I want to look, once again, at PEEPA. I suppose I could be indicted for overkill, paranoia even, or worse still, intellectual narcissism. But do I plead guilty? I think not; at least, not presently. For we have now come full circle in this, the last of my three articles on parastatals. I thought it only proper to complete my trilogy on public bodies and the problem of relationships. I also felt I should complete the task I set myself at the beginning of my articles, namely to demystify company law theory and lay bare the dynamics behind the legal structure of power so that we can better understand the shenanigans of public officials, that is, not as the consequence of divine intervention, but as tactics in a well thought-out political strategy. Hence, my approach has been from the standpoint of rules of law, no doubt much to the disdain of those schooled in the art of public administration, as they would rather such analysis of government be undertaken from an institutional perspective. I am afraid I do not share that analysis, as it will by now not surprise the reader, owing largely to my training in the discipline of law.
It will be recalled that I began these series with a discussion of company structures and the distribution of powers and functions between them, and their troublesome relationships; I then proceeded to look at the responsibilities of company directors and located the debate on corporate governance in this theoretical space, at the same time warning against a mechanical or blind application of corporate governance principles to public bodies. I refer the reader to my penultimate article in the last issue of the Sunday Standard where this topic is sufficiently dealt with. This time, I want to undertake an exegesis of the third pillar of what I earlier referred to as the hierarchy of powers in a government-owned company: that enigma called the Minister. I say enigma because etymologically speaking the word ”minister” means a person acting under another’s authority, a presidential agent in our case. But a Minister is also a creature of both constitutional and legislative enactments that we have all come to gape at, bemusedly, in awe; a repository of diverse stately powers and functions.
Now, I must explain that I am not bent on some personal vendetta nor do I wish to give a character reference to any individual Minister or public official. I am describing the Minister as an adjunct who holds office at the pleasure of the President and is hired by the President to carry out his or her instructions within a ministry and to manage that particular ministry. I am here concerned with this office (one of many) in part in terms of its formal framework and in part in terms of powers and functions in the context of the regulation of public corporate entities. If you fell to the ground and spent too much time looking at where you fell, and not where you tripped, you are probably not going to know the reason why you tripped and therefore fell. In the same way, by devoting too much attention to parastatal boards, we run the risk of confusing the site of conflict as the primary source of conflict. In this article I argue against that approach, and I attempt to identify the real culprit as none other than the Minister of Finance. This should not be construed as an attack on the person of the Minister. Rather, it is the office with which I am concerned. I want to argue that what has happened at PEEPA will likely take place in other areas in time to come unless certain safeguards are introduced without delay. Let me substantiate.
Before the last twenty years or so there would probably have been no need to examine with particular care the ministerial powers exercised over state-owned companies or parastatals as they are popularly called. These powers were accepted without question. A variety of reasons have led to the importance of this subject, however. The fact that in the last few years our country has begun the shift from a welfare State or so-called mixed economy to a capitalist state or so-called market oriented economy, means that an examination of the problems encountered during this transitional period cannot be avoided. For a number of reasons which it is unnecessary to go into, our government has adopted the policy of privatization which translates into the disposal of assets hitherto belonging to the nation and transfer of these assets to private concerns such as multinational corporations. This is phenomenal development. The quintessence of privatization, beginning first with telecommunications and transportation; later, insurance, land and housing; and much later, mineral and water resources, is that the government’s role in these economic activities will be reduced to regulation and oversight. However, and ominously, as public bodies are off-loaded they will become the property of certain powerful resident families and allied interests abroad. We can assume therefore that various interest have begun to position themselves.
But, even more alarming, a strange feature of this transition is how the process is leading to the considerable strengthening of political power. Let me explain this carefully. Although the official policy is also to de-politicize the powers and functions of public bodies as the country embarks on corporatisation (hence the furore about corporate governance), the implementation of privatization appears to go in the opposite direction. Of course, the government must be commended for the position explicitly set out in Government Paper No 1 of 2000, that the privatization project cannot succeed without, among other things, an appropriate legal framework. This theme is repeated consistently throughout the new policy and, significantly, it is accepted that there may also have to be legal restructuring of those parastatals that escape privatization. The Minister of Finance appears hesitant to implement this aspect of the policy. Is he defying Cabinet?
