By Bernard Mpofu, HARARE, March 4 (The Source) – Government has banned heads of public enterprises from holding office for more than eight years, and bureaucrats from sitting on boards of such companies in a bid to improve corporate governance.
“Mr Speaker, Sir, with regards to the chief executive officers appointment and performance, cabinet has decided that CEOs and other senior management in state enterprises, parastatals and heads of local authorities be put on performance contracts,” finance minister, Patrick Chinamasa told Parliament on Tuesday.
Corporate governance at state-owned companies has come under spotlight in recent months after disclosures of executive compensation at several institutions showing that some earn monthly salaries running into hundreds of thousands of dollars.
Many are riddled with debts, corruption and mismanagement with some executives staying on for more than 20 years.
Finance minister Patrick Chinamasa, who is also the as chairman for the cabinet committee on parastatals, state enterprises and local authorities said the executive had adopted a new corporate governance framework to effectively manage government entities.
“CEOs should enter into four-year employment contracts which may be renewable once. The contracts should clearly spell out the minimum requirements, which if not met, should constitute grounds for termination of service,” he said.
The boards will now be required to evaluate the performance of the chief executive on a quarterly basis and appraise the responsible minister.
Interviews for prospective heads of public companies will now be carried out by the board and a professional human resources company.
Permanent secretaries would now be banned from holding positions on the boards of such companies.
“No permanent secretary should be a member of a public enterprise board, but that ministers should appoint appropriately qualified and experienced persons from their ministries to sit through deliberations of the board and to report to the ministry the gist of the board’s deliberations,” Chinamasa said.
CEOs will also be required to report directly to the permanent secretary on a regular basis including all significant decisions taken by management.
The finance minister said the new measures will also bar executives from serving on more than two boards of public enterprises. The new framework also compels state enterprises and parastatals to hold annual general meetings, which should be attended by representatives from the office of the president and cabinet, treasury, the parent ministry, the auditor and comptroller general and other stakeholder ministries.
He said the cabinet committee on state enterprises and parastatals development will oversee the forensic audit of all parastatals and local authorities.
“Subsequent measures will be taken to deal with the more complex issues of salaries, allowances and procurement practices of public enterprises and local authorities,” Chinamasa said.