Saturday, July 4, 2020

BR board has no finance or accounting professional 

In what is perhaps the worst unforced error he has made so far, the Minister of Transport and Communications, Thulaganyo Segokgo, has appointed Botswana Railways a board of management that lacks the type of professionals that he should have thought of first. At a period of time that organisations (especially those that are supposed to make profit) are being refashioned on the tenets of corporate governance, people with financial knowledge and skills (mostly finance and accounting professionals) have come to chair finance and audit committees of the board.

That is done for the simple reason that they can appreciate and articulate issues of finance, audit and investment from a position of experience and technical knowledge. Where there are fiscal problems, the committee resolves them with the guidance of the chairperson. If an audit identifies a problem, the committee monitors the implementation of plans to correct such problems with the guidance of the chairperson. A former BR board member says that the one other responsibility of the chairperson is to provide informed opinion on investment and policy decisions.“If management makes a poor investment decision, the chairperson must be able to provide guidance,” says the source.

All along, BR, which is worth P4 billion, has had a rotation of finance and accounting professionals chairing the organisation Finance and Audit Committee. The chairperson of the immediate past Committee, Christopher Mokgware, was a chartered accountant who works full-time for Debswana Diamond Company. However, for the first time since the institution of corporate governance processes, the BR board has no member with professional qualifications in either finance or accounting. And for the first time in a really long time, the Finance and Audit Committee is chaired by someone (former Assistant Minister of Agriculture and Tswapong South MP, Oreeditse Molebatsi) who doesn’t have any professional qualifications in either finance or accounting.

That notwithstanding and has been practice all along, he will be expected to help the board fulfill its fiduciary responsibility. In fairness to him, Molebatsi is a businessman but BR (and indeed other parastatal organisations) have established a standard that requires a lot more than owning a business to chair finance and audit committees. Sunday Standard’s information is that BR executive management is itself gravely concerned about this anomaly and has officialised such concern with Minister Segokgo, with the expectation that he will take corrective action.

Corporate governance is at the core of auditing and in terms of this framework, board members should not have any financial interest in the organization except for their fiduciary responsibility. However, Molebatsi has in the past not only done business with BR in the past while a board member but neglected to formally declare such interest until 11 months after the fact.Effort to get an explanation from the ministry failed. While Sunday Standard complied with all requirements for getting a response from the government (by sending written questions via email, confirming receipt of such questions, allowing the ministry adequate time to respond and indicating the production deadline), none had been received at press time.

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Sunday Standard June 28 – 4 July

Digital copy of Sunday Standard issue of June 28 - 4 July, 2020.