GOVERNMENT has started operationalising the Public Entities Corporate Governance Act, which is expected to curb the excesses of executives and boards that have left almost 90 of the 107 State Enterprises and Parastatals (SEPs) in perennial loss positions while six are technically insolvent.
The Public Entities Corporate Governance Act became operational from June 8, 2017.
The law, which introduces a number of measures designed to turnaround the fortunes of parastatals, had been gazetted on May 11.
Secretary for the Corporate Governance Unit in the Office of the President and Cabinet, Ambassador Stuart Comberbach, told The Sunday Mail Business last week that the Act is now operational, with regulations accompanying it also approved and set to be gazetted soon.
“Yes, the Public Entities Corporate Governance Act became effective in law on 8 June and is now operational.
“The accompanying regulations as drafted by the Office of the Attorney General have been approved by the Ministry of Finance and will be gazetted shortly,” said Ambassador Comberbach.
He added that all heads of ministries have already been requested to ensure that all SEPs, which fall under their respective administrative umbrellas, are made fully aware of the Public Entities Corporate Governance Act.
To this end, heads of ministries have since been furnished with a range of documentation relevant to the effective implementation of the Act for on-passing to all State entities.
Ambassador Comberbach added that compliance with the numerous provisions of the Act will be more of a process than an event.
“. . . but effective compliance will, over time, impact positively on the operational and financial performance of those entities and will lead to better service delivery to the nation,” said Ambassador Comberbach.
The law is understood to have already sent a chill down the spines of some extravagant parastatal bosses, most of whom were deliberately running down the firms they lead.
Some executives are accused of drawing humongous salaries that are not matched by performance.
But the honeymoon is now over as Government has developed a remuneration framework that is in three parts; for boards of SEPs, chief executive officers and senior managers, and on local authorities.
Details of the remuneration framework could not be immediately ascertained, but indications are that Cabinet has long approved the framework for boards and local authorities.
Overall, the remuneration framework is expected to introduce some measure of consistency and transparency in how the remuneration packages are worked out and implemented.
Deputy Chief Secretary in the Office of the President and Cabinet, Dr Ray Ndhlukula recently told The Sunday Mail Business that the major advantage of the Public Entities Corporate Governance Act is that it clearly defines the roles of stakeholders, Government, the minister, permanent secretary, chief executive officer and the board.
It is hoped that this definition of roles will eliminate the interference that some parastatal boards and CEOs were claiming to be frustrating their efforts to operate effectively and make a profit, or at worst, break-even.
Ministers were mainly fingered as the culprits interfering with the SEPs’ operations. The Act, has among other issues, introduced a Corporate Governance Unit that monitors the operations of parastatals.
The Unit is housed in the Office of the President and Cabinet and will provide an advisory and centralised support mechanism for line ministries to ensure strict compliance by all SEPs with the applicable provisions of the Act.
In addition, the Act provides for the appointment, tenure and conditions of service for boards of public entities.
This comes as some parastatal boards were reportedly sitting more than 43 times per annum in a bid to draw more remuneration, despite the shambolic and murky performance of their entities.
Most of the executives and their boards also refuse to publish audited results while in some cases they are kept away from the glare of the media to avoid scrutiny.
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