela. It is also Donald Trump’s style. Attack someone who is offering constructive criticism and they often will instinctively get sidetracked trying to defend the legitimacy of their criticism, allowing attention to be shifted from the original critique, no matter how legitimate.

“Ah, he’s going after the elites,” one more populist journalist friend said to this editor, when the conflict between former directors and the mayor became public. “Who the hell do you want running a multibillion-dollar international energy company?” this editor replied. “They had damn sure better be elite and know what they are doing!”

The former EPM board had directors like Javier Gutiérrez, who was former president of oil giant Ecopetrol, and general manager of energy company ISA; Manuel Mejia, former general manager of Colombiana de Comercio (distributor or manufacturer of brands in Colombia such as AKT motorcycles, Foton trucks, Castrol lubricants, Royal Enfield motorcycles, and Kalley appliances); Andrés Correa, formerly part of the insurance multinational SURA; and one of EPM’s own retired executives: Jesús Aristizábal Guevara, a civil engineer.

The new EPM board of directors is notable for having a preschool teacher, community activists, former politicians, lawyers, but no large company leadership experience. The mayor did nominate a few, but they all refused. Now, the mayor’s new board will have to navigate the $2 billion USD litigation that he unilaterally launched, and the war he has started with what seems the entire political, business, civic, and even labor community of Medellín. What do they know about international capital markets and the mechanics of bond pricing and currency risk? This editor wishes them luck. We want to see EPM succeed and Medellín do well. The only way this will happen is if they make drastic course corrections. It is not too late for the mayor.

On the other hand, we are only 8 months into a four-year mayoral term. This editor has never seen so many disparate people and institutions unite since the 9/11 attacks in the US. There, the population at least temporarily united behind then President Bush. In August, 2020, sectors from labor to enterprise are all uniting against Quintero. He is at a juncture in his mayoralty. He can attempt to reconcile, or he can take Gustavo Petro’s style book and fancy himself the martyr and class-struggler that everyone is out to get.

Mayor Quintero talks about making Medellín what he calls “software valley,” but foreign investors will not locate to a destination mired in conflict that can’t keep its lights on. He was elected without a power base, to some degree a rejection of the Uribista alternative. He clearly views the civic dissatisfactions with his moves as an Uribista plot. Surely they are included in his menagerie of new opponents, but they weren’t the ones who led to a loss of $30 million USD in EPM’s outstanding bond value in the space of 3 days. There were no Uribistas behind Wall Street firm Fitch deciding to lower the utility’s credit ratings. The only “forces of darkness” Fitch cited was Quintero’s “deterioration of corporate governance controls at the company.”

In this editorial, Finance Colombia calls on the mayor to rectify his course and work in a more collaborative, professional and transparent spirit with all the city’s stakeholders, or alternatively on Paisas to democratically and civilly protect the trajectory of amazing progress the city has made in the last two decades. Choose quiet progress over loud and bombastic stagnation. Cooperation over tomato-throwing confrontation.

Medellín Mayor Daniel Quintero (Photo courtesy Alcaldia de Medellín)

“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).

El pasado 29 de julio se cumplió el plazo para que EPM entregara este material a la JEP. La empresa no respondió a los requerimientos de la JEP, ni envió justificación sobre el incumplimiento. Por esta razón, la JEP abrió el incidente en contra del gerente de EPM.

— Jurisdicción Especial para la Paz (@JEP_Colombia) August 20, 2020

The subpoena relates to EPM’s troubled Hidroituango dam project (above photo) in Ituango, Colombia. Where several years ago in order to build the hydroelectric project, EPM transferred bodies from cemeteries in the rural hamlet of Barbacoas. That area of Colombia’s Antioquia department is still troubled with organized crime as a transit corridor for illicit narcotics. In earlier decades it was a conflict zone between guerrilla groups such as the FARC and ELN and paramilitaries such as the AUC. Countless rural people were “disappeared” during the conflict; some were combatants, but most were innocents caught in the 3-way crossfire between the guerillas, government forces, and paramilitaries.

Any possible remains of conflict victims encountered during the construction of the dam would have to be investigated and accounted for. According to independent forensic investigations carried out  by the University of Antioquia in Medellín, some of the remains exhumed by EPM contractors appear to be conflict victims, but EPM is accused of re-interring the remains without proper investigation or resolution, and by flooding the area, preventing the continuation of the search for victims’ remains.

While these alleged violations occurred during 2017, before Rendón was appointed, an initial subpoena by the peace tribunal was issued last year, and the current administration has, according to the JEP, ignored it.

The JEP stated that “there is a notorious disagreement between EPM’s affirmations in relation to the administrative transfers of the cemeteries and what was found by the JEP in the laboratory of the University of Antioquia.”

