Corporate governance broadly refers to the mechanisms, relations, and processes by which an organisation is controlled and directed. It is the framework of rules and practices by which a board of directors ensures accountability and transparency in an organisation’s relationship with its stakeholders. The framework consists of: (a) explicit and implicit contracts between the organization and its stakeholders for the distribution of responsibilities, rights, and rewards; (b) procedures for reconciling the sometimes conflicting interests of stakeholders in accordance with their duties, privileges, and roles; and (c) procedures for proper supervision, control and flow of information to serve as a system of checks and balances.
Corporate governance focuses on leadership, sustainability and good corporate citizenship. Moral, ethical and effective leadership is the essence of good governance. Such leadership directs an organisation’s strategies and operations with a view to achieving sustainable economic, social, and environmental performance. It is the primary responsibility of the board of directors for the governance of the organisation, including: (a) setting strategic objectives; (b) providing the necessary leadership to implement the strategies; (c) supervising the management of the organization; and (c) periodic reporting on its stewardship to the concerned Minister and the Legislature in the case of public entities. All directors, whether or not they have executive responsibilities, are responsible for the stewardship of an organisation’s assets. They also have a monitoring role to play and ensure that the necessary controls are in place and are working satisfactorily.
The board of directors provides effective oversight of the management of the organization and a sense of direction and leadership. It speaks with the collective voice of the individual members who work with quiet competence in the furtherance of the objectives and activities of the organisation. With such collective responsibility, individual members, including the Chairman, are usually anonymous in the eyes of the public. A non-executive chairman’s responsibilities are no different from those of the other members of the Board, except that he/she has the added responsibility of chairing the meetings of the board. A chairman must not convey the impression that he/she is in charge of the organization since such actions would be viewed as over-extending his/her remit and a usurpation of not only the functions of the board but also of management.
The board, including its chairman, oversees the implementation of policies and is not involved in operational matters which is the remit of senior management. For example, a Chairman does not to get involved in routine financial management matters, such as making adjustments to the books of account, approving payments or signing cheques. Nevertheless, the board or a sub-committee thereof, approves of all procurement above a certain limit, within the framework of laid-down procurement rules approved by the National Procurement and Tender Administration Board in the case of State-owned/controlled entities. In the area of human resources management, the Board ratifies all senior appointments.
All public statements and commentaries about the organization are normally made in the name of the board. In addition, disagreements among board members, including the Chairman, are dealt with and resolved internally, failing which the intervention of the concerned Minister is sought. Further, board members foster good and cordial working relations with one another as well as with senior management, and all tensions and barriers to organizational effectiveness and performance are resolved amicably, without having these matters become public knowledge. Indeed, it is extremely rare for a private sector organization to allow any disputes or disagreements among board members and senior management to spill over to the public domain.
For some time now, there has been a failure to adhere to these fundamental principles of corporate governance because of either a lack of understanding of these principles, or authoritarian tendencies, or simply attempts to display rank power and the desire to be in the public limelight. We shall highlight a few examples that made the news in recent weeks.
Georgetown City Council
In a recent letter to the Georgetown Mayor, the Minister of Communities had cause to point out that the Town Clerk exceeded his authority when he directed the removal of vendors from Robb Street, Bourda without the approval of the City Council. At a subsequent meeting of the Council, the Mayor defended the Town Clerk’s action. She asserted that the Town Clerk could act without the permission of the Council and then inform the Council after, if the need arises. Perhaps the Mayor was referring to routine administrative matters. The Minister quite rightly drew attention to the relevant section of the law which considers the Town Clerk an employee of the City Council, an elected body. It follows that the Town Clerk could not act in this particular instance without the approval of the Council; and his action was a usurpation of the authority of the Council.
The Minister emphasized that Central Government has a policy of non-interference with the workings of local democratic organs. However, it reserves the right to intervene if there is a clear violation of the law. He stated that by virtue of George-town being the nation’s capital, it will always be subject to particular attention by Central government. The Minister also referred to the denial of facilities for the Deputy Mayor during the period when he (the Deputy Mayor) acted as Mayor. Under the law, if the Deputy Mayor, or any Councillor, is required to perform the functions of Mayor for seven or more consecutive days, the Council must provide all the necessary facilities, including financial resources, to enable the person to effectively discharge his/her responsibilities.
