Jooste hardens on errant public enterprises

MINISTER of public enterprises Leon Jooste, who has been in office for six months, is shocked by the poor quality of governance in state-owned enterprises.

The government spends billions of dollars per year to sustain loss making state enterprises.

“I sadly have to confess that I am astounded by the poor quality of governance in most public enterprises,” he said in a ministerial statement in parliament yesterday.

Jooste revealed that some boards hold more than 20 meetings per year, which “clearly exposes the failure of the entity”.

“It further exposes the failure of corporate governance and the blurred separation between the fiduciary duties of the board and the executive functions of management. It should not be necessary for the board of a well-managed public enterprise to meet more than four times per annum,” the minister said.

He said he has reason to believe that some boards are capitalising financially from their positions.

Jooste also said he has written to chairpersons of public enterprises to request CEOs to provide him with a detailed total “cost-to-company” of the boards.

“I also want copies of existing board remuneration policies and will request the formulation of such policies where they don’t exist,” he said, revealing that the amended Public Enterprises Governance Act (Pega) was finally gazetted last week.

Although it will be a temporary legal solution, it will enable the ministry to become functional, he said.

“We have also virtually finalised a database to capture the status of compliance of public enterprises to assist us now and in future,” he said. He warned that he was firing the “first salvo of remedial actions to address the serious non-compliance of a number of public enterprises”.

“My expectation is that by us addressing the various non-compliance issues, we will expose a number of financial and operational deficiencies, which once rectified, should yield immediate results,” Jooste said. The first item to be addressed under the new act will be governance agreements that require boards to enter into written agreements with their line ministries on the scope of business, efficiency and financial performance, business planning and financial planning.

The act will make it possible for ministries to recover debts from board members who contravene the act through bad governance and take board members to court for violating the law. Jooste said the days where public enterprises do not produce annual financial statements are gone.

“Every public enterprise must annually, at least 90 days before the commencement of its next financial year, submit a business and financial plan to the portfolio minister,” he said.

He said the completed, approved budget must then be submitted to the public enterprises minister and the portfolio minister within two months of the financial year-end.

“It is clear that adherence will result in a controlled and predicable corporate process where the shareholder will not be caught off guard as has become the norm. This will also result in a more coordinated and accurate budgeting process to aid the minister of finance,” he said.

Jooste said there is no reason why public enterprises should not produce annual statements on time – not later than six months after the end of each financial year

“The failure to submit annual reports timeously unfortunately raises suspicion and the question: What are you hiding?’” he said.

Under the act, CEOs who refuse or fail to give information requested by the minister or give false and misleading information can be fined up to N$20 000 or sent to prison for a period not exceeding two years, or to both.

“My previous attempt to gather information from public enterprises was a rather arduous and painful exercise and I want to declare publicly before parliament that I will not hesitate to invoke the provisions of Section 24 when forced to do so,” he said. The section empowers the minister to take action against non-compliant CEOs.

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