Sunday, November 29, 2020

Government should act on the findings of the BDC’ report

Following several months of investigations, the Special Select Committee of Members of Parliament who carried a probe at Botswana Development Corporation (BDC)’s Chinese glass project, have delivered a report.

We commend the legislators for their task.

From the report, although there are ongoing efforts to try and recapitalize the project, the fact is the Palapye glass project has now come to a halt.

It has emerged from the committee’s probe that while over 70 percent of the project capital has been expended, barely half the project works has been delivered.

It is our view that pointing fingers and assessing how the situation could have turned out is a waste of precious time. We strongly believe that more energy should be exerted on preventing a repeat of what happened.

The clear overruling of the BDC Board by BDC management has resulted in a collapse of corporate governance ethos.

The corporate oversight function of the board was compromised and its powers were taken by management.

It is evident that instead of running BDC and ensuring accountability on behalf of government and the taxpayers, BDC board members were reduced to mere officials who sit once in a month just to rubber stamp management’s decisions.

Also disturbing is the finding that BDC management appointed board members for its subsidiaries. This is clearly a breach of the oversight role that the BDC board ought to play.

According to the report, the future of the project hangs in the balance with over hundred job losses looming.

Prospects of enhancing national revenue and using the glass project as another avenue for economic diversification are also dim.

The report also points a finger at BDC management for prejudicing the Palapye Glass project by failing to execute proper due diligence on prospective investment partners.

By now it is common knowledge that the Chinese company that BDC partnered with embellished its profile and had no track record whatsoever in any capital intensive project like the Palapye Glass project.

The parliamentary probe also found that there was generally a skills deficit on the board in that it did not adequately seek appraisals on the technical aspect of the project given the amount of money involved.

It is our view that what is remarkably at issue is the deteriorating culture of corporate governance within many of our institutions and parastatals.

Minister Kenneth Matambo’s decision to interfere with BDC operation by suspending board members at a time when the board sought to bring disciplinary action against some members of management is a clear sign that Botswana has a long way to go in appreciating and fully inducting ourselves with a culture of good corporate governance.

Boards have to be allowed to carry their mandate without interference or compromise. The prevalent tendency of packing parastatal boards with serving or retired civil servants who are not adding value should be reviewed.

We believe that appointment to boards should be based on merit as competence alone will ensure that boards carry out their oversight function.

In this regard, it is our view that if we are serious about cultivating a culture of corporate governance and accountability within our institutions, we have to empower boards and not undermine them in their roles.

Where reporting lines are clear, it would not only ensure accountability for the taxpayers’ monies but also curb corruption.

That noted, the committee has made numerous recommendations, it is our hope that government will act on the findings.

We believe that, to save BDC’s integrity, there is need to urgently restore a culture of corporate governance by improving accountability, especially to the board.

That disciplinary action should be commenced against members of BDC management implicated in their breach of a fiduciary duty to their employer is to us a small issue.

As long as we allow management in parastatals to override boards then, going forward, we are going to be caught up in the same web. We believe the solution is to restore accountability to the boards.
Given the amount of funds spent on the Palapye glass project, it is our view that government should step in and try to save the project by looking for alternative financiers as recommended by the select committee of parliamentarians.

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Sunday Standard November 29 – 5 December

Digital copy of Sunday Standard issue of November 29 - 5 December, 2020.