Much of this article is a reaction to that reported on 6/10/03, on Ghana web, ¢1,291,224,819,168.00 Lost To State First of all it must be noted that these types of corrupt practices do not only take place in Ghana. However, in the Western world shareholders of companies and governments have started putting CEO’s and board members in jail, as their poor actions directly affect consumer confidence, especially as it pertains to investing in the financial markets, which drives in particular the US economy.
Having said this, the unique structure of some of these Ghanaian companies (cited in article) will make the government the sole executor of what the necessary outcome should be. There are no huge shareholders here to put pressure on the government. The government must simply see the point to do so which should be no different from what motivates countries like America these days to prosecute its corrupt CEO’s and executives, even of private companies.
This report, “¢1,291,224,819,168.00 Lost To State” on Ghana web, conclusively signals the lack of controls in these organizations and the first step, in terms of a lasting corrective action is for an expert team to introduce the required changes in these organizations so that in the future we have multiple controls in place, in each of the cited organizations to reduce this kind of collusion of board and management used to fleece the public.
The second move, which should be initiated, is to terminate and prosecute every MD or CEO, regardless of the value of the squandered funds in question. Every single one of these Managing directors, by way of this report has indicated the following: They are not competent and have no control over their organizations. They have failed to create value for their owners, be it citizens of Ghana or shareholders and as such have failed to meet the primary objective of the CEO in a modern organization, which is, to enhance the value of the company. These two breakdowns obviously have led to the loss of funds to the state. In examining the report, the number of instances where boards were not included in decisions, make it prudent for government (in the case of government companies) to identify who is on these boards, discipline them, and reconstitute them, tapping qualified people in the process. If we have a bunch of friends of the CEO’s or MD’s, serving as board members, the organization and its stakeholders are not going to reap any benefits that accrue from having a separate board and management in the modern corporation. The main role and purpose of having a board, is to provide oversight with respect to management duties and performance as it relates to the interest of the company’s stakeholders. As such, it is clear that these board members did not work in the interest of the stakeholders of the organizations and as such must go. The Ghana web article, “¢1,291,224,819,168.00 Lost To State” speaks volumes to the sad situation in Ghana with respect to corporate governance, which should become an issue if we want to expand our financial markets and economy to appreciable levels. We have over and over again seen failures of MD’s and CEO’s and constantly seen inefficient boards because our entire selection process for these positions are flawed. We have CEO’s who cannot articulate a P&L and we have managers who simply were “good fellows” and as such were handed over these jobs as gratitude for some misguided reason. The government’s reaction should be to fire all the CEO’s and MD’s. Put in structures to enable the organization recruit competent professionals, using international standards to recruit replacements. Let third party personnel firms or committees vet these selected individuals before they are appointed. Also provide them with a contract, which spells out their obligations over a specific time frame. After each term there must be a “score card” with identified and already discussed areas of assessment, which will determine if the CEO’s/MD’s previous performance warrants re-appointment, which should purely contractual. With respect to my suggestion of reconstituting the boards, let us go back and identify the role of the board. Boards should not be made up of ignorant people with no knowledge directly or indirectly of the industry in which they operate. Go into any organization in Ghana, and you will find board members who are clueless about the industries in which they operate. Their ability to function as an effective board member would not be more than what a monkey could deliver. We have organizations on the stock market that are as weak as the worst US firm could be but this is because no one journalist or prominent figure has taken corporate governance to task. Some listed companies on the stock market pay out no dividends and cannot show any investments financed from operating revenues and this goes on year after year. Shareholders to a certain degree are aloof about their rights and accept whatever the company executive’s claim at AGM’s. If Ghana is serious about the “Golden Age of Business”, then we need to understand that sound private companies are needed to meet our dreams. As such, as we speak of governance at the government institutional level, this debate must be brought to the private sector. Imagine Ghana’s prospects, should we have a strong financial market, with a diverse group of well-managed companies. Our overall development could be accelerated locals, as well as foreigners, or those in the Diaspora would simply have to invest in these organizations for a perceived return on investment. This would drive up investment and the rate of growth for local companies and society at large, thus moving the economy right along with modest private investments. This disgraceful performance on the part of the cited companies must be pursued by the government. It must take the same approach that the US has taken to ensure that sanity and confidence is brought back to the critical financial market. Not doing so will erode any confidence that existed on the part of the citizens, and here there is a double-edged sword as most of the cited organizations are state owned or quasi-government companies, and as such will be a reflection on government. On the other hand, government must not be the only one at the forefront of the needed corporate governance dialogue. It should be an issue championed by the stock market and its stakeholders. When one looks at the capitalization of the market and the potential, one will have to be dumb not to realize that the lack of confidence in the ability of those running those companies listed (true or perceived) and the whole exchange has contributed to this low level of investment, considering the time of its inception. The fact is simple. In more cases than not, we have poor minds running companies in Ghana, and the article, clearly shows why the need for a strong corporate structure must be developed if we are to go anywhere. Company performance must be reported on a regular basis and journalists should start specializing in reporting effectively in this area, creating both awareness and enthusiasm. The issue of corporate governance must be pursued with zeal. The government must set the tone and clean house, with respect to this issue. In the case of those government companies, we need to rethink what performance measures are to be used to appraise the performance of management and the organizations at large. As it stands now, this type of performance on the part of corporations in Ghana, if continued will not get us any closer to the Golden Age of Business. It will get us closer to the “Golden Age of Unemployment”, as many companies will be run to the ground, leading to staff reductions and layoffs. Eventually, the real hope is for government to get out of these private businesses for good and leave them as thriving publicly held corporations, operating alongside solid local companies borrowing or dealing in financial instruments in a budding Ghanaian capital market. Views expressed by the author(s) do not necessarily reflect those of GhanaHomePage.