Lucas Tshuuya
Stakeholders of public enterprises have a right to fair and reasonable access to public facilities and services as provided for in the Namibian Constitution, and public enterprises need to be governed in the same manner for the best interests of the nation. It is a constitutional provision that administrative bodies and administrative officials should act fairly and reasonably to comply with the requirements imposed on them by common law and legislation.
One of the inalienable rights every person has in terms of the Constitution is the right afforded to aggrieved persons to approach a competent court or tribunal to enforce their rights.
Administrative bodies and administrative officials perform public functions, on behalf of the State, by serving the nation in different spheres in line with the government’s objectives; to provide services to the public. When delivering such services, the government delegates certain functions to entities established under any law to state-owned enterprises (SOEs). SOEs are established with the purpose to complement government efforts in service delivery. SOEs are established by Acts of Parliament, namely the Public Enterprises Governance Act, for the efficient governance of SOEs and to monitor their performance with clear demarcation of power, duties and functions. SOEs, like any other business, are managed by a board of directors appointed by the relevant ministers responsible for such public enterprises in conjunction with Cabinet e.g., if the SOE caters for transport-related matters, then the relevant minister of such SOE is the minister responsible for works and transport. The minister handles the appointment of the board of directors of such SOEs, and tables their budget in parliament.
The board of directors of a company has a common law duty of care, skill and diligence towards the company they serve. These duties are a crucial role in ensuring the promotion of corporate good governance, ethics and principles. If public enterprises established under legislation cannot deliver quality services, then the government would find it difficult to deliver much-needed public services.
Over the past decade, it’s reported that many SOEs are managed poorly, with incidents of mismanagement and embezzlement of public funds by some board members, a situation which caused many public enterprises to become heavily reliant on government bailouts, thereby posing operational risks. In most cases, SOEs found themselves cash-strapped because of mismanagement, embezzlement of funds, theft, corruption and fraud perpetrated by those in charge.
Although the SOEs board of directors is appointed by the relevant ministers responsible for them together with Cabinet, some of them have been involved in scandals, to such an extent that when such anomalies are discovered, criminal or civil actions are instituted against them, and regrettably they end up getting fines. According to governing legislation, only the minister responsible for them has the power to order their removal from office.
In terms of applicable laws and procedures, only the line minister, in consultation with Cabinet, has the right to appoint a board of directors of SOEs, which appointments, in most cases, are based on political considerations, and not merit or qualification-based.
Citizens who double as taxpayers (stakeholders) have no legal recourse to institute legal proceedings against SOEs’ directors simply because they lack locus standi to bring applications to court.
This is so because there is no legislation setting out criteria that stakeholders should follow to bring an application to court for the removal of an errant director from the office of an SOE.
Such right is only applicable to members/shareholders, the Master of the High Court, creditors, liquidators or a judicial manager in case such
public enterprise is under judicial management. Therefore, it is recommended to authorities such as BIPAm which is busy with corporate laws’ reform, to consider overhauling the entire process of appointment and removal of the board of directors of SOEs in terms of the Companies Act and the Public Enterprises Governing Act to afford every citizen or association not for gain a right to bring an application to court for an order of removal of an errant board of directors of an SOE who are found wanting, and spell out liability or consequences relating to the breach of fiduciary duties of directors.
Such right is vested in the citizens/stakeholders by the provisions of
Articles 18 and 25 of the Namibian Constitution.
* Lucas Tshuuya is a corporate governance practitioner from Onaanda in the Uukwambi district.