Colombian Utility EPM’s Board Dispute a ‘Red Flag’ for Lucror

(Bloomberg) -- The resignation by board members of Empresas Publicas de Medellin over a dispute with management is a “red flag in terms of corporate governance”, Lucror Analytics analyst Lorena Reich wrote in a research note.

* EPM’s decision to commence a legal claim seeking damages from construction of Ituango dam project was taken unilaterally, without consulting the board; 8 board members quit their posts as a result
* “Regardless of which party is in the right, these developments are very concerning from a corporate governance standpoint, as we would have expected robust rules in this respect at EPM, being that it is a state-owned company with an investment-grade profile”
* Negative publicity likely to continue to impact the bonds, Lucror says

By Ezra Fieser