SIDEBAR: The EFCL issue
The Board of EFCL was reported to have dismissed its CEO after he failed/refused to comply with their directions in a certain matter. There are allegations reported that the Cabinet attempted to direct the EFCL Board, which raises the perennial issue of the nature and extent of Cabinet authority over State Enterprises.
From both the Companies Act and the recent High Court/Appeal Court rulings in the eTECK matter, it seems clear to me that the Board of Directors have fundamental responsibility for the direction and control of the company. That is the legal position, but it seems that our fundamental political culture and conduct is in real conflict with notions of independent professional responsibility.
The State Enterprise sector is once again the subject of public concern on the good governance issues of accountability and transparency. Where does the power lie?
The two most striking issues emerging recently are the declaration of new accountability targets for State Enterprises and that the ‘EFCL Board fires CEO‘, reportedly in defiance of Cabinet directions.
The Accountability and Transparency Deficit is the first issue and it needs to be put into a timeline to illustrate the reality.
Mariano Browne, then a PNM Minister in the Ministry of Finance (with responsibility for State Enterprises), on the issue –
“…The ministry has mandated all State enterprises to establish audit committees to access (sic) the effectiveness of internal controls of these companies…As corporation sole, the Ministry of Finance is responsible for the managing of all State enterprises. However, it is apparent that there is reluctance by some companies to comply with these basic monitoring requirements…”
Winston Dookeran, then Finance Minister in the Peoples Partnership, addressed this issue in his first budget presentation –
“…Mr. Speaker, no coherent, co-ordinated planning or strategy for state enterprises exists. As a result we have begun to rationalise the state enterprises, including the special purpose companies, which will incorporate a new accountability system that goes beyond the presently operating company ordinances. It is these loopholes in public accountability that resulted in the UdeCOTT scandal. This must never again happen in Trinidad and Tobago…” (pg 22)
The revised State Enterprises Performance Monitoring Manual 2011 was published to guide the operations of these important companies. At 3.2.5. it is required that audited accounts be submitted to the Minister of Finance within four months of the end of the financial year, before open publication.
Those attempts to improve practices in the sector have yielded little, if any, respite in the flow of large-scale scandals in terms of loss and theft of Public Money, not to mention the consequent loss of trust. I know that there are many competent, hardworking and honest public officials at our State Enterprises, but the role of party financiers and supporters is a significant issue. Accountability is extremely elusive in that kind of situation, which is the problem at hand. So, what is the latest?
Dr Keith Rowley, current Prime Minister, stated on Wednesday 4th, after the Cabinet retreat that State Enterprises were now required to submit accounts by the end of March 2017, even if those were unaudited, to Corporation Sole. Dr Rowley was clearly disapproving –
“…As it stands now, even at the level of the Cabinet in many instances, we are informed of what goes on or what went on in a State enterprise when the media reports largely of something on wrongdoing or something of scandal. That is not how we run this very large part of our economy or this very large part of the State’s portfolio…”
It was also reported that…
“Rowley made it clear that the absence of a report on the basis that it is not an audited financial statement will not be tolerated and failure to comply with this directive would have serious consequences…”
Under the new rules, as declared by PM Rowley, the State Enterprises seem to have the option to prepare their own accounts, without independent audit, for the Minister of Finance. The current administration is openly resiling from the sound standards established in the 2011 Performance Monitoring Manual.
Just consider that Public Money should be managed and accounted for to a higher standard than Private Money. Try to imagine the Chairman of the Massy Group or ANSA/McAL announcing to shareholders and colleagues that they don’t need to bother with audits, just send in the figures. What we are seeing here is literally incredible. Incredible, but true.
The Minister of Finance needs accurate figures to navigate this worsening recession, but that pressing requirement cannot be allowed to eclipse fundamental standards. What is more, the declaration of the official decline in these crucial accountability standards came directly from the PM, which raises two important questions. Firstly, are we seeing that the 2011 policy, has in fact just been diluted for no given reason and without real research as to its effectiveness? Secondly, this 2011 policy has been unenforced since its establishment, so how seriously can one take the PM’s threat of ‘serious consequences’ if the proper standard could not be upheld?