Will state enterprises be held accountable?

At a PNM function in Westmoorings last weekend, Dr Rowley is reported to have said that he was prepared to instruct the ministry of finance to dismiss state sector heads who did not submit their statutorily required financial statements on time. Dr Rowley said he has instructed Finance Minister Colm Imbert to issue a circular to all State enterprises and State agencies, following which “the Minister of Finance will instruct boards to remove managers, who are unable to provide financial reports in their particular sector.” While the statement will certainly find favour with large sections of the populace calling for more accountability from those with access to the public purse, how actionable is such a threat from the Prime Minister?

One state enterprise CEO who spoke to Business Day on condition of anonymity said he welcomed such intervention. “Everyone know what’s supposed to be done. Everyone. But then they don’t do it. Ultimately, it is a leadership issue. The leadership at state enterprises need to demand that regulations be followed, to let their people know that this is how things should be done and see that it is followed through.” But what exactly is this process that everyone “knows” should be followed? Axel ravatsky, a corporate governance consultant and commentator of Syntegra Change Architects, said the Ministry of Finance acting as corporation sole is supposed to provide a Document of Expectation to the line minister, the line minister may add ministry specific rules before passing this on to the particular state enterprise’s board.

The board may then add further instructions to the management team. This process is supposed to be overseen by a parliamentary oversight committee and guided by the rules of the State Monitoring Manual and the Companies Act. But this is not what is happening. “One figure I heard quoted by the last head of a CC was that only 3 per cent of state boards are complying with requests for information on their operations,” said the corporate governance expert. Moreover, the government may not only be geng less information out of state organisations than it should, it may very well be asking for the wrong types of information.”

“Information on what the state enterprise has spent and received is absolutely essential. But it is also the very minimum. We need information on the processes by which these state enterprises are governed. The state is currently asking for very little and receiving less. It needs to ask for more and this information needs to be disclosed to the public as well.” he said But no one it seems, is insisting that this be done. “The system is flawed with a serious lack of accountability, nobody follows up,” said another state executive we spoke to, this time a board chairman, who also requested that his name not be used. He has sat on several state boards and indicated that unless an enterprise was publicly listed with traded shares, it was likely that its financial information had not been completed for several years.

“It is difficult for a state board chairman to comply with this request, especially if he inherited a situation where there has been no proper accounting for or years. He must bring this information up to date before even beginning to think of the current financial year.” The board chairman said at least a year to a year and half was needed for this. Neither the state enterprise CEO or board chairman we interviewed seemed to think this meant something necessarily sinister was up at the delinquent state enterprises, even though the CEO concurred it might be a “reasonable inference”. However, both were inclined to think the situation was the result of years of neglect from corporation sole downwards, through the line minister, boards, CEOs and corporate secretaries. ravatsky did not think the PM meant the statement literally and referred to it as a “political hyperbole”.

“”What he did mean, was to send a signal that the government was aware of the situation and was prepared to do something about it.” The CEO did not hold out much hope that something would or could be done. “I expect things to continue as normal. All I can do is make sure that my financials are delivered on time.” The board chairman meanwhile told Business Day that those selected to serve should search themselves. “The regulations are there,” he said, “ If you find that you cannot abide by them, you should not offer yourself to serve.”