Major Norwegian industrial company Yara announced on Monday that chief executive Jørgen Ole Haslestad would be replaced by Norsk Hydro CEO Svein Richard Brandtzæg. It’s the latest in a series of management replacements aimed at cleaning up the scandal-hit company’s image.
Haslestad took over as Yara CEO from Thorleif Enger in 2008, shortly before economic crime police Økokrim began a corruption investigation in 2011, reported newspaper Dagens Næringsliv (DN). In January this year, Yara was fined a record NOK 295 million (USD 49 million) for serious corruption in Libya, India and Russia. Enger was in charge when the bribery payments were allegedly made, and is one of four former senior managers who will face trial in January. After becoming CEO, Haslestad was reportedly informed about at least some of the bribery payments, but did not report them to police until DN began investigating the corruption scandal two years later.
Haslestad had planned to remain in the top job at Yara until he reached the statutory retirement age of 65 years. The 63-year-old said Brandtzæg was a good candidate to take over, but the process to replace him “has gone a little faster than I had thought,” reported newspaper Aftenposten.
Haslestad stood by everything he had done in his time as CEO. “I believe I am and have been a strong and good leader for Yara,” he said. “We have done a lot of good internationally, and I leave behind me a company in full sail with amazingly good drive. The job now is to continue to steer on the course I have set together with skilled colleagues.”
“We have had full confidence in Haslestad and he has continued in this style until we found a successor,” said new chairman Leif Teksum. “There has been no doubt about that.”
Brandtzæg will take over at the start of February 2015, about a month after the managers’ corruption trial begins. It will leave Haslestad unencumbered to testify, at an arm’s length from Yara’s ongoing operations. “We have received our fine and are finished with our part of the case, so it will not have any influence on the company as such,” he said. “But individual staff with personal relationships with those who are involved will probably feel that this hurts.”
Haslestad tried to distance the company’s international reputation from the corruption scandal at home, saying only seven percent of Yara’s almost 10,000 staff worked in Norway. “So the majority of the company will be relatively unaffected by this storm which eventually must come to Norway,” he said. He will remain with the company working on other tasks until 2016, but keep his wage, which DN reported was around NOK 6 million in 2013 before bonuses and other benefits.
‘One of the best’
The replacement was the latest in a clean-out of Yara’s management. Board chairman Bernt Reitan announced in April he would step down after just two years in the job, and two other board members did not seek re-election. It followed a campaign by one of Yara’s major shareholders, the Local Government Pension Fund (Kommunal Landspensjonskasse, KLP) for a fresh, scandal-free start.
Netfonds analyst Roger Berntsen said there had been an unhealthy culture in Yara’s upper echelons, echoing similar claims by some former board members. He said Brandtzæg’s appointment was great for the fertilizer giant, but a blow to the industrial company that once owned it – Hydro.
“Of the heads of the biggest Norwegian companies, Brandtzæg is one of the best,” Berntsen said, adding the current Hydro boss would improve Yara’s reputation. “The top management has received a lot of negative attention, and the company has been heavily involved in regions where corruption is widespread. I expect that Brandtzæg will focus more on building up capacity in the USA. There, Yara can take advantage of low and stable gas prices in its fertilizer production.”
The head of KLP, Håvard Gulbrandsen said he was happy with the management changes. “I have the impression that they’re setting anti-corruption work very high,” he told Aftenposten. “We also see that they’ve appointed Brandtzæg as the new CEO. He is a very experienced, solid and trustworthy person and has maneuvered Hydro through difficult waters. That will certainly be very useful experience in Yara.”
Yara’s shares jumped 1.5 percent on the Oslo stock market following the announcement, on an otherwise flat Monday. Yara is the fifth largest company on the Oslo exchange (Oslo Børs). “This shows how much it means to get a good leader,” said Berntsen. “I expect that he will stake out a new course for Yara.”