How Do We Justify SOE Executive Pay Packages?
By: TSUDAO GURIRAB
DAILY accounts of incompetent and bumbling yet bumptious managers of our SOEs warrant serious interrogation.
After all, money still does not grow on trees and what we spend at SOEs is taxpayers’ money. In governance just as in economics there are opportunity costs. Money spent on a fancy head office building for Agribank is money no longer available to buy textbooks for Grade R in Schlip. Such is public finance.
Save for the fact that he is sitting tight on the reports of commissions of enquiry by his predecessor, President Hifikepunye Pohamba started his term brightly making all the right noises.
He declared corruption an enemy we should all stand together to combat and railed against it from every possible forum during his early days in office.
He was equally concerned about the performance of the SOEs such that during his Cabinet’s first retreat in Swakopmund in November 2005 the discussion on the performance or otherwise of the SOEs received a disproportionate share of the available time.
The pertinent question is, do we get just returns for the pretty penny invested in the myriad of SOEs and, perhaps more critically, is the senior management of these institutions up to the task? Do they have the education, the aptitude, the skills and experience to make the correct call? And do we reward them adequately?
To be sure, the consideration of executive pay goes back as far as 2000 with the one-man commission of former minister Helmut Angula who was tasked to survey and advise Cabinet on the remuneration of boards and management. This brief later metamorphosed into what has become the State Owned Enterprises Governance Act of 2006. The Prime Minister is responsible for the enforcement and administration of the Act except this is not happening six years after it came into force.
Despite boards being in place, Government, as per rule, calls for forensic audits should they want to know what happens in SOEs as the boards are plainly clueless and the management wallowing in incompetence.
But the Government, particularly the Prime Minister, appears to be blissfully content like a kid lost in a candy shop.
Yet at the 2005 Swakopmund Cabinet retreat, the brand new President was finger waving at SOE management that they will “face the full force of the law”. The President went on to say that “unscrupulous managers” milked SOEs to finance their extravagant lifestyles instead of pumping the gains back into the Government coffers for development.
We can imagine the managers guffawing in the sleeves of their pricy suits at this clearly inconsequential threat. They knew pretty well that they will continue to run down the assets of these SOEs with the certainty that the Minister of Finance stands ready to bail them out. So why perform?
Despite very clear provisions of and allocation of responsibilities the Prime Minister is of the view that “it is not an easy matter” to implement the Act. This is what he said two years ago and repeated two weeks ago in Parliament. Given the paucity of skills in Government, perhaps he may wish to farm out its implementation to auditing firms because, after all, it is only when they come in and produce a report that we all have some idea of what is happening at these SOEs?
But when this all is said and done, it is the boards of these SOEs and their respective managements which are entrusted with the taxpayers’ money to run these organisations in the most optimum manner. And for their labour and skills they should expect a fair reward.
The question is do our SOE boards and their managers preside diligently over the resources entrusted under their care and, critically, can we justify the salaries and benefits they claim? After all, despite the pretension to the contrary, they are not private sector institutions but very much part of the public sector. For example, the placing of NPTH or the Road Fund Administration outside the regular civil service is not a statement that those skills are not available in the civil service. The reasons have more to do with expected efficiency gains. The question is how much premium should the taxpayer pay for this reorganization of service provision?
Because of generous annual increases and padding of their benefits the remuneration of SOEs have simply grown exponentially over time such that a CEO of the Road Funds Administration or MVA pockets an annual package of N$ 2million. The question is what particular skill do they bring to these jobs or alternatively what scarce skills do they posses for which they would command these princely sums in the private sector?
As for their boards their ineptitude is now a national embarrassment that they themselves must realize that they do not deserve a single penny for the monumental chaos over which they preside.
As for TransNamib, it sounds like a horror story. It is only in Namibia that a board which is pretty much the inventors of the mess can still be in place. All this means is that the manner in which SOE boards are procured needs serious and urgent review.
The time may have come to publicly and honestly review the remuneration of the public sector in totality and bring sound corporate governance to our SOEs.