It is long overdue that boards of directors be held accountable when they do not meet expectations. But penalties cannot be extracted without a regulatory framework and definitions.
The Ministry of Public Enterprise must demand that potential board members agree to listed performance requirements. Those requirements must be given in advance and in writing. They should state upfront that board fees are payable only with approved performance ratings each quarter.
Until this is done in Namibia, no one can arrive after the fact and declare that (undefined) ‘poor performance’ means that board fees must be returned. This is not a part of the existing operational rules.
Far too many people choose not to accept that receiving board sitting fees is perfectly normal. Board work is a skilled duty, not a volunteer bake sale. To retain qualified, skilled board members, their time must be remunerated. The public cannot expect talented, skilled boards and pay nothing for it.
If a company is in trouble, the board must use its experience, talents, and skills to ally with management to find productive options. However, if each board member cannot bring skills to the table, they are the wrong people with the wrong responsibilities. They should never have been appointed to that board.
The situation with the SME Bank liquidators who have filed suit to hold former board members of the SME Bank accountable raises concerns.
Secretary to Cabinet, George Simataa, repeatedly said that he was appointed as the Chairman of the Board of the SME Bank due to his civil service office. He did not seek or choose that position. The problem is with rules mandating positions rather than people to take up seats on an SOE board.
The practice of placing people on board from various ministries by mandated regulations must end.
No one should be on a board that: 1) does not choose to apply personally for the seat. 2) does not have the listed skills to function as a board member. And 3) is not prepared to be legally and financially accountable for their board decisions.
Namibia’s norm of insisting that one board member always be a lawyer or an accountant is ridiculous. Technical people should be expert, non-voting consultants to the board, not necessarily members. A law degree or articles in accountancy completed does not make one skilled in the profit-making business of the company on whose board they sit.
The question that should be in the headlines is not what someone was paid in board fees. The question is whether those funds were stolen, obtained illegally or paid in error based on the rules in place when the monies were paid.
If the government does not like the SOE board fee levels, let them adjust the rules and lower them. But coming around after the fees are legally paid out as per the existing rules, and demanding refunds is unethical and unfair.
Enoch Kamushinda, a director of the SME Bank, faced fraud and corruption charges before the entity ever came into being. Why did that board accept a known Zimbabwean conman’s participation against the cautions of the Bank of Namibia? The amounts the board members are paid in sitting fees are of secondary importance to this question.
Let us not forget the possible self-interest of the liquidators bringing the court case. They are paid a percentage of how much money they recover for the bankrupt SME Bank. Successful court action to force SME Bank board members’ repayments may increase the payout percentage for the liquidators. One also can wonder who is paying the legal fees of the liquidators? Is it assigned to the account of the SME Bank as a liquidation expense? Are former bank account holders who have lost a significant percentage of their deposits paying for this lawsuit? Bear in mind that those defending the case must pay their legal fees personally.
Incentivizing liquidators to find assets is a good thing. There is nothing wrong with this. But, when analyzing the demand for precedent-setting repayment of board fees, all aspects of the situation should be on the table.