IN FEBRUARY of last year the late Prime Minister David Thompson appointed Mr Arni Walters as executive chairman of the Barbados Water Authority (BWA). Twenty-one months later, Minister of Water Resource Management Dr David Estwick announced that Mr Walters was no longer with the authority.
We do not want to reflect on either Mr Walters’ efficiency or effectiveness in that job. The focal point has to do with the governance of the BWA.
The Water Authority is one of four critical utilities in this island but has been hamstrung by problems for many years. It needs to be restructured and modernized, its customer service enhanced and a major main replacement and conservation programme put in place.
This utility is clearly critical to our very well-being. However, it has never been viewed in the same positive manner as the privately-owned Barbados Light & Power Company or Cable & Wireless. Even the National Petroleum Corporation, the other Government-owned utility, was never seen as being as inefficient as the BWA.
We do not know the thinking behind Mr Thompson’s decision to create the position of executive chairman at the BWA, but it certainly did not help an already bad situation. The position was clearly a creature of the minister. There is only one instance in the public sector of an executive chairmanship that has worked relatively well.
We refer to the Central Bank of Barbados where the governor also serves as chairman of its board.
And even there it has not been a perfect fit.
The idea of combining the role of chairman and chief executive officer is an American business practice which has proven to be a weak corporate governance model.
It does not allow for the type of transparency necessary in a modern business and the CEO’s actions can go unmonitored. Indeed, it can be problem-riddled.
In Britain and Canada the role of chairman and CEO is generally separate and there are clearly established guidelines. The UK Corporate Governance Code requires that the division of responsibilities between the chairman and CEO should be clearly established in writing and agreed to by the board.
We recognize that by separating the two roles it allows the CEO and the non-executive chairman to focus on different but equally important components of the organisation’s performance. The chairman is responsible for leadership of the board; the CEO is responsible for leadership of the business and managing it within the authority delegated by the board.
Good corporate governance is essential here and requires the board of directors to keep the CEO?in check.
It therefore begs the question: how can a CEO manage the business and be his own overseer?
It is all about transparency.
Mr Thompson’s decision to appoint an executive chairman for the BWA was clearly an unwise move. Estwick’s move to separate the positions makes sense.
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