26 January 2008

Missing from interim arrangement: State enterprise commission

ISSUE

Both Majilses are busy proposing independant commissions that they think will benefit democracy and protecting rights of the people. There is one area they have ignored or have forgotten;
  • Safeguarding the assets of the people owned by state enterprises
  • Protecting state enterprises from bad management and politics.
CORE PROBLEM
State owned companies are often used as a political tool to reward people who show certain affiliations or punish people who refuse to show loyalty towards the establishment. Hence top management team and the Board are often cluttered with people who would not know how to read a financial statement even if it hit them on the head. When it comes to appointment of people to the top jobs in these companies, competencies required to take state enterprises, to a competitive level locally and internationally, often takes a back seat.

The consequence is-
  • At one time or another most of state enterprises have gone bankrupt or have faced serious financial problems because of corruption and also because of bad management.
  • Assets of state enterprises (wholly or partially owned) are often used during political campaigns. These assets include the staff, funds or cash and other assets such as vessels (sea and land).
Hence saving only civil servants (dhaulathuge muvazafun, they are not government servants) is not enough to hold free and fair elections now and beyond. Politicians on all sides need to prevent state enterprises (wholly or partially owned) being misused by any party for political gain.
REMEDY

Introducing totally independant State Enterprise Commission with the mandate of
  • Appointing board of directors to state owned enterprises.
  • nominating people for board of directors in companies that is partially owed by the state
  • regulating state enterprises
  • regulating prices of utilities (electricity, water, basic telephony)
Formula to Appointing members to the commission could be similar to other Commissions already formed.

One may say that all such problems will be solved if we privatized state owned companies. State owned companies that can be privatized should be privatized. The question is do we have time for that during the interim period. Anyhow state ownership of companies will continue since some goods cannot be left to govern based on free market principals. Even if all including utilities are privatized, prices of such companies are regulated in most countries by a commission. In such a mechanism utility prices cannot be used to score political points during election. Till we see such a day, a State enterprise Commission is a must to safeguard assets owned by the people and to protect state enterprises from bad management and politics.

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