While the National Assembly and the Private Sector Commission (PSC) will be identifying one candidate each for the board of the Natural Resource Fund, President Irfaan Ali will select one and possibly three in his own deliberate judgement, possibly giving him total control over this all-important oversight body.
Such concentration of powers in the Executive Presidency for the fund which controls all oil revenues accruing to the country will raise severe concerns and offend best practices for Sovereign Wealth Funds (SWFs).
The Natural Resource Fund Act has been slated by critics for its poor construction and vagueness on the Board of Directors which will govern it. However, what has now become clear is that President Ali won’t only be appointing directors and selecting the chairman, he will also be picking at least one and possibly three of the directors.
Section Five (1) of Part Three of the Act dealing with Governance and Management of the Fund says “There shall be a Board of Directors of the Fund which shall comprise of not less than three and not more than five members who shall be appointed by the President, one of whom shall be appointed Chairperson by the President”.
Section Five (2) speaks about who the directors shall be explaining that they “…shall be elected from among persons who have wide experience and ability in legal, financial, business or administrative matters, one of whom shall be nominated by the National Assembly and one of whom shall be a representative of the private sector.”
It is still unclear what nomination process will be followed by the National Assembly as the Act is silent on this. It would likely mean that Parliament’s Committee on Appointments would undertake the task and the PPP/C would use its Parliamentary majority to decide the candidate no matter the views of the opposition parties.
Chairman of the Private Sector Commission (PSC), Paul Cheong told Stabroek News on Tuesday that the PSC is already planning on how its nominee will be selected. He said it will be an inclusionary process as the post is “too important” to not have consensus.
Cheong explained that next week there will be a meeting of the PSC and a discussion to “chart a way forward” will be on the agenda, although they have not yet received formal notification to submit their nominee’s name.
“We will have to open up for the sectoral bodies to nominate and we will have to go through a process. This is an important position and it has to be open,” he said, underlining the importance of the legislation.
“We will have to appoint a committee to look at it and try to find the best possible persons,” he said. After the nominations, there will be a vote to determine the best person and that person’s name will be forwarded to the President for his approval or rejection.
But how will President Ali make his selection or selections? Will he be publicly consulting with anyone on his selection/s? No matter whether he chooses one or three directors, the government will effectively have total control over the board as the National Assembly nominee will depend on the majority approval of the PPP/C MPs and the nominee from the private sector is likely to be someone who the PPP/C will find favour with.
While the NRF Act says the Fund will be managed according to international best practices including the Santiago Principles which is the gold standard for SWFs, the present legislation will be found wanting in relation to principles six and seven.
“GAPP 6. The governance framework for the SWF should be sound and establish a clear and effective division of roles and responsibilities in order to facilitate accountability and operational independence in the management of the SWF to pursue its objectives.
“GAPP 7. The owner should set the objectives of the SWF, appoint the members of its governing body(ies) in accordance with clearly defined procedures, and exercise oversight over the SWF’s operations”.
President Ali is expected to make announcements shortly on the composing of the board.
On Friday, December 31st, Minister with responsibility for Finance, Dr Ashni Singh promulgated an order setting January 1, 2022 as the commencement date for the operation of the Natural Resource Fund Act.
