The side hustle of sitting on boards

Serving on boards across Namibia’s largest state-owned enterprises, banks and listed companies has become a lucrative source of income for a few.

According to annual reports and data obtained from the Namibia Sexurities Exchange (NSX), earnings for chairs and senior board members at banks, listed companies and state owned enterprises (SOEs) range from N$400 000 to N$1.6 million annually.

Independent Patriots for Change chief whip Rodney Cloete says board work has moved away from being a part-time public service role and has instead become a full-time source of income for a small, politically connected group.

“When we speak of the growing ‘professionalisation of board participation’, let us be clear about what this means in the Namibian context.

“It means board work has evolved from a part-time civic contribution into a full-time income stream for a politically connected class without any of the accountability mechanisms that attend professional employment performance reviews, outcome measurement, or termination for cause,” he says.

Cloete says it is known that the same individuals alternate across boards of state-owned enterprises, public enterprises and regulatory bodies.

He says appointments are largely driven by personal connections and favouritism, rather than merit or performance.

Minister of works and transport Veikko Nekundi last month told The Namibian there appears to be a growing culture of entitlement regarding board compensation when asked about Namport’s board sitting fees.

“The approved meetings are four per year. Board members get sitting fees for those meetings. They also receive retainer fees for ad hoc meetings.

“The retainer fees are paid monthly, whether they sit or not. Why should people still get paid for extra meetings when they are already receiving retainer fees?” he asked.

Nekundi also expressed frustration with inefficiency in public institutions.

“In Oshiwambo, there is a saying:omuna ombwela moshilongo omu (‘there is no discipline in this country’). People just do what they want while wasting government resources,” he said.

In the public sector, board activities are governed by the Public Enterprises Governing Act.

Although the act sets limits on board pay and restricts individuals to serving on a maximum of two boards at a time, differences in remuneration still exist.

Speaking in general terms, member of parliament Tobie Aupindi says the current trend in board remuneration could be described as “vulture capitalism”.

He says there is no strong governance framework clearly showing how taxpayers’ money is being used.

“Look at the poor performance of SOEs, yet many board members are being compensated handsomely for messing up,” he says.

“Until we commit to reforming SOEs without fear or favour, taxpayers’ money is being used and abused without accountability,” he says.

NSX PROTESTS

In the private sector, board appointments and conduct are guided by NamCode, which advocates for formal, transparent nomination processes.

However, NSX chief executiveTiaan Bazuin says many of the current board fee comparisons rely heavily on South African data.

“. . . which reflects significantly larger markets and resource bases and does not always provide an accurate or appropriate reference point for Namibian companies,” he says.

Bazuin says directors should not depend on board fees for their income, because this could affect their ability to make unbiased decisions.

Directors are also expected to give each company they serve enough time and effort.

If a director sits on too many boards and cannot participate properly, this could become a concern.

“Where a director is materially reliant on sitting fees as a primary or significant source of income, this may impair independence and should be carefully assessed and disclosed,” he says.

Bazuin says directors owe fiduciary duties to each board they serve on, including the duty to devote sufficient time, skill and participate meaningfully in the deliberations of the affairs of the company.

Namibia Institute of Governance managing director Desmond Nikanor says NamCode only provides general guidelines on being fair, open and reasonable, for example.

This means boards can suggest their own pay, which is then approved by shareholders at annual general meetings.

“In Namibian-listed companies, the current governance code only sets the principles that must be taken into consideration when determining board remuneration. And that is that remuneration must be fair, transparent and reasonable in a way that supports governance and also reflects the level of risk and expertise required,” Nikanor says.

– This article was produced by The Namibian’s investigative unit. Send us story tips via your secure email to investigations@namibian.com.na

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