Sunday, April 21, 2024

SOEs’ governance ethic must change


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By Eric Smith @eric_nationbb

Attorney General Dale Marshall has been highlighting the need for both reform and introduction of laws to help modernise this country’s jurisprudence.

In the course of outlining why such measures are necessary, he and indeed many other members of the Government have been talking about the need for “transparency” and “accountability”. The Integrity In Public Life Bill, 2018 points the way.

As is the case with many governments in Barbados over the years following a change of administration, there are usually accusations made against predecessors.

It all makes for good political fodder. However, the reality is that the politicians are not necessarily the only or indeed main people on whom the public, as watchdogs, should be keeping a close eye. It is the entire government system, particularly the state-owned enterprises.

There is therefore earnest hope that the next phase of the Barbados Economic Recovery and Transformation (BERT) programme, coming on stream within a matter of weeks, will bring a significant shift in the way things are done in Barbados, particularly within the state-owned enterprises (SOE). Achieving the economic targets is critical, but there must be other tangible targets to achieve.

The public’s negative comments about many of the SOEs highlight a major weakness in the way they are governed. The concern is not because they are under state control as opposed to private ownership, but rather about how they are governed.


These problems may stem from most not having effective corporate governance rules and regulations, which are so important to militate against risk. Most Barbadians appreciate that public enterprises deliver key services across sectors, account for significant investment and employ many people at all levels. However, many of them underperform, which is why the BERT programme has become necessary to prevent them becoming a greater burden on taxpayers.

This is why the comments made late last year by Government economic advisor Dr Kevin Greenidge about modernisation of public institutions were so important: “. . . By the end of March, you will see an improvement in many of the institutions. There are 15 of them we have found; then there are another 20 or so that will require some heavy lifting – we will deal with them in the next fiscal year. ”

There is always the risk of arousing the wrath of many Barbadians by looking to the Organisation for Economic Co-operation and Development (OECD) for leadership on anything.

However, its guidelines on corporate governance of state-owned enterprises are considered the international benchmark.

They state in part: “The state should act as an informed and active owner and establish a clear and consistent ownership policy, ensuring that the governance of the state-owned enterprises (SOEs) is carried out in a transparent and accountable manner, with the necessary degree of professionalism and effectiveness. (. . .) The government should not be involved in the day-to-day management of SOEs and allow them full operational autonomy to achieve their defined objectives. . . . The state should let SOE boards exercise their responsibilities and respect their independence.” Unfortunately, many public sector businesses do not observe five key objectives: improve transparency and reduce corruption; improve their operational performance; reduce their fiscal burden and make a contribution to the

Continued on next page.

The public’s negative comments about many of the

SOE’s highlight a major weakness in the way they are governed

International Monetary Fund senior economist Dr Kevin

Greenidge (FP)

Attorney General Dale Marshall. (FP) Best practices must be followed

From Page 14A.

Treasury; increase access and opportunities to alternative sources of financing; and help finance infrastructure development.

In order to achieve some of these objectives board members of stateowned agencies must understand their roles – which means adhering to international best practices.

This will require director training and certification, which can help better outline the roles of the executive chairman, the chairman and the role of the board as opposed to that of the executive management.

There is no doubt that being a director of a public sector business can be very challenging.

Both the boards and the elected officials must understand what and where the are boundaries between government and the market.

Stay out

The politicians need to stay out of the dayto- day activity of these enterprises, allowing for full operational autonomy, even as the question will be raised as to how much distance there should be between the government and the businesses it owns.

The old habit of politicians wanting greater influence and power over stateowned operations must stop since it only breeds nepotism and cronyism leading to rewards to supporters through appointments to various positions and even granting of lucrative contracts without going through an effective tendering process, thereby making a mockery of the system. This is why bribery is commonplace in a world without transparency.

Transparency International (TI) has developed ten anticorruption principles for state enterprises, and until there is an overarching bit of legislation in place to ensure good corporate governance then the TI guidelines should be studied.

Given that integrity and probity stand above all else, the public will need information. This is why whistleblowers are so important and they must be given protection. Freedom of information legislation is equally necessary. Access to information will be necessary to hold institutions and officials accountable.

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