…Tightening the screws on boards
With public enterprises continuously begging for bailouts from government, despite appalling corporate governance measures, the Ministry of Public Enterprises is on a robust drive to turn the fortunes of SOEs around.
During an exclusive interview earlier this week, Public Enterprise minister Leon Jooste expressed concern over the cost of a lack of corporate governance within public enterprises on taxpayers.
“So many mistakes have been made over the past 26 years when it comes to SOEs, we do not want to continue with that trend because they it is very costly. As a Namibian, I hate reading in the papers about SOEs begging for bailouts,” Jooste said.
Jooste is particularly disturbed by the manner in which boards operate and how some use board sittings to drain SOEs to the maximum.
“At some SOEs the board fees are as high as N$2 million per year, those are some of the things we are addressing. We also stopped foreign travelling by board members, if they want to travel they must get permission from the Ministry,” he said.
According to the minister: “The boards must apply to travel abroad and based on their motivation and budget we make a decision. You find some boards where four members want to go on the same trip, we normally decline this.
Jooste said travelling should in most cases be reserved for the company’s management because it is in charge of the company’s operations.
“It is seldom that board members have to travel abroad while you have the management in place, in fact, that is why you have a CEO in place,” he said.
Jooste said the ministry is in the process of instituting wide reforms in the SOE sector which will see the introduction of new remuneration guidelines and new procedures when it comes to selecting board members.
“We will root out all the outdated and flawed guidelines and move towards a completely performance based system for public enterprises,” he revealed.
Jooste said there are less than half of the public enterprises have performance contract based systems in place but expressed concern regarding the control and monitoring measures.
“Even companies with performance management systems in place are lagging when it comes to monitoring. We will procure software to make the monitoring processes easier. I know there will be an outcry over the cost but there is no way we can implement performance management systems without technology, he said.
Jooste said performance contracts will be equipped with key performance indicators which encompasses economic and strategic goals.
“CEOs will earn incentivized packages, this is crucial because we have a small pool of professionals, as a result the private and public sector both compete for those skills. If we do not offer competitive packages we will not attract skills,” Jooste said as he hinted that salary grades in the different tiers could be reviewed.
Salaries in the tiers will be altered, Jooste said, adding that there are highly complex public enterprises that requires certain that cannot attract skills because of the salary grades.
The shortage of skills in government has also been identified as one of the reasons why public enterprises are not controlled adequately.
“The shareholder has never really been equipped with skills required to perform the functions of a shareholder. To run the enterprises efficiently the shareholder must have skills in the areas of accounting, law, economists and human capital experts to keep an eye on the state companies,” he said.
Jooste is also not overly impressed with the dual model system that is used to govern public enterprises.
“It never worked anywhere in the world because there needs to be dual accountability which is not effective in my view. We are in the process of migrating towards a centralized model. All finance institutions should resort under the finance ministry because they are aligned to the State Finance Act.,” he said.
Jooste also said the ministry will uphold its directive that compels public enterprises to seek approval from the ministry before instituting any suspensions.
“All the suspensions must come through our office, if there is an issue in a certain company, that board must approach the ministry. We will only allow suspensions when all procedures have been followed,” he said.
Jooste is also against the practice of officials being suspended with full pay.
“In the private sector employees continue their work despite being under investigation, why can it not be done in the public sector? In my view, public enterprises suspended officials to investigate officials because they failed to follow procedures. If you abide by the regulations, there will be no need for knee-jerk reactions or suspending people based on suspicions,” he said.
Disciplinary procedures should be upheld, Jooste said, adding that: “If there is an allegation it must be investigated while the person being investigated is on duty, no need to chase them home with full pay to go and lie next to their swimming pools.”