This archive report was first published on 21 July 2019.
On a recent visit to a neighboring East African country, a company secretary shared his harrowing experience as the secretary for a parastatal. The board of directors was comprised of appointments from the line ministry, and the company secretary soon realized that the recommendations were often based on personal connections rather than qualifications.
One director, Mary, had requested to attend a training event in the United States on sustainable mining practices, despite the parastatal being in the agricultural industry. The cost of the training was a staggering $68,000 (Sh6.8 million), which was above the allocated budget of $32,000 (Sh3.2 million). The company secretary and the CEO were shocked by the request and decided to decline it.
However, Mary was not pleased with the decision and fired off a series of emails to the company secretary, calling him incompetent and petty. It was later revealed that Mary was angling for a position as a permanent secretary to the ministry in charge of mining, and the training was meant to give her a leg up in demonstrating her qualifications.
At the next board meeting, Mary accused the company secretary of being inept and disrespecting a director. However, the chairman intervened and put an end to the discussion. A few months later, Mary was appointed to the mining ministry and stepped down from the parastatal board. Within nine months, she was fired for wanton corruption.
The company secretary attributed the poor governance in the public sector to the sense of entitlement among directors, who view the resources of the parastatal as their own to use. He noted that the directors in the private sector were focused on delivering the organization's mandate in a cost-efficient and profitable manner. When asked why this was the case, he replied that it was due to the pedigree of the directors, which was determined by their education, motivation, exposure, and integrity.
He noted that in the public sector, the shareholder is represented by a multiplicity of interests, which can lead to poor director selections being tolerated. This raises an interesting question: should public sector directors be appointed or should they apply for the roles competitively?
