Equinor’s board and management should have taken action earlier, chairman of the board Jon Erik Reinhardsen said after receiving a report on the company’s US operations.
“We have received a thorough and critical report. We have suffered large financial losses as a result of investments in the United States.
“This was mainly driven by an ambitious growth strategy and too optimistic price assumptions,” Equinor’s board chairman Jon Erik Reinhardsen noted.
“The board and management should have seen and seized the challenge earlier, and it is now the board’s and management’s responsibility to ensure that we learn from this,” Reinhardsen said.
The main findings of the report are, among other things, that the company’s growth strategy in the USA led to too little focus on value creation and control.
The activity in the land-based business increased faster than important support systems could handle, the report concluded.
Additionally, the report states that the company’s follow-up should have been stronger and did not sufficiently reflect this business’s risk picture.
Since 2014, extensive improvement measures have been implemented, which were also reported to the board.
These improvements contributed to the fact that internal control in the USA is significantly improved today, the report concludes.
NOK 200 billion losses
Authorized Public Accountant and Partner Eli Moe-Helgesen at PwC was hired by Equinor to review the company’s foreign investment in the United States.
The background for the report is Equinor’s multi-billion loss in the United States.
Dagens Næringsliv revealed earlier this year that the company lost NOK 200 billion on US investments over the past 20 years.
The episode has been dubbed Norway’s “largest industrial scandal ever.”
Sætre comments on report
Outgoing CEO Eldar Sætre says that Equinor takes the conclusions in the PwC report very seriously.
“This report is a tough read for many. We made investments that were not robust when the market turned, and we should have uncovered the control challenges in the land-based business earlier,” he said in a press release.
“Our job now is to learn and concretize the follow-up of the recommendations to ensure that we do not get in the same situation again,” he added.
© NTB Scanpix / #Norway Today