Corporate governance and public corporations in The Bahamas, pt. 2

Tue, Oct 7th 2014, 01:03 AM

Last week, we considered the important role of good governance in general and corporate governance, in particular, in public and statutory corporations in The Bahamas. Based on the comments and general feedback received in relation to that article, it is apparent that a deeper dive into this vital but often ignored topic is warranted.
The loyalty and commitment to the status quo by opponents of change in our commonwealth continues to be the greatest hindrance to the progressive idea of good governance in theory and practice among state-owned enterprises within The Bahamas. Hence, this week we take a look at why reform of governance in these corporations has been slow or not forthcoming.
The balance of power
One of the most famous quotes attributed to John Emerich Edward Dalberg-Acton, who was referred to as Lord Acton, is "power tends to corrupt and absolute power corrupts absolutely". This quote is one that has stuck with this writer for years following an introductory course in law school almost 15 years ago. The relevance of this statement to the governance of public corporations in The Bahamas cannot be overstated.
State-owned and statutory corporations are prone to abuse of power by the political directorate, appointed directors and management. This is made easy because non-adherence to the principles of good corporate governance is not frowned upon and has become generally accepted. The separation of powers and implementation of appropriate checks and balances are often not codified in a corporate governance policy document which is enforced in entirety.
The Apostle Paul said it best in Romans 5:13, that sin is not imputed where there is no law; in essence, in the absence of clear and specific guidelines or requirements, any allegation of a breach is baseless. The government will do well to promote and mandate public corporations to implement corporate governance policies if the abuse of power in corporations owned by the Bahamian people is to be stemmed.
Autonomy and good governance
In the case of certain statutory bodies, the government has over the years given up significant control over the decision making and the affairs of these institutions. The relinquishing of power by the government over the operations of such entities in a number of cases has not been voluntary but rather spurred by the need to comply with international standards and best practices. The consequences of not giving autonomy to certain statutory bodies would have included negative reviews from international bodies and multilateral regulatory agencies.
Autonomy and independence from the political directorate by a public corporation makes it easier to implement good corporate governance policies and practices within such an institution. The reality is that even though some corporations have some autonomy in theory or on paper, they are still subject to significant influence by politicians in the fulfillment of their mandate. This becomes even worse in the case of corporations that do not have or have minimal autonomy within their governing legislation. In such cases, the empowering statute vests the power to make literally all decisions in the minister responsible for such an entity.
A fundamental paradigm shift
One of the biggest obstacles to good governance and ultimately the success of public corporations in our nation is the archaic mindset that supports cronyism and rewards inefficiency, insubordination and unprofessionalism. One only need reflect on the last experience or encounter with public corporations and government departments in The Bahamas to understand the challenges we face in this regard. This behavior has survived for decades because successive governments and public servants have shied away from confronting this menace that has plagued our country.
It will take discipline and fortitude on the part of the political directorate and leaders within public corporations to bring about the much-needed change in the approach to work within these entities. In short, a radical shift in the current paradigm is required and the change must begin with our political leaders if we are to succeed in this effort.
This may very well be seen as utopia, as many do not see politicians as being the champions of drastic changes to the culture and work ethic of the public sector and statutory bodies due to the fear of backlash at the polls. Unfortunately, this fear translates into interference for political expediency.
On their part, certain leaders of public corporations are just reluctant to trouble the waters because they are concerned that their initiatives or decisions will be undermined by the political directorate. A change in mindset and attitude to work in public corporations will not happen by accident; rather, it will require specific focus and a concerted effort by our leaders.
Conclusion
The discussion surrounding poor service from certain institutions in the public and private sector is an interesting one. On the one hand, we complain about the level of service and on the other hand, we continue to patronize or accept this behavior.
We the people must realize that we perpetuate that which we tolerate and we should commit to changing the existing culture which upholds mediocre service. Additionally, we should promote changes either in law or policy that ensure the independence of public corporations, empower management to perform their duties and free up professionals in these entities to do their jobs.
The employees and customers of public corporations alike have major roles to play in the reinvention of these entities and the public sector as a whole. The change must begin with us all, with the most important focus being on the image we see in the mirror daily.
Accountability and responsibility by the policy makers, directors, management and staff are prerequisites for good governance in public corporations. Transition to good corporate governance within public corporations will not occur in an environment in which leaders provide a safe haven for unproductive workers.
The government must lead the charge by being guided by the following words of J. Ramesh: "There never is a good time for tough decisions. There will always be an election or something else. You have to pick courage and do it. Governance is about taking tough, even unpopular, decisions".
The time for implementing good corporate governance practices across all public corporations in The Bahamas is now.
o Arinthia S. Komolafe is an attorney-at-law. Comments on this article can be directed to a.s.komolafe510@gmail.com.

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