Governance in public sector organisations and state owned enterprises |12 January 2018
‘Regulations need to be followed’
Reinforcing the controlling mechanisms and regulations of public sector organisations was the aim of a high level meeting held yesterday at State House.
The meeting was between President Danny Faure and top officers from the Public Enterprise Monitoring Commission (PEMC), department of public administration (DPA) and the Ministry of Finance, Trade and Economic Planning.
Among delegates present at the meeting were the Minister for Finance, Trade and Economic Planning Dr Peter Larose, finance principal secretary (PS) Patrick Payet, secretary of state for cabinet affairs Mohamed Affif, PEMC board chairperson William Zarine, PEMC chief executive (CEO) George Tirant and the chief secretary (CS) and head of public service Jessie Esparon.
The President noted that public sector organisations had recently been accorded greater delegation of authority, and that such delegation also carried increased responsibilities for organisations, as well as accountability for decisions taken.
The President said that 2018 would be a year in which governance and fiscal frameworks – as well as discipline – would continue to be reinforced. Governing boards should exercise proper guidance and supervision of the functioning of their respective organisations, and the boards should also keep their respective oversight ministers briefed on the work of their organisations.
During an interview with the press following the meeting, five delegates gave details of the outcome of the discussion.
Minister Larose said the fruitful meeting was in accordance with improving corporate governance, transparency and accountability within the public sector organisations.
“This is not some philosophy we speak of, it needs to be applied and now the message to all board of directors, CEOs, management teams of state owned enterprises (SOEs) is that we are serious and the regulations need to be followed,” he said.
He said the President has instructed him to address challenges that SOEs are facing which during the meeting PEMC highlighted as lack of discipline and accountability.
“We need to ensure that all financial regulations and discipline is reinforced at every level,” he said.
He said the President emphasised on applying the agenda of good governance, transparency and accountability.
PS Payet said the finance department is reinforcing the procedures to ensure that the CEO and board of director in these public enterprises become more accountable.
“The CEOs are appointed by the President but the CEO reports to the board of directors and if things are not going accordingly the Ministry of Finance needs to raise these issues with the board and the cabinet to review whether the CEO will be sanctioned,” he said.
He said those being awarded these high positions need to be aware of the existing policies such as the Article 151 to 156 of the Constitution, Public Finance Management Act and Regulations, Public Procurement Act and Regulations and Public Enterprise Monitoring Act.
Mr Zarine said PEMC being the body which has oversight on all government commercial undertakings, wants to ensure that the President’s agenda is implemented.
He highlighted the financial performances for 2016 to 2017 of the public enterprises.
“For 2016 the revenue was about R10.8 billion and the profit before tax was about R1.4 billion. We’ve analysed the indicators and there is plenty of room for improvement,” he said.
Mr Zarine said public enterprises have very big asset base with about 130% of the GDP which amounts to around R24 billion.
“In Seychelles’ context this is big so the country has a lot of value at risk if it’s not managed carefully. The liability of the enterprise is about 50% of the GDP,” he said.
He stated the international benchmark on the return of asset is about 5% but here it is around 4% and the return on equity benchmark is 15% but Seychelles is at 9%.
He said the President demanded for more discipline in the financial and project management for the SOEs to perform better financially during 2018 and 2019.
Mr Tirant said the discussion also included PEMC’s strategy for 2018 onwards for financial assessment and governance assessment.
“For this year we’ve been issued the directive to submit the reports we draft to the Ministry of Finance, the minister responsible for the particular enterprise and the cabinet affairs at the President’s Office as well as chief secretary and public sector commissioner,” he said.
He said they expect the findings and issues reported by PEMC to be addressed in a timely manner.
“For 2018 according to the responsibility decreed to me under the guidance of the PEMC board of commissioners, we are to have more proactive and law abiding public enterprises,” he said.
Mr Tirant stated that the Public Enterprise Monitoring Act is being reviewed and many pertinent points discussed in the meeting will be included in the reformed law which they expect will be ready by April.
He also highlighted that there will be governance training for staff of PEMC, board members and CEOs.
“We are expecting some key results from all this which includes a very effective, profitable and efficient public enterprise which does not strain the national budget, which brings dividends for the government and brings tax for the country,” he said.
Ms Esparon conveyed a message to the CEOs who have received more autonomy of late.
“This means there should be more discipline and responsibility. They should deliver within the agenda established by the government which is by respecting the laws, public service orders and other regulations implemented by the government,” she said.
She added that all their actions should be undertaken in line with these regulations without any discretion.
“If any CEO fails to comply then disciplinary actions will be taken against them which could be removal from office, a warning letter or suspension which are the normal disciplinary action that is prescribed under the public service orders or the employment Act,” she said.