Private companies and public entities across the economy have vested the authority to manage them on their behalf on a group of individuals known as Board of Directors where some of them are executive and non-executive members respectively. Shareholders are essentially the owners of these private companies on one hand while on the other, citizens or members of the public own public entities like State Owned Enterprises. Not every Benny and Betty is competent to become a member of the Board of Directors whereat individuals with requisite credentials commensurate with the tasks at hand are appointed to such structures. Or so I thought.
Expectedly, these are individuals who should like someone said, ‘think in the 2nd and 3rd order (thinking beyond the obvious)’. But for some strange reason known only to themselves, the decorated members appointed to boards have behaved like the ordinary Benny and Betty and continue to so unabated. The reason for this errant behaviour is because board members know very well that no punitive action will be meted on them should they take decisions detrimental to their companies and entities. They know they will always go unpunished even for decisions they ought to have foreseen to be detrimental.
There are reports that various District Councils and other NGOs have ‘invested’ cumulatively, about Pula 200 milion in a company currently under liquidation and which company is called Bluthorn Fund Managers. It appears from what one learns the money may never be recovered. Was due diligence conducted by the District Councils and the NGOs before the ‘investment’ to ascertain the company’s background and sustainability as a fund manager? Were there any possible conflict of interest with regards to its directors? The conflict of interest question is very important because from what has emerged, Bluthorn appears to be ‘a family’ business which was described by the liquidator as family business partners discussing business over a family table. These are pertinent questions whose answers could be hard to find. Given the mushrooming of fly by night companies, it was incumbent upon the District Councils to ensure that such ‘investments’ were above board. State Owned Enterprises are on their knees as a consequence of bad business decisions made by the boards of these enterprises. Such business decisions involve huge amounts of public funds where accountability for them cannot be swept under the carpet.
I have argued in my recent past articles that the Botswana Building Society Limited shareholders should sue the board for their loss in value of their shares occasioned by the suspension of the same by Botswana Stock Exchange. I have also argued that had the board properly managed its differences (that are in the public domain) with the Managing Director and the Company Secretary, the boardroom brawl that ensued therefrom would have not occurred. In the process of the boardroom brawl, shareholders would have lost from the non-trading of their shares. Was the dismissal of the Managing Director and the Company Secretary by the board the best way to resolve the differences between the two parties? Was the board oblivious of the possibility of a protracted legal battle resulting from the dismissal? Was it not anchored on bad faith? Was the board not expected to know that it had violated the Constitution of the organisation as the High Court recently held?
The two issues show beyond any reasonable doubt how individuals in positions of authority preside over institutions they lead. And I must state very categorically that I am not specifically targeting institutions named herein but to suggest that this is the scenario throughout the public and private sectors. These are just examples. One has read how Enron in the US was collapsed by its leadership at almost all levels as a result of a ‘systematic structure that can be boiled down to simply accounting fraud’; how Eskom in South Africa is facing daunting challenges which could have been avoided had various boards did the right things; Botswana Meat Commission has almost collapsed. In all these situations, there were Board of Directors whose primary mandate was to ensure that these
institutions are properly managed and sustainable to uplift the socio-economic circumstances of citizens. But lo and behold! That has proved a pie in the sky. So what is the problem?
It is very likely that Board of Directors generally speaking, use their positions to pursue their own personal agendas out of sheer greed. And this because they enjoy lucrative perks in terms of sitting allowances and others which they would not be prepared to forego. In State Owned Enterprises, board shareholders in terms of relevant ministry senior officials become entangled in boardroom brawls in terms of advancing their own personal agendas by influencing, for example, tenders for their own companies or their cronies. These are usually high value tenders from which they make a kill. Because of these conducts, ministry officials in boards never raise a finger to any wrongful conduct by their fellow board colleagues or, they look the other way. The corrupt nature in both the public and private sectors do not make the situation any better because everyone everywhere and according to some observers, can bribe law enforcing agencies to conceal the wrongdoing. If one considers the scale of public funds lost in State Owned Enterprises and whether anyone has been prosecuted let alone serving a jail term, neither of the scenarios exists.
Shareholders know very well that they lose huge amounts of money as a result of bad errors of judgement committed by their boards where in most cases, such are not borne out of good faith or good intentions but by sheer greed as already mentioned. In cases where these boards fail to demonstrate that their actions were not vexatious, they should be sued in order to compensate the financial and other losses suffered by the shareholders. Good corporate governance in public and private sectors had been diminished to a point where the principle has only become a convenient rhetoric. Yet, individuals appointed to these boards are not your usual Benny and Betty. They are individuals with good credentials who should be making good governance fashionable. Public funds lost through Bluthorn by the District Councils and NGOs are as good as gone. Boards of Directors have decided to go rogue, delinquent and untouchable. It is high time shareholders stood up to show who is the boss. I am prepared to be persuaded otherwise as always. Judge for Yourself!
Covid-19 is still our immediate threat. To those who have been vaccinated, you are not out of the woods yet. Let us all observe and comply with Covid-19 protocols. It is our civic duty to do so.
