Corporations owned by municipalities What about control, transparency and accountability? Gissur Ó Erlingsson Centre for Municipality Studies Linköping.

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1 Corporations owned by municipalities What about control, transparency and accountability? Gissur Ó Erlingsson Centre for Municipality Studies Linköping university

2 Background: ”how are the most healthy patients doing?” Starting point: fascination for ”corruption in least corrupt settings” Swedish Research Council (2007-2011) ESO (2012-2013) Spinoff: publicly owned corporations - particular danger zone for corruption? Norrköpings forskningsfond (2014, tiny, tiny pilot study…) Swedish Research Council (2016-, three year project) Gissur Erlingsson, Anna Thomasson, Andreas Bergh Richard Öhrvall, Patrik Jarelius

3 Today? Background to our project Present ”lessons” from a newly published article in Statsvetenskaplig tidskrift Briefly introduce what’s going on in 2016

4 Corporations owned by municipalities: why bother? Continously increasing in numbers Ca 1 300 in 2002, ca 1 700 today (Believed) to somewhat have changed character since late 80s, early 90s From primarily producing ”public” and ”social goods” (energy, water, waste, housing) -> -> to do lots of other things (marketing, tourism, ”event-making”, bulding/owning arenas, etc.) Blurring public/private spheres (tasks? roles?) Perceived to increasingly compete with private companies Increasingly important for local economies Total turnover approx. 200 billion employ ca 48 000 individuals combined est worth 1 875 billion (Sub-part of our project –> generate better figures + credible time series; compare to other countries; something special in Sweden or a general trend?)

5 Why bother – contd. Last decade: Several (parallell though unconnected…) debates Hurt private companies on established markets (Konkurrensverket 2014) ”De kommunala bolagen går ibland med förlust. Deras ägare har emellertid tillgång till skattemedel att täcka förlusterna. Kommunen kan också, som i Stockholm, sammanföra sina olika bolag i en koncern och låta koncernbidrag ersätta de underskott som uppkommer. Kommunernas bolag bildar en värld för sig som inte liknar något annat i Sverige. Jämförda med vanliga bolag arbetar de på villkor som är nästan helt riskfria.” (Zetterberg 2000) Often used for ”tax optimization” (tax avoidance, Skatteverket 2013, Laurent 2007) ”…sen vill vi förstås inte tappa pengar till staten” (Lennart Holmlund, KsO, Umeå) Social housing, taxed twice? (”how ought profits be used?”; Swedish Union of Tenants) Poor transparency & accessability (SOU 2011:43, Hyltner & Velasco 2009) Low awareness of corruption among management (Statskontoret 2012) Particularly worrying – they´ve been proven to be a danger zone for irregularities Östersund, Norrköping, Sundsvall, Gothenburg, Motala – to name but a few

6 Hence: important to ask questions about quality of control, steering, ownership Our purpose in the Statsvetenskaplig tidskrift-thing: (rather modest, definitely parochial…) to initiate a criticaldebate about the quality of steering and scrutiny of, as well as insight in, municipally owned corporations Results grounded in Review of topics in contemporary debates; Literature on corporate governance, plus an explorative case study of one Swedish municipality

7 Results:”Four lessons for local governments” ”Regularly oversee how many corporations you own, and in what line of business they operate” ”The Danger of Incrementalism”; Lex Gothenburg (Amnå et al 2013) ”Make sure things are documented and archived; make sure the corporations have guidelines and policies in place; make sure management follows the principe of access to official records” ”Oversee how you appoint the boards of the corporations, and have a well thought out training program for board members” TODAY: Double whammy – poor principles for appointments + no (or poor traning) = low quality of the work of the boards… How should the dilemma ”divided/mixed loyalties” be handled? The local political elite are represented in boards – in practice controlling and steering themselves? Perhaps unsolveable – but at least, admit there´s a problem!

8 What we´re doing in 2016 Poor female representation in boards of the corporations – why? Better representation in all other bodies politically appointed Here – ¼ - why? Intransparent processes? Lack of female interest – far less women state interest in taking place in these boards (Erlingsson Öhrvall Fogelgren 2014) We are conducting field studies now; interviewing party-representatives in Scania municipalities

9 (What´s happening in 2016, contd) Replicate survey from our pilot study to a larger sample of municipalities Is what we found in our pilot study unique or representative for the municipal sector in Sweden? Examples:

10 Replicate ”stress-tests” of Hyltner & Velasco (2009) + SOU 2011:43 Hyltner & Velasco ”endast ett av tre undersökta kommunala bolag uppfyllde sina grundlagsstadgade förpliktelser att lämna ut allmänna handlingar” SOU 2011:43 ”Utredningen bedömer att kommunala bolag inte i tillräcklig grad synes efterleva det krav på skyndsamhet som gäller då en person begär att få del av allmän handling”