RWE: Special audit of Essent deal, of Lechwerke AG delisting and RWE Polska Contracting management is requested

Three shareholder proposals have been added by Dela Beteiligungs GmbH to the agenda of the annual meeting of RWE, German electricity and gas Company. The shareholder requested special audits within certain management board actions. The supervisory board of RWE deems requests unsubstantiated and proposes rejection. ECGS supports two of these actions.

  •  Essent deal

In 2009, RWE bought Essent, which was considered as the "perfect partner" at a purchase price of EUR 8bn. RWE intended to become a leading energy supplier in the Benelux countries. However, 50% of the EUR 8bn purchase price paid at the time according to media reports have had to be written off.

Dela proposes to conduct a special audit to examine who initiated the acquisition, which board members were involved, how the acquisition came to pass, did the involved board members act in line with legal requirements and have the shareholders at all-time been appropriately informed. Last but not least, Dela requests that the special audit looks into the question of liability of current and/or former executive board members of RWE.

ECGS recommends support of the special audit request. We consider it important that the actions concerning the purchase of Essent and the write-offs allegedly amounting to EUR 4bn are cleared up.

  • delisting of Lechwerke AG

ECGS does not support the proposal. We note that since the announcement of the delisting of Lechwerke AG, the share price, which was at EUR 70,00 at the time of the announcement remained stable at the Frankfurt stock exchange and even increased at the Munich Stock Exchange (EUR 71) since then. Therefore we do not see a drop in the value of assets of RWE, the argument given by Dela for special audit, as of today. In addition we note that a complete delisting is not planned, according to an announcement of Lechwerke AG.

  • management monitoring at RWE Polska Contracting

ECGS supports the special audit request regarding the management monitoring at RWE Polska Contracting. For years, RWE Polska Contracting sp. z.o.o. has been in a legal dispute concerning the cooperation agreement with SKT Sp. z.o.o., the managing director of which is Mr. Benedikt Kotzur. Litigations started in 2002, after RWE Polska Contracting sp. z.o.o. terminated the agreement. Since then, SKT obtained at least four favourable court orders and four execution titles against RWE Polska Contracting sp. z.o.o.

Dela proposes to conduct a special audit to examine whether the civil and enforcement proceedings brought against SKT Sp. z.o.o. cause damage to the subsidiary RWE Polska Contracting sp. z.o.o. and the RWE Group and if so, in what amount, whether the claims asserted by SKT Sp. z.o.o. obviously justified and if so, in what amount, why the Executive Board did not take actions regarding this issue. In addition, Dela reqests to examine whether RWE exercised the diligence of a prudent and conscientious managing director in monitoring RWE Polska Contracting sp. z.o.o. Last but not least, Dela requests that the special audit looks into the question of liability of current and/or former executive board members of RWE.

We consider it important that the actions concerning this issue are cleared up. This is especially true as it may impair or may have already impaired the image of RWE in Poland and abroad.