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20.07.2005 Business & Finance

Push Public Sector Companies onto the GSE


Accra, July 20, GNA - Mr Justice Awuku-Sao, Executive Secretary of the Institute of Directors (Ghana), on Wednesday called on the Government to speed up the process of listing many public sector companies on the Ghana Stock Exchange (GSE).

He said all the public sector companies listed on the GSE held Annual General Meetings (AGMs) declared and paid dividends and taxes promptly in addition to bringing discipline in corporate governance. Mr Awuku-Sao made the call when speaking on: " The Realities and Challenges of Public Service Corporate Governance" at the Second Annual Conference of Public Service Chairpersons, Chief Executives and Chief Directors of Public Boards, Commissions, Authorities, Councils and Agencies in Accra.

The Conference held under the theme: "Corporate Governance in Public Service Organisations" was sponsored by the Public Service Commission in conjunction with the Ministry of Public Sector Reform, the UNDP and the National Governance Programme.

Mr Awuku-Sao explained that the discipline in corporate governance by the public sector companies listed on the GSE, included prompt preparation and audited accounts, periodically appearing to explain the strategic direction of the company, greater disclosure and transparency. He said firms listed on the GSE that were not able to cope with the requirements faced an indirect penalty, such as reduction in share value and the worst form of direct penalty would be to be de-listed, which every firm tried to avoid.

Mr Awuku-Sao noted that public sector companies listed on the GSE had higher corporate governance standards than those that were not listed and an indirect advantage to government was that companies were compelled to perform in order to achieve excellent results.

He recommended that the State adopted the company model in the practice of good corporate governance, and asked the Government to set up a unit or department solely responsible for corporate governance. The functions of the unit should include: coordinating the appointment of Boards of Directors; screen, vet and recommend to higher authority persons competent to serve on boards.

It would also arrange and ensure that persons approved to serve on boards were given the requisite training in corporate governance; and receive appropriate certificates for the purpose.

The Unit should in addition, come out with guidelines on compensation package for the Directors, hold companies responsible for organising AGM and represent the shareholder at such meetings.

It should remind companies about the need to pay dividends promptly to share holders, ensure that one-third of Directors retired by rotation at AGM's; draft appointment letters to Directors in line with best practice; initiate action for renewing mandate of Directors when it expired; and to develop guidelines, appraise and monitor the boards. The unit envisaged should be equivalent to a nomination committee of a publicly listed company", he said.

Mr Awuku-Sao said to ensure good corporate governance, boards must have a role in the appointment of Chief Executive Officers (CEOs), appraise the CEOs on annual basis and appraise itself. He recommended that the Government appointed Directors and allowed them to appoint a chairperson, adding; "politicians serving on corporate boards should be discouraged".

Mr Awuku-Sao said when it became necessary for boards to be dissolved; the authorities should communicate the decision to the board to allow it to pass a resolution for its dissolution. He said if the board was to be removed for certain allegations made, members should be given the opportunity to react to all the allegations made.

"Appointment and replacement of boards will continue but this must be done in line with best practices," he said. Professor George Gyan-Baffour, Deputy Minister of Finance and Economic Planning, said the single most important challenge facing public sector managers was how to motivate middle level managers, subordinate officers and workers to convert policy, programmes and projects into goods and services that impacted positively on the lives of the people.

He said the best way to change the attitude of subordinates to channel their actions in a direction that would impact positively on the lives of the people was for managers to lead by example. Managers, he said, should ensure that the individual interest of public officers coincided with national interest. Mr Christophe Bahuet, UNDP Deputy Resident Representative, said good corporate governance and good public sector governance was a prerequisite for development.

He observed that when public service institutions that were the primary structures through which development policies were delivered to the citizenry failed and did not fulfil their roles, development suffered.

"When development suffers institutional weaknesses, the poor are the first to be deprived of access to resources and services. Therefore, both the nature and pace of development in a country are dependent on the dynamic and proactive nature of its public service institutions", he said Mr Bahuet gave the assurance that the UNDP would continue to support the Government and Ghanaians to enhance the capacity and performance of the public service and foster growth and development of all sectors of the economy.