July 27, 2018

What is the real motivation behind the dismissal of the FS board?

Written by 

ITALY’s new right-wing coalition government of the Five Star Movement and the League parties, which came into office on June 1, is starting to turn its attention to rail transport. The government’s first significant act affecting the railways was taken on July 25 by Mr Danilo Toninelli, minister of infrastructure and transport who belongs to the Five Star Movement, when he signed a decree to dismiss the entire board of directors of Italian State Railways (FS), including CEO, Mr Renato Mazzoncini.

Toninelli says the motivation is ethical, because Mazzoncini has been indicted to stand trial following an investigation into Umbria Mobility, a local transport company. Mazzoncini, who was formerly CEO of FS subsidiary Busitalia until his appointment as FS CEO in November 2015, is also being investigated for alleged irregularities in a local public transport auction in Parma.

 

Under Italian law, an incoming government is allowed to cancel or renew management positions of public companies. However, the FS statute states that directors can only be barred from election to the board if they have been prosecuted. Mazzoncini was reappointed as CEO as recently as June 11, while the next FS shareholders’ meeting was planned for July 26.

To dismiss Mazzoncini and the entire board on ethical grounds is therefore not very convincing. Toninelli argues that this is a government of change, which means that there must be no uncertainty regarding the managers of state-owned companies.

However, Toninelli rather gave the game away when he said that his ministry has launched a review of major projects such as the Turin - Lyon high-speed line, and he questioned whether Anas, the state-owned highway maintenance and construction company taken over by FS at the end of 2017, will remain a subsidiary of FS.

Italy’s previous government, headed by Mr Paolo Gentiloni, had supported the so-called “cura del ferro” railway investment programme, which provided for investment in both regional and high-speed services, as well as intermodal rail freight and improving rail links to ports to encourage freight to switch from road to rail.

Toninelli says he wants to focus on the real needs of the country, such as commuter and regional services and rail freight. But FS has been doing this by investing in the renewal of trains in collaboration with Italian regions. The development of the high-speed network has also been a real success with substantial increases in traffic for both FS and private open-access operator Italo-NTV.

Beyond the high-sounding declarations of the Five Star Movement, which do not appear to be aligned with the transport policy of its political ally the League, led by Mr Matteo Salvini who is Italy’s deputy prime minister and interior minister, the real transport policy of the new government is likely to start to emerge. An FS shareholders’ meeting must be held by July 31 to elect the new board and CEO. Italian taxpayers could face a large bill if the new government decides to stop high-speed projects already underway.

Get the latest rail news

IRJ Rail Brief newsletter covers global railway news