The second point is that certain factors are critical for successful policy implementation. We all know that political power (not legal authority) over some public officials tends to have the effect of making them amenable to the will of the person wielding such power. The new policy seeks to counter this human disposition: “Government will create an autonomous public entity to be named ‘Public Enterprises Evaluation and Privatisation Agency (PEEPA)’”. This body is required to report to Parliament through the Minister, and once established, it “will be an autonomous entity that will be run on commercial principles.” Clearly, the policy of the government is to remove implementation of the privatization project from political control and to vest it in an independent body, a feat that can only be accomplished by the amendment of the Constitution. This is yet to materialize. PEEPA, as presently constituted, does not satisfy this requirement. For example, PEEPA does not compare with the Independent Electoral Commission, a public entity this writer first conceived and articulated for and on behalf of the Opposition (not the ALL Party Electoral Commission which Dr Kenneth Koma so cherished) during the 1980s. Nor does PEEPA compare with the independent commission devised to implement the new SACU Treaty in member countries, to which we are party, and which our country (and Namibia) sponsored to counter South Africa. In short, we are not without precedent. Instead, what we have is a limp organisation seemingly at the Minister’s beck and call. When can we expect the Minister to deliver an independent public entity called PEEPA? Is he defying Cabinet?
The Privatization Policy makes explicit the government’s concern with corporate governance issues in the new era, for it provides that “PEEPA will be a company with a board of directors drawn mainly from the private sector who will be appointed by Government in a transparent manner….Those chosen from the public sector will be selected to serve on the board in their personal capacities and rewarded accordingly.” So far so good, since on the face of it the Minister has complied. But has he complied substantially? If read in context, it is clear that the Privatisation Policy requires PEEPA’s board, not the Minister, to elect their own chair and appoint the Chief Executive Officer. Alas, under PEEPA’s articles, which were registered at the behest of the Minister, the Chairman cannot be elected by the Board, or elected at all. On the contrary, the Chair is appointed by the Minister, on no one’s advice, in consultation with no one, and clearly in breach of the Policy. The object of the Policy is certainly to ensure that merit rather than political considerations should be the reason for appointment. I have no quarrel with the integrity of the Permanent Secretary. I doubt though if there is a Chinese Wall or cordon fence between him as Permanent Secretary and as Board Chair when he discharges his duties in either capacity. More important, by appointing his most important employee as Chair, the perception could be that the Minister is assured of political control. Why did the Minister make such appointment? Is he defying Cabinet?
To answer some of these questions, it should first be noted that there are advantages and disadvantages attaching to the various choices and processes available to the Minister. When a statutory company is established under specific legal legislation, its constitution and powers and functions (its structure, what it can and cannot do, and who can and cannot do it) are contained in that law and the power to change all these is vested in Parliament, although it is not uncommon that Parliament will delegate its authority to the Minister enabling him or her to change the law through regulations. But Parliament jealously guards against this power-making capacity by extending only limited ministerial authority. Clearly, a statutory corporation is not susceptible to political control that easily due to this rather cumbersome procedure.
In contrast, the constitution, powers and functions of a company formed under the companies legislation can be altered at will by the general meeting of shareholders acting in compliance with the procedures stated in the articles. I have already given as an example of this the withdrawal by the Minister of the right to appoint an executive director previously enjoyed by the CEDA board. Such a step does not require parliamentary intervention, which in any event would not be forthcoming unless there first was a full and public disclosure of reasons. Traditionally, this is a prospect that few Ministers relish.
Let me look at the last issue. This is the story of the appointment of PEEPA’s Chief Executive Officer and is now well documented. But how does one explain the histrionics? If the Permanent Secretary is also the Chair, which he should not be, who does he answer to? To PEEPA, or to the Minister, or to the President through the Minister? He who pays the piper calls the tune. But who pays here? If it is the Minister, and not Cabinet, who pays, does it follow necessarily that the Permanent Secretary, nay, the Chair of PEEPA, is the Minister’s instrument? In centuries gone by, the Romans would often be heard say: qui facit per alium facit per se, or he who does a thing by another does it by himself. Amen
Michael Mothobi is a Law lecturer at the University of Botswana.
