Politics protects poor performers

By: NICO SMIT

THE process of appointing senior managers at Namibian State-owned enterprises (SOEs) has become politicised to the extent where political patronage has created a culture which protects poor performers and those engaged in corruption from exposure, as their political ties could outweigh the need for accountability.

This is one of the findings of the latest report published by the Institute for Public Policy Research (IPPR) in its anti-corruption research programme. The report, titled 'Governance Challenges In The SOE Sector', investigates transparence and accountability at senior management level at SOEs, identifies current trends plaguing the SOE sector and makes a number of recommendations to improve governance of SOEs.
With regard to the performance of the SOE sector as a whole, the IPPR regards it as having been “plagued by a perception of poor management, non-accountability and generally non-transparent practices, with political interference an ever-present reality”.
Widespread poor management and mismanagement in the SOE sector is an indication that the sector is operating in an environment which suffers from “poor and under-regulation and lax oversight, which by extension can be argued creates the perfect climate for corruption.”
Between 2008 and 2009 SOEs accounted for 22 per cent of the 117 cases of alleged corruption that were recorded.
The IPPR identifies political patronage, ‘moral hazard’ and a culture of secrecy and poor record keeping as issues related to corruption in the SOE sector.
In the first instance, “a reality of Namibia’s SOE and government appointment processes is that senior management positions have been politicised from the start as the ruling Swapo Party has sought to impose itself on state processes”.
According to the IPPR, the situation is that political, and in some cases personal, affiliation and connectedness “has consistently trumped experience, skills and expertise when it has come to the appointment of SOE managing directors or CEOs.”
As a result, political protection and interference lower the probability of detecting and punishing corruption, and thus heighten the risk of corruption taking place.
Moral hazard is the practice whereby one party takes a risk or decision for which, should it backfire, another party would bear the cost.
“Moral hazard has become a defining characteristic of the SOE sector in Namibia, as the taxpayer, through Government, is consistently and continuously called on to bail out a host of SOEs long plagued by bad decision-making, weak management, poor planning and lax financial controls.”
A culture of secrecy is characterised by poor record keeping and financial reporting, and is also closely linked to political patronage “because SOE managers, who because of their political affiliation – and thus performance and accountability do not come into it – arguably enjoy the benefits of an environment marked by altogether lax oversight, do not feel pressed to adhere to financial reporting standards.”
The IPPR regards Government’s slow response to the governance shortcomings and challenges experienced by parastatals as the result of a “legislative and regulatory environment which remans inadequately circumscribed.”
According to the IPPR this state of affairs “suggests that the State is an active participant in the undermining of governance at public entities with a mandated and significant public service delivery task, and by extension an accomplice in corrupt activities and practices and mismanagement.”
The IPPR recommends that Government implement performance management and control systems as well as enhance internal transparence by developing and implementing comprehensive codes of conduct.
Further recommendations are that reports by presidential commissions of inquiry which relate to SOEs should be publicly released and that Government should commit to transparent governance by ensuring that SOE financial statements are published regularly.

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