Problem

The state ownership policy has not been formalized, and there are no individual ownership policies for state unitary enterprises and business companies in which the state owns 50 percent or more of the shares or equity (hereinafter in problem 2.4.1 – state-owned enterprises). In practice, the functions of the owner, regulator and policy-maker are not segregated at some agencies, which leads to conflicts between these functions.
The criteria for mandatory annual independent audits at state-owned enterprises are not defined, and the criteria for mandatory establishment of independent supervisory boards need to be updated. The legislatively defined principles for the formation and operation of supervisory boards of state-owned enterprises need to be aligned with OECD standards. In practice, there is a nominal independence of supervisory boards of state-owned enterprises from the owner, which makes it more difficult to create a model of transparent and productive management of the public sector of the economy.
OECD corporate governance standards have not been implemented at the vast majority of state-owned enterprises, particularly those of strategic importance for the nation’s economy and security or those with the highest level of corruption risks or enterprises that are the most critical business entities in the defense industry.
At the legislative level, there is a need to clearly define the requirements for the introduction of efficient and effective internal control and risk management systems in the operations of state-owned enterprises, the correlation between internal control and corruption risk management, and the powers of supervisory boards to exercise internal control.