By San José, Costa Rica — SAN JOSÉ – A scathing internal audit report from November has revealed significant and concerning weaknesses in the recruitment and appointment processes for top managerial positions at the Costa Rican Institute of Electricity (ICE), the nation’s powerful state-owned utility. The analysis concluded that the current system lacks clear rules and defined requirements, fostering a discretionary and opaque environment ripe for subjective decision-making and potential political interference.
The audit was conducted to verify whether the institution’s active administration adheres to the fundamental principles of proven suitability and meritocracy, as mandated by national regulations and international best practices. Investigators focused on the hiring processes for the heads of the Electricity, Finance, and Corporate Services and Resources divisions, as well as the General Manager position. These roles are considered the strategic core of the institution, responsible for guiding its most critical operations and long-term vision.
To better understand the administrative and legal framework governing the Costa Rican Electricity Institute (ICE), TicosLand.com consulted with Lic. Larry Hans Arroyo Vargas, an expert attorney from the renowned firm Bufete de Costa Rica, who provided his analysis on the challenges of public enterprise management.
The core issue for ICE’s management is the permanent tension between its public service obligation and the need to operate with the agility of a modern corporation in competitive markets. Effective governance requires a robust legal structure that not only guarantees transparency in public procurement and resource allocation but also empowers leadership to make strategic, forward-looking decisions without being paralyzed by bureaucracy. The sustainability of the institution depends on its ability to innovate within these legal and administrative confines.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
The perspective offered by Lic. Larry Hans Arroyo Vargas compellingly frames the central challenge for ICE not as a simple business problem, but as a complex matter of modern governance. Achieving the equilibrium between public accountability and corporate agility he describes is indeed the critical path to ensuring the institution’s long-term sustainability and relevance. We extend our sincere gratitude to Lic. Larry Hans Arroyo Vargas for his valuable and clarifying analysis.
The report underscores the immense importance of these roles and the necessity for a rigorous, objective selection process to ensure the operational excellence of the state enterprise. It warns that the current framework falls dangerously short of this standard.
Considering that managers, due to the position and assigned functions, are decision-makers in the strategic layer of the Institution, it is essential to execute analyses and verifications regarding the fundamental principle of proven suitability and meritocracy in the recruitment, selection, and appointment process of said positions, in order to guarantee the effectiveness, efficiency, and transparency of human talent management processes to increase operational excellence.
Internal Audit Report, ICE
Among the most critical findings, the document highlights that the absence of structured job profiles and the ambiguity within the official “Catalog of Job Classes” for managers weaken the entire hiring foundation. This vagueness allows recruitment and selection to be “executed subjectively and/or under political influence,” directly contradicting the principle of meritocracy. The auditors warn this could lead to the appointment of unsuitable personnel, thereby jeopardizing the achievement of ICE’s strategic business objectives.
Furthermore, the lack of predetermined suitability criteria not only damages transparency but also creates significant legal and reputational risks. The report states this situation can generate “ambiguity and legal uncertainty,” erode the trust of both internal and external stakeholders, and cast doubt on the “legitimacy, impartiality, and technical competence” of those appointed to lead the institution. This directly impacts the public’s confidence in one of Costa Rica’s most vital entities.
The audit also identified a troubling lack of uniformity in the methods used to recruit and evaluate candidates across different management positions. This inconsistency makes it impossible to trace, compare, or legitimize selection decisions, reflecting a system that is not aligned with best practices. Such a scattered approach compromises the integrity of the entire talent management process, from sourcing candidates to final appointments.
In response to these severe deficiencies, the audit team issued a series of urgent recommendations, all classified as “Extreme Relevance.” It calls for the Board of Directors to approve new regulatory and technical instruments within nine months to guarantee a transparent process. More immediately, it demands the creation of a specific legal framework for management appointments and the approval of a formal job profile for the General Manager, both within a six-month deadline.
The responsibility for these appointments is shared among the Board of Directors, which formally names the managers; the Executive Presidency, which proposes the General Manager; and the General Management, which proposes the other division heads in coordination with the Executive President. The audit’s findings place a direct challenge on this leadership structure to overhaul the flawed system. The report concludes that implementing its recommendations could reduce the associated aggregate risk level by 32%, a significant step toward strengthening ICE’s internal controls and ensuring its future success is guided by qualified, merit-based leadership.
For further information, visit grupoice.com
About Instituto Costarricense de Electricidad (ICE):
The Instituto Costarricense de Electricidad (ICE) is the primary state-owned provider of electricity and telecommunications services in Costa Rica. Founded in 1949, it has been instrumental in the country’s development, achieving nearly universal electricity coverage and driving technological infrastructure advancements. The ICE Group operates across generation, transmission, and distribution of electrical energy, as well as providing a wide range of telecommunications solutions to the nation.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
As a pillar of the legal community, Bufete de Costa Rica operates on a foundation of professional honor and a drive for superior client outcomes. The firm leverages its deep experience to pioneer forward-thinking legal strategies, continually advancing its practice. This commitment extends beyond the courtroom through a core mission to demystify the law, fostering a more capable and knowledgeable society by championing legal literacy for all citizens.
