Government acts on State enterprises

Government acts on State enterprises

Source: Government acts on State enterprises | Financial Gazette (News)

STATE entities and parastatals, which have often gone for years without substantive executive appointments, including chief executive officers and financial directors, will now be required to make substantive appointment within 90 days of a vacancy.

The new regime will be become effective once the Public Entities Corporate Governance Bill, currently before Parliament, becomes law, a senior government official said.
It will also affect the appointment of parastatal and State enterprise boards.

At least 20 State enterprises and parastatals are currently being run by acting chief executive officers.
Speaking to The Financial Gazette at the Institute of Chartered Accountants of Zimbabwe (ICAZ)’s public sector audit and governance convention held in the capital last week, permanent secretary in charge of corporate governance in the Office of the President and Cabinet (OPC), Stuart Comberbach, said there would be serious consequences for wilful non-compliance with the new law, which is expected to be promulgated before the end of the year.
“It’s a very interesting piece of legislation,” said Comberbach.

“It’s in response to growing concern about continuing corporate governance failings across a poorly performing State enterprise and parastatals sector. Cabinet has approved a Public Entities Corporate Governance Bill and forwarded it to Parliament. The Bill had its first reading in Parliament on September 21. Our hope is that the Bill will become law before the end of the year,” he said.

“If the Bill is approved by Parliament and signed by the President into law, no entity will go for a period longer than 90 days without a board or chief executive officer (CEO) or finance director. There will be consequences for non compliance. It’s a huge task for us to ensure that State enterprises and parastatals comply with the law. But, I can assure you, we will be on top of it.”
Zimbabwe has about 100 State-run firms and nearly all of them are teetering on the verge of collapse due to mismanagement and other vices.

Given the critical nature of these State-owned enterprises in the economy, delay in replacing heads of institutions has taken a toll on the operations of the parastatals, with almost all of those in acting capacities failing to spearhead the turnaround of the organisations.

The leadership vacuum has also triggered underhand dealings in the government-owned entities.
The OPC has already put the process to create a database of qualified people who should be considered for appointment to the boards of public entities in motion.
Last week, the OPC invited Zimbabweans who are interested in appointments to the boards of State enterprises.

The database will be accessible to all line ministries to enable them to identify suitably qualified candidates for appointment to boards of public entities.
Comberbach also said the proposed law would also protect State enterprises and parastatal board members, CEOs and finance directors from dismissal.

Any dismissal or appointment of the executives or board members would require approval by President Robert Mugabe. This would put to rest the current norm where newly appointed ministers sack executives of State companies once they get appointed to line ministries, replacing them with friends and relatives.
“The new changes will not allow a situation where a board member or CEO can be dismissed without approval of the President. That’s another check and balance on the issue,” said Comberbach.

Under Clause 16 of the Public Entities Corporate Governance Bill, the law gives board members security of tenure by prohibiting their dismissal for anything other than misconduct, disqualification, failure to comply with their conditions of service or performance contracts, or if they fail to attend three consecutive board meetings.

Disputes over whether a particular dismissal is justified will be referred to the OPC.
Comberbach said his office had accelerated the process to identify State entities that should be shut down or privatise. Others will require joint venture partnerships, he said.

“His Excellency expressed his disappointment and concern at the perpetual underperformance of parastatals and State enterprises and the failure by line ministries to adequately oversee and supervise the various State entities which fall under their respective administrative portfolios.

“The President’s remarks and his reference to the need for ‘coffins’ for purposes of laying to rest those State entities which have outlived their usefulness or which are simply no longer viable, has prompted the acceleration of an already ongoing review of the mandates, performance and future potential of a number of State entities with a view to identifying possible candidates for ‘burial’ or alternatively, possible candidates for privatisation, joint venture partnerships or re-integration as departments, within parent or line ministries,” said Comberbach.