“Likewise, there is no clarity of the due compliance with the information gathering processes with the communities, nor of the development of the search, prospecting and exhumation processes carried out, nor of how these comply with the requirements of the law and technical and ethical standards,” said the JEP in its subpoena.

The JEP demanded that EPM deliver within five days from last Thursday, “the reason and supporting documents by which and based on which EPM supported the statement or consideration in the sense that none of the bodies buried in the cemeteries of the towns of Orobajo (Sabanalarga), Barbacoas (Peque) and La Fortuna (Buriticá) had no relationship with the armed conflict.”

As the legal representative of EPM, Rendón is subject to arrest should the documents not be delivered.

EPM issued a statement in response to the subpoena stating:

“EPM reports that on the afternoon of this Thursday, August 20, it received, from the JEP, the notification of an act through which an incident of correctional measures is opened to the General Manager of EPM, for allegedly not sending information in a timely manner that had been requested from the Company by this authority.

This same order grants a term of five days for the pertinent explanations to be sent.

EPM is evaluating the content of the document and will give the corresponding explanations in the term indicated therein.”

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.

Federico Arango Toro renunciation letter from Tigo Une

Two weeks ago, the mayor announced, without any board approval, that he will transform the utility company serving metropolitan Medellín with basic services such as electricity, water, natural gas and sanitation into a conglomerate involved in everything from tourism to tunnel boring —though such a fundamental transformation had never been discussed with the utility’s board of directors, or even the city council.

Despite repeated requests by Finance Colombia, Mayor Daniel Quintero, through his press secretary has refused to respond.

EPM, though owned by the city of Medellín, is run as a corporate utility with operations and assets from México to Chile. The company is a rated issuer of corporate bonds, and has up until now been run at arm’s length from the city’s political structure. The Mayor has a seat on the company’s board of directors and may appoint the CEO and board members as their terms expire, but beyond this, is generally not involved in the management of the company.

The final shock was EPM’s announcement on August 10 that it would launch a $2.7 billion USD lawsuit against a consortium of firms involved in the utility’s troubled Hidroituango hydroelectric project. Regardless of whether the legal action has merit, the legal action was instituted with no involvement or knowledge of the board of directors, breaking all established norms of corporate governance.

Even Quintero’s own appointees, Luís Fernando Alvarez Jaramillo and Jesús Aristizábal Guevara resigned in protest of the mayor’s actions.  The mayor’s unilateral actions may have grave consequences for the utility, as EPM counts heavily on its credit rating and high esteem in the eyes of international investors.

The board’s resignation left the utility’s CEO, Álvaro Guillermo Rendón trying to explain to the media and public why the entire board of directors resigning or the mayor’s actions are nothing to worry about.

“Inside (of EPM) we have taken it as a regrettable situation, but this does not take away from the governance of the institutions,” he told local paper El Colombiano after the action.

See also:

• Financial Entities Suspend “Commercial Relations” With EPM Citing Governance, Credit Concerns

• Fitch Downgrades EPM, Citing “Deterioration Of Corporate Governance” After Medellín Mayor’s Usurpations

Rendón López has a postgraduate degree in Administrative Law from the Universidad Pontificia Bolivariana de Medellín and in Economic Law from the Externado University of Colombia in Bogotá. Rendon was a participant in the National Constituent Assembly that drafted the Political Constitution of 1991, representing the energy and hydrocarbons sector and in the Special Legislative Commission that was instituted for its regulation.

With extensive experience in the academic, public and private sectors, Rendón has served as Auditor General of the Republic, Advisor to the Administrative Management of the Oleoducto (Oil Pipeline) de Colombia company, General Secretary of the Territorial Financial Development Agency (Findeter), Advisor to Bavaria for the study of the reform of the state entities, General Manager of the Cooperative of Municipalities of the Department of Antioquia (Co-municipalities), Director of the Legal Office of the Colombian Polytechnic institute Jaime Isaza Cadavid, and several other positions

Rendón has been a professor at the universities of Santo Tomás, Sergio Arboleda, Pontificia Bolivariana and the Higher School of Public Administration (ESAP). He has also been a guest speaker at Georgetown University in the US.

In assuming the position, the new General Manager indicated that “the community will be our priority to work every day, with the purpose of contributing to its well-being and development. We all are EPM.”

EPM is based in Medellín and owned by the city, but with international operations in Colombia, Chile, El Salvador, Guatemala, Mexico and Panama, and lines of business encompassing aqueduct, sanitation, gas, solid waste management, generation, transmission and distribution of energy, wastewater management and seawater purification. It is the largest utility company in Colombia and currently serves 20 million people.