Bill to limit State entities CEOs' term to 10 years looms

Chief executives of State enterprises and parastatals who have served for 10 years and above are facing the chop as the Public Entities Corporate Governance Bill, which is expected to become law next month will only allow them to serve a further six months while Government seeks replacements, a senior official has said.

According to the Public Entities Corporate Governance Bill, the chief executives who are already serving will complete their 10 years terms.

Unpacking the bill at the Corporate Governance Workshop at the Management Training Bureau in Harare yesterday, Secretary for the Corporate Governance Unit in the Office of the President and Cabinet (OPC), Ambassador Stuart Comberbach said public entities' chief executives will on the commencement date of the law, be allowed to continue in office until they have served the maximum period allowed under the Bill (two five year terms).

"If they have already served that period, they will cease to hold office six months after the commencement date.

"The board must agree on an exit package with the affected chief executives but that must be agreed by the Minister of Finance and Economic Development and should be performance based," he said.

Ambassador Comberbach said the bill will provide for the corporate governance of public entities; statutory bodies (parastatals), certain constitutional commissions, and commercial entities that are owned or controlled by Government.

The Act, he said, shall apply to public entities notwithstanding anything to the contrary in their enabling instruments and will override anything to the contrary in any other Act or legal instrument that establishes or regulates public entities.

"Board terms are limited to four years, renewable only once. No persons shall sit on more than two boards of public entities and no Permanent Secretary shall be appointed to or hold office as a member of any such board.

"In appointing or dismissing board members, line ministers must seek the prior consent of the President (through the Office of the Chief Secretary to the President and Cabinet)," he said.

He said the Bill prohibited the dismissal of board members for anything other than misconduct; failure to comply with their conditions of service or with their governance or performance contracts.

The Bill also empowers the minister (responsible for the administration of the Act) together with the Minister of Finance and the line Minister, to fix maximum amounts payable to board members of public entities.

"CEO's will be appointed for maximum terms of five years, renewable once only and their tenure will be reviewed annually by their boards to ensure satisfactory performance. Board members will be appointed after a selection process involving public advertisements, interviews and approval by the line Ministry, with the consent of the President.

"The bill also requires boards of public entities to enter into performance contracts with their chife executives and other senior members of staff," he said.
Ambassador Comberbach said Government had previously come up with a number of guidelines on how State enterprises were supposed to operate such as the 2010 procurement guidelines and 2014 guidelines on salaries but these were largely ignored.

He complained that management in the public sector were getting hefty salaries even when their organisations were not performing well.

"Sometimes one has to consider if it is fair that a man in the street should be paying for management's holiday allowances, DSVT subscription among others especially if the entity is not performing. If the economy was performing these kinds of benefits would not raise eye brows," he said.

He expressed concern that performance of public entities had gone down over the last three to four years while management costs continued to go up.

"Entities should see what they can do to lower costs. We are working on a new remuneration policy which will not be imposed but recommended to entities.

"Corporate governance survey shows that some salaries were not too bad but it was the innovative ways the companies would use to put some add ups. You look at an entity budget and see an impressive budget on training but the training will include education allowances for bosses' children, hefty allowances for bosses' security which may not be on the contract. In most cases the allowances are not taxed," he said.

He said a more rationale framework was expected to iron out some anomalies.

"I sense a willingness on the part of Government to deal with corporate governance with reform and bringing it to a state which it can meaningfully contribute to national Gross Domestic Product," he said.