Vice President Emmerson Mnangagwa has said Government is concerned about the frequency with which some parastatal boards are sitting adding a significant cost to already struggling organisations without corresponding improvements in their performance.
Giving a keynote address at the fourth excellence in corporate governance awards ceremony organised by the Institute of Chartered Secretaries and Administrators on Thursday, VP Mnangagwa said Government is also concerned with the quality of board members that sit on some boards.
He also said that because board fees and director allowances are linked to executive management salary levels some boards through self-interest were under pressure to review executive salaries upwards regardless of the state of operating condition of the company.
“Corruption has been blamed for the slow economic development of countries and it acts as an implicit tax on investors.
“Unfortunately in some instances, because of weak corporate governance practices through the creation of a network of relations of directors and suppliers, for example, corruption could be systemised.
“Government is worried with the frequency with which some parastatal boards sit adding to a significant cost to already struggling organisations without corresponding improvements in their performance. Auditors are therefore called upon to investigate and carry out necessary tests on the soundness of some of these contracts and arrangements,” said VP Mnangagwa.
In order to effectively fight corruption, VP Mnangagwa said Government has passed relevant anti-corruption laws and established the Anti-Corruption Commission which has been given more teeth and gravitas by operating directly from the Office of the President and Cabinet.
“For our anti-corruption initiatives to be effective and sustainable, we need to work towards eliminating the scourge from both the private and public sectors. The role that private sector companies can play in this fight is therefore not to be accomplices.
“Good corporate governance in the private sector can contribute significantly to a reduction of the scourge in the public sector by addressing most of the problems and pressures emanating from the private sector players,” said VP Mnangagwa.
He added that despite the strategic importance of some state enterprises, some of them have not been performing to expectation due to a number of reasons including illegal economic sanctions imposed by the West. Regrettably the Office of the Auditor-General has continued to note weaknesses in the public sector accounts, an indication of governance weaknesses.
VP Mnangagwa said such a situation has continued to fuel corruption, damaging the country’s international standing and working against the spirit of reducing Government expenditure.
“As a result, inadequate revenue is available for infrastructure development. The failure to adhere to corporate governance principles in Government Ministries and entities is therefore partly creating the economic challenges the country is going through.
“Fundamental to good corporate governance is the appointment of the board of directors to oversee the operations of a company.
“The board should therefore provide effective corporate and entrepreneurial leadership,” said VP Mnangagwa.
He said good corporate governance is also important in the development of stock markets. Herald