…As parastatals defy Cabinet directive
TINASHE MAKICHI
Investigations Editor
Board members for State-entities are pocketing a paltry ZWL$1 000 allowances and fees on average per board sitting or less than US$12, a situation which could potentially force them to lax their critical corporate oversight, it has emerged.
Their counterparts in the private sector, according to several board members of some listed companies, are pocketing between US$100 and US$150 or about ZWL$8180 and ZWL$12 270 using this week’s auction rate. In addition to that they get fuel allowances.
The low fees come at a time when President Emmerson Mnangagwa’s administration is luring professions to sit on parastatals’ boards in a bid to revamp operations at state enterprises and parastatals.
Several state enterprises and parastatals are being run into the ground due to poor governance, mismanagement and corruption. Several of these entities have been struggling to produce financial statements.
But, the low fees and allowances might not help the government’s bid to attract the best people to sit on the boards of these struggling State entities, critics have said.
Although the Public Entities Corporate Governance Act says payments to board members will be based on the entity’s financial capacity, the low fees and allowances could mean entities might not benefit immensely from the rich knowledge some of the board members have.
The disgruntled board members could choose not to bring quality service on the table as they believe they are just ‘donating’ their services to the government.
This could point to the reason why most State entities are making perennial losses.
And they continue to drain the fiscus through perennial bailouts to fund their operations.
Business Times this week saw a schedule of board fees and allowances for State entities and spoke to disgruntled board members who expressed disquiet over the failure by entities to implement a directive approved by Cabinet last year to review upwards their board fees and allowances.
Business Times is informed that the last review was done in October last year and ever since, non-executive directors have been earning ‘peanuts’ from board fees and sitting allowances.
Some board members who requested anonymity said there was already disharmony among non-executive directors in several State entities, meaning there is a likelihood of them losing critical skills.
“Remember some of the non-executive directors are retired captains of industry and there might be no need to continue serving state enterprises for free,” one director who requested anonymity told Business Times this week.
“The last review was done in October last year and just look at how the exchange rate has moved to date. Some directors are now even proposing extension of board meetings and sittings.”
Head of State Enterprise Reform and Corporate Governance Unit, Willard Manungo, admitted that there was a delay in implementing the Cabinet decision to review board fees and allowances saying the implementation was awaiting harmonisation.
“Cabinet approved in principle, but they wanted the implementation to be harmonised, we will shortly communicate how the harmonisation will be done,” Manungo said.
In a bid to resuscitate the ailing State enterprises, the government promulgated the new governing law under the Public Entities Corporate Governance Act [Chapter10:31].
Corporate governance malfeasance and subdued remuneration of non-executive directors, among other issues, have fueled corruption in Zimbabwe’s state enterprises, frustrating efforts to rescue the country’s fragile economy.
Analysts say board efficacy has been exposed by the collapse of iconic corporate giants that were the envy of investors and competitors, adding it has been proven that the board of directors is the epitome of corporate governance.
Parastatal and state enterprises survival, according to the analysts, hinges on an effective board with effective and controlling functions and while the Western world is far advanced in terms of the development and implementation of corporate governance codes, Africa and Zimbabwe in particular has been lagging far behind.
Several companies have faced difficulties associated with board failure and some non-executive directors, due to lack of sound remuneration, have ended up rewarding themselves with unjustified allowances.
The analysts said some of the major causes of corporate scandals were centred on poor oversight and lack of proper monitoring. (See comment )
