Official Launch of “Handbook on Good Governance for Chairmen and Boards of Directors of Public Enