Nam changes rules on interlocking SOEs boards

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By Timo Shihepo

Windhoek - Namibia has developed a growing trend of appointing chief executive officers of struggling state-owned enterprises (SOEs) as a chairperson of other financially crippled government entities. The recycling of directors and managers at government companies, without the injection of new blood, has been raised as one of the reasons why SOEs in Namibia are failing. Often ministers hide behind the excuse that Namibia allegedly has a small pool of expertise to choose from. Critics have also asked what happens when the so-called most skilled Namibians cannot turn around the country’s parastatals. Governance experts labelled the situation, where one person is appointed on the boards of more than two companies with the required efficiency, as ‘virtually impossible’. The situation, they say, becomes more suspect when the said individual occupies crucial positions like CEO of a failing government company and then being board chairperson at another government company on life support.

Experts also said the recycling of these people makes it easy for corruption to breed due to the intimacy that these individuals develop.

The practice is not unique to Namibia, South Africa’s President Cyril Ramaphosa described his country’s state-owned enterprises as “sewers of corruption” that his government was working hard to fix.

He said his administration was completing work on a new, centralised ownership model that allows for better strategic alignment, improved coordination and more effective oversight.

 

 Namibia changes its ways

In Namibia too this is soon to change, as  minister of public enterprises Leon Jooste told The Southern Times that government is finalising new Board Recruitment and Appointment Guidelines. The new guidelines, according to Jooste, will prohibit the appointment of SOE chief executives as chairpersons of other parastatals. The new guidelines are also set to limit the number of parastatal boards an individual could be appointed to. Jooste wants to limit the number to only two.

A typical example is that of Johny Smith, the CEO of the ailing government rail transport company, TransNamib. Smith, until recently, was the chairperson for the Alliance for Corridor Management in Africa (ACMA), chairperson of Telecom Namibia, and a commissioner on the country’s National Planning Commission.

It is interesting to see how Smith juggles his work commitments given the fact that TransNamib, which had more than two unsuccessful turnaround strategies within a decade, needs undivided attention from its boss. The parastatal is still begging government for R9 billion to overhaul the dilapidated rail line around the country.

Due to workload, Smith confirmed to The Southern Times that he has resigned as the Chairperson for ACMA and also resigned from Telecom Namibia last month.

“As an individual, I have never compromised at any time my duties as CEO whether it is TransNamib or my previous role as CEO of the Walvis Bay Corridor Group (WBCG).  I have learned to manage my time to ensure that I provide dedicated time to the various roles to ensure an effective contribution to the relevant institution,” he said.

Smith has a mammoth task on his hands to turn around the fortunes of the beleaguered parastatal that has been inundated with claims of corruption, poor governance for over a decade now. The national rail company basically depends on government to fund its operations yearly while unable to fund its own operations from its business activities.

“My track record should be an indication as to my ability to deliver results rather than the pure time spent in the office.  When I took on this role I was clear about the challenges that it holds and as a mature professional I’m confident that I will manage my time to the benefit of TransNamib,” said Smith.

Despite the workload at the Communication Regulatory Authority of Namibia as CEO, Festus Mbandeka is also serving on the board of Namibia Diamond Trading Company (NDTC) as well as the chairperson of the Casino Board of Namibia.

Jerome Mutumba juggles his work between various equally important tasks. Mutumba is the chairperson of the Namibia Students Financial Assistance Fund (NSFAF), he was also the acting CEO of Zambezi Waterfront and Tourism Park in Katima Mulilo, a flying distance of more than 900 km from his day job as a Development Bank of Namibia (DBN) senior communications manager in Windhoek.

Mutumba was also appointed as one of the commissioners of the National Planning Commission.

“In companies, there are executive directors and non-executive directors. My task at NSFAF is that of a non-executive director, I am not involved in the day-to-day running of the business but we only meet say, for example, on a quarterly basis. 

This then allows me to concentrate on my 8 to 5 job,” he said.

Mutumba, however, said it is important that if one is being appointed as CEO, chairperson or a board member due diligence should be done that no conflict of interest arises.

The chairperson of the troubled National Petroleum Corporation of Namibia (Namcor), Patrick Kauta is also the chairperson of the controversial Namibia Premier League. Kauta is also the senior director of a law firm called Dr Weder, Kauta & Hoveka Inc.

National power utility, NamPower chairperson, Kauna Ndilula despite having to put up with the demanding business of NamPower, she is the founder and managing director of Business Financial Solutions (BFS), a Namibian multi-disciplinary consulting and asset management holding firm. Like Mutumba and Smit, Ndilula is one of the commissioners of the National Planning Commission.  Although Ndilula and Kauta’s day jobs are not government related, as chairpersons they preside over parastatals that are constantly in the media mostly for negative reasons.

Economic analyst, Dr Omu Matundu referred to this as a corporate governance problem that needs curbing. He said having someone managing a failing SOE and appointing him or her as the chairperson of another SOE is setting up two companies to fail. “Now, it becomes a problem to pinpoint where exactly the problem is. Is the problem in management, the board of directors or the chairperson? In the end, the government would end up forking out taxpayers’ money to pay out people from their contracts because they are longer performing. It’s a governance structure issue just recycling people within the system,” he said.

Answering if it was practical for a CEO to be a chairperson, Jooste said it depended on the intensity of the demands in the respective positions and, of course, also on the capacity of the particular individual.

“In our Act, we don’t allow for an individual to serve on more than two SOE boards simultaneously. 

We have compiled a significant database of potential board members and we have managed to encourage several people to make themselves available to broaden the base,” he said.

 

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