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TMCNet:  Call to Put Cap On Board Posts

[February 22, 2014]

Call to Put Cap On Board Posts

(AllAfrica Via Acquire Media NewsEdge) Career board members abound in Zimbabwe, with some people sitting on up to 20 company boards. This has raised questions as to why the same people continue being recycled in boards of private and public institutions.


This comes amid reports that politicians knocked off a clause on a Remuneration Commission from the Draft Constitution, which would have dealt with poor corporate governance issues and awarding of mega salaries and perks to company bosses.

Speaker of the National Assembly Cde Jacob Mudenda on Thursday said a technical committee of lawyers, of which he was part, inserted the clause in the draft to regulate corporate governance in both the public and private sectors.

The clause was, however, removed from the final Draft Constitution under unclear circumstances, resulting in the supreme law being adopted without the mechanism last year.

The commission could have established regulations to block individuals from sitting on more than two parastatal boards.

Clause 3.2.5 of the Governance Framework for State Enterprises and Parastatals, launched in November 2010 by the State Enterprises and Parastatals ministry, states that individuals nominated to public boards should not serve on more than two boards at a time.

However, the regulation remains unenforceable under current laws.

Lawyer Mr Chris Mhike said had the commission been adopted, "Those who violate statutory provisions could well be prosecuted under the various laws of criminal procedure and of substantive criminal law.

"And those who violate best practice and policy guidelines on board memberships would be liable to various punishments under disciplinary proceedings, ranging from cautions to dismissals, and in some cases, requirement for restitution of the stolen resources." Some of the people who hold multiple directorships in both public and private companies include former Premier Service Medical Aid Society boss Dr Cuthbert Dube, former Harare mayor Dr Muchadeyi Masunda, proprietor and managing director of Management Solutions Group Mr Luxon Zembe, businessman Mr Bekithemba Nkomo and former Ziscosteel finance director Mr George Anthony Chigora.

Others are chartered accountant and businessman Mr Ngoni Kudenga; and lawyers Mr Stanford Moyo, Mr Canaan Dube and former Women's University Vice Chancellor Dr Hope Sadza.

Mr Dube is in 20 boards including PSMAS and its investment arms among them, Westend Hospital, Claybank Hospital, PSMI Pharmaceuticals, PSMI Clinical Laboratories, the Zimbabwe Football Association, and recently the Zimbabwe Broadcasting Corporation.

Dr Masunda is also on several boards. He chairs the Zimbabwe Sugar Association board and is also on boards of CABS, and the Commercial Arbitration Centre. He is a board member of Zimplats and Bindura Nickel Corporation.

Mr Zembe was on six boards until he stepped down as chair of CBZ Holdings and PSMAS. He chairs the Zimbabwe National Chamber of Commerce Advisory Council, and sits on the boards of Schweppes Zimbabwe Ltd and Premier Services Medical Investments.

Mr Nkomo is on the boards of African Sun, Aico and Seedco.

Mr Chigora is on four boards, including Noczim where he is chair, the Central Mechanical Engineering Department and Mashco; boards.

Mr Kudenga is also on three boards - ABC Holdings, BNC and Hippo Valley; while Mr Moyo is on four boards. He sits on the PPC, Zimbabwe Revenue Authority, Stanbic Bank and Alpha Media Holdings boards.

Mr Canaan Dube sits on the Barclays, Delta and Edgars boards; while Dr Sadza is on five boards, which are the Institute of Directors, Barclays Bank, Delta and Securico Security Services.

Multiple directorships have been blamed for contributing to corporate governance failures among Zimbabwean companies.

According to studies held globally, holding too many directorships lowered effectiveness. Most are agreed that busy directors provide excessive compensation for their CEOs, resulting in lower firm performance.

Institute of Directors of Zimbabwe director Mr Edward Siwela said multiple directorships created many challenges.

"This area requires urgent attention. Directors need training to keep them abreast with the changes in the industry," Mr Siwela said.

He said IDZ was one of the organisations working on a national corporate governance draft code to address such issues.

Mr Siwela said the code would provide guidelines on chief executives' packages, as well as those of non-executive directors sitting on boards of listed firms.

Transparency International Zimbabwe said multiple directorship led to corruption and inefficiency.

"In accordance with good corporate governance principles, multiple board membership is frowned upon as it can lead to a conflict of interest and or a lack of effective board oversight," TIZ information officer Ms Sheryl Khupe said.

In the United States, professional bodies have recognised the possible detrimental effects of multiple directorship.

The Council of International Investors and National Association of Corporate Directors ordered that directors should not serve on more than two/three boards. It also ensures that mega salaries are immediately made public.

The proposed Remuneration Commission in ZImbabwe could have addressed these matters.

Giving a lecture on International Law and Zimbabwe's Political and Legal System at the National Defence College on Thursday, the Speaker of the National Assembly Cde Jacob Mudenda said, "The Constitution of South Africa established a Remuneration Commission which looks at the remuneration of everybody from the president, the ministers and the ordinary person.

"When our Constitution was being made there was a lot of debate on it and a clause to create such a body was included in the draft.

"However, when the draft went to the management committee, that clause was lost. How it was lost we do not know because we, from the technical committee of lawyers were no longer there. We need to go back to that clause that will rationalise the remuneration of everybody." He went on, "As Parliament, to some extent we went to sleep, we should have done that but now we know, it is not too late to start acting." Copyright The Herald. Distributed by AllAfrica Global Media (allAfrica.com).

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