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Friday 19 July 2019
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‘Ministers afraid to take bold decisions on SOEs’

…as parliamentary committee enters SOE fray

 

 

 

 

 

 

 

 

 

 

 

 

 

The Auditor-General’s annual reports of audited financial statements of State-owned enterprises often stirs public excitement as hidden issues of rampant abuse of public funds by government departments and parastatals are continuously unraveled. But, despite that, government has always failed to act on the revelations and those implicated for financial mismanagement are hardly held accountable. Of keen interest in the audit reports were revelations by the AG that some of the SOEs that are supposed to be cash cows for the national fiscus were actually technically insolvent and depend annually of state-cash-injection to remain operational TransNamib Holdings, Air Namibia and Roads Contractor Company(RCC) have been identified by the Parliamentary Standing Committee on Economics and Public Administration as the rotten apples and raised doubts on the SOEs as a going business concern. Given such scenarios, where government entities continue to be loss-making and lacking accountability and transparency, Chairman of the committee, Veikko Nekundi, feel line ministers of non-performing SOEs are not bold enough to take bold decisions. “These are the enterprises that are of great concern to the committee, not because they have no potential, but due to poor corporate governance. In most of the cases it is clear that line ministers are not bold enough to take bold decisions,” said Nekundi during a one-on-one interview this week.
The youthful legislator also expressed concern over the rotation of board members from one SOE to another as well as the quality of individuals tasked to serve on boards. “In Namibia we have a situation whereby board members are circulated from one board to another, regardless of their performance.  In some cases, you have unqualified board members who are tasked with fiduciary responsibilities to oversee management members who are more qualified than them.  In some cases board members serve below management level where they come from, how do you expect them to provide oversight?” questioned Nekundi. Nekundi also accused Ministers of not setting clear terms of references for boards and subsequently also castigated boards for not setting targets for management. “Evaluation is key to ensure that there is performance in a company, but that can only be done if the targets are clearly outlined.
In some companies the management have mandatory bonus clauses in their contracts regardless of the company’s performance, which just shows that the incentives are not aligned to the objectives,” he lamented. He added: “Some companies cry for bailouts every year yet their management receive salary increases. Others operate on deficits but the management members are accorded performance bonuses.” “We must remember that SOEs are managed on behalf of taxpayers, therefore, they must be operated along ethical lines. Taxpayers cannot be pumping money into companies that are not performing,” he said. Nekundi also expressed concern over the auditor general reports that are tabled in the National Assembly. “These reports are only for note taking and not discussion, this means they are only there to collect dust in our offices. Some reports are even tabled five years late, how do you expect lawmakers to take action?” he questioned. SOEs are by law required to avail their annual financial reports within six months after the financial year has ended.
“It is my feeling that our government needs a total overhaul if we want to see results, this does not only count for SOEs, but the civil service as well,” he opined. Although the AG’s reports have recommendations on how ministries and parastatals can maintain financial discipline, most of the audit reports produced have raised the same issues of misuse of funds and little change being effected. Nekundi said Namibia’s ballooning job-creation situation in the SOE sector can, to a large extent, be accredited to poor business models in the sector. There are currently over 14 000 workers employed by approximately 97 parastatals in the country. The legislator, who also sits in the Public Accounts Committee, said the public cannot be blamed for thinking that most SOEs exist merely to create jobs instead of competing economically with the private sector. “I will not blame the public if they feel this way because that is the picture that is being portrayed. Our SOEs should align to the industry and carry out benchmarking exercises.  One of the fundamental problems is the fact that the establishing Acts of most of our SOEs do not prescribe the staff structure or size thereof,” he said.
He added: “Some companies do not deliver yet they employ a lot of people, in some cases more than what a similar company in the private sector would.  We must ensure at all times that our SOEs are run on commercial principles. The workforce must be aligned to the organisation’s targets.” With claims of constant political interference in SOEs, Nekundi said the public often confuse political interference with political intervention. “There is a chain of command, in my view, there is nothing wrong with political intervention to remedy situations. But if there is political interference taking place within our SOEs, I strongly condemn it,” he said.In many advanced democracies and in progressive economies, irregularities such as inflated payments and gross violations of regulations, which border on corruption and abuse of office within various government departments such as those exposed repeatedly Auditor-General Junias Kandjeke, would certainly cause heads to roll.The Anti-Corruption Commission, which is accused of seldom prosecuting senior government officials, previously stated there was no evidence of corruption by officials, saying it would only act should there be evidence.




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