A few months ago, the contract for the installation and operations of parking meters was entered into without any form of competitive bidding in violation of the Municipal and Distract Councils’ Act. In addition, the elected Council was also not involved in the decision-making process leading to the award. There were calls from a wide cross-section of citizens to rescind the contract and begin the process all over through consultations with key stakeholders and the involvement of the entire Council. Unfortunately, such pleas have fallen on deaf ears while Central Government, through the Minister, appears helpless to address not only this authoritarian tendency but also this significant breach of the procurement rules.
Guyana Water Inc.
The dispute and disagreements between the chairman of GWI’s board and Chief Executive Officer (CEO) have been hitting newspaper headlines. Based on media reports, there are a number actions that the CEO took that did not meet the test of transparency and accountability. These include the hiring of a number of persons without adherence to established procedures, breaches in procurement rules, and relocating the office of the Internal Auditor to make way to the establishment of the Debt Recovery Unit without the approval of the GWI’s board. However, these are matters that could have been dealt with and resolved internally, with the guidance of the concerned Minister, as necessary. We now learn that the dispute is engaging the attention of the Cabinet, and a sub-committee meeting is to be held in a matter of days to resolve the issue, a development that the Chairman is reportedly uncomfortable with.
The other matter that found its way into the public domain relates to the controversy over ownership of the water infrastructure at the Sanata Complex. The Complex was sold to Queens Atlantic Investments Inc. (QAII). This column has carried two articles on the matter. In the first article, based on available information, we were able to conclude that facility is owned by GWI. This provoked the ire of Chairman who clearly from his public reaction appeared to be supportive of the claim by QAII that since the water infrastructure is sited in the Complex, it belongs to QAII. One would have expected the Chairman would have taken the position of defence of GWI, unless conclusive evidence demonstrates otherwise. Instead, he took the reverse position. He is also clearly over-extending himself as Chairman by taking positions and making them publicly known. The second article was a response to the statements he has made in an attempt to discredit this columnist.
Guyana National Broadcasting Authority
Another unpleasant occurrence relates to the public disagreement between the Chairman of the Guyana National Broadcasting Authority (GNBA) and two board members. The allegation by the Chairman was that he had received a complaint from a cable network service provider who claimed that he was being pressured by the two members to give up his operations in Essequibo in exchange for setting up service in the East Coast Demerara. The two board members have vehemently denied any wrong-doing, and there is a threat of court action.
The Chairman of the Board quite inappropriately released a statement to the media detailing the events leading up to the allegations and actions contemplated. Was he speaking for or on behalf of the Board, or in his personal capacity as Chairman? On the other hand, the service provider has acknowledged that he has been operating illegally. Is it a case where his service is affecting other legitimate operators on the Essequibo Coast? These are the issues on which the GNBA Board should deliberate, rather than making public statements which only serve to exacerbate the situation.
National Communications Network
The furore at National Communications Network (NCN) over the removal of the news anchor because of pregnancy, saw quite correctly the intervention of the Prime Minister who instructed that the CEO apologise for his action. However, such intervention should have been made through NCN’s board. One recalls the Prime Minister berating a news reporter from the Guyana Chronicle for a headline that he (the Prime Minister) did not like. He was reported to have instructed that all future headlines be vetted by his office. It should not be over-emphasised that ministerial responsibility relates to policy only and does not extend to the oversight of management which is the remit of the board.
Georgetown Public Hospital
Although the matter simmered down somewhat, there was a public dispute between the Minister of Health and the Chairman of the Georgetown Hospital board as to the action needed to be taken against the CEO following the forensic audit of the institution. The Board felt that the evidence was not enough to cause a removal of the CEO while the Minister felt otherwise. Ultimately, it is a decision that the Board will have to make, and not the Minister.
