(Bloomberg) -- Slovenia is taking steps to replace the executives of Luka Koper d.d., a profitable port operator whose shares are outperforming the benchmark, deepening the controversy over the government’s handling of state-owned businesses.
Shareholders led by the government on Thursday backed a no-confidence motion against Dragomir Matic, the president of the management board, as the state asset manager has alleged irregularities under his leadership. Matic rejects these claims. If rubber stamped by a supervisory board on Friday, Matic will lose his job despite a sharp increase in earnings since the 2014 start of his tenure.
Slovenia has had a fraught relationship with state companies, including lengthy delays on a pledge to the European Commission to sell Nova Ljubljanska Banka d.d. after a bailout. With general elections just months away, the government has been accused of inconsistency in its approach to corporate governance.
“The logical question arises why this scrutiny is against Luka Koper management and not against some other companies, also partially state owned, where results are clearly lagging," Saso Stanovnik, an economist at Alta Invest in Ljubljana said by email. "Profitability is clearly not the criteria.”
The port operator’s shares have risen 20 percent this year compared with the 11 percent rise of the Slovenian benchmark index of 11 most traded stocks. Luka Koper shares fell 0.3 percent to 29.70 euros as of 1:05 p.m. in Ljubljana.
Even though the company is performing quite well, the management hasn’t been able to remove irregularities and hasn’t controlled risks indicated in a PricewaterhouseCoopers report, the Slovenian Sovereign Holding said in response to emailed questions. The management no longer enjoys its trust, the agency said.
Business partners are finding it "hard to comprehend all these back-door dealings and political games,” Matic said last week in an interview at the company’s headquarters.
Still, Radivoj Pregelj, a portfolio manager at Zavarovalnica Triglav’s asset management arm which holds Luka Koper stock, said high economic growth in the countries that receive the cargo leaving the port would support the company’s performance even after a change in management. Dredging carried out in 2014 that enabled bigger ships to enter was also helping, he said.
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