BY NED GAGAHE
Opposition Leader Matthew Wale expressed his strong concerns about the proposed State-Owned Enterprises (SOE) Amendment Bill 2024 arguing that it could result in more power being concentrated in one Minister, less accountability, and a return to the mismanagement issues that have plagued SOEs in the past.
Wale shared his concerns during last week’s Parliamentary Bills and Legislation Committee hearing on the State-Owned Enterprise (Amendment) Bill 2024.
The objective of the State-Owned Enterprises (Amendment) Bill 2024 is to amend the State-Owned Enterprises Act 2007 in accordance with the Government’s endorsement of the SOE Ownership Policy 2018 and the National Gender Equality and Women’s Development Policy 2016-2020 to:
(a) to consolidate ownership monitoring responsibility for State Owned Enterprises (SOEs;) in the Minister of Finance alone,
(b) clarify the process through which state-owned enterprises provide Community Service Obligations: and
(c) strengthen the publication requirements of a state-owned enterprise of documents or information about the state-owned enterprise that are tabled in Parliament; and
(d) include a regulation-making power relating to the evaluation of directors of state-owned enterprises and the election of board chairpersons and deputy chairpersons
The Opposition Leader stated that the bill consolidates authority primarily within the Minister of Finance, eliminating the necessary “constructive tension” that previously existed between the responsible minister of an SOE and “minister” which is the minister for Finance.
He emphasized that this shift could undermine the governance framework that was designed to prevent political interference in the operations of SOEs.
“Assigning almost all powers to a single minister is a dangerous move,” Wale stated.
“This legislation risks backsliding into the cronyism and financial mismanagement that have plagued our state-owned enterprises in the past.
He recounted past incidents of corruption, where ministers appointed boards filled with friends and cronies, resulting in significant financial losses.
“The existing Act was designed to create “constructive tension” by involving two ministers in the oversight of state-owned enterprises. The technical ministry’s minister is one of the accountable figures, while the Minister of Finance also plays a crucial role. This relationship has been essential in improving governance and turning SOEs around.”
“If you have just one minister overseeing SOEs, that’s not ideal. This bill removes the necessary tension by assigning almost all powers to the finance minister alone, essentially allowing the minister to monopolize authority over SOEs. Is that a good policy? While policy decisions are ultimately for the government, we all have a stake in this country and can question what the government is trying to achieve—whether it’s for the good or not.” Wale said.
The Opposition Leader also criticized the bill’s approach to the Statement of Corporate Objectives (SCO), which was intended to limit political directives to SOEs.
He argued that the new legislation undermines this framework, opening the door to increased political meddling.
“Under Section 13 of the existing legislation, the Statement of Corporate Objectives is possibly the most powerful tool the political government has. Previously, ministers issued directives to SOEs without clear boundaries.
“This bill aimed to put a stop to that by establishing a framework where ministers engage in a Statement of Corporate Objectives once a year. If they want to make any changes, the SOE board can propose them, and the minister simply reacts. This framework was designed to prevent political interference in the governance of SOEs.” Wale said.
Furthermore, Wale raised alarms over proposed changes in the election process for SOE board positions, warning that it could introduce unhealthy dynamics such as lobbying and corruption.
He further expressed frustration over the allocation of funding for community service obligations, calling for a more structured approach.
“Without clear accountability and oversight, we risk repeating the mistakes of the past. This bill must be re-evaluated to ensure that the governance of our state-owned enterprises is strengthened, not weakened.
“When SIEA proposes to expand the grid to capture 80,000 customers, the financial aspects should be included in the Statement of Corporate Objectives, but much of it will be technical. This bill undermines the necessary involvement of both ministers, removing the technical expertise that has been built over many years. We’re backsliding to previous governance issues, as seen with SIBC and Solomon Water, where boards were pressured politically.
“The current legislation lacks a clear process for when a minister wants the board to take action, which should come through the annual Statement of Corporate Objectives. If the board disagrees, there should be a mechanism for contestation. The absence of this process in the bill poses a risk of concentrating power in the hands of one minister, leading to dangerous territory for governance.
“By removing one minister from the equation, the Statement of Corporate Objectives becomes dominated by financial considerations, sidelining the technical input necessary for effective governance. This is a significant concern.” The Opposition Leader said.
The Ministry of Finance and Treasury (MoFT) when appeared before the Committee defended the amendments stating that consultations between the two ministers will still remain.
MoFT Permanent Secretary McKinnie Dentana stated that the intention of the policy is to ensure that consultation remains a part of the appointment process for directors.
“While we think it may not be strictly necessary, there will still be consultation among the experts involved in the act.
However, Wale pointed out that the bill lacks any reference to this requirement and emphasized that it needs to be incorporated into the legislative framework.
“There’s nothing in the law that compels the Minister of Finance to involve the other minister in decisions. If the Minister of Finance chooses to make regulations that grant him monopoly over appointments, that could be perfectly lawful. This raises a significant concern.
“Currently, there’s no express provision for this collaboration. Therefore, I recommend that we consider an amendment to the law that requires both ministers to work together, rather than relying on an assumption. While the current arrangement has been functioning well, that effectiveness is not actually enshrined in the law.” The Opposition Leader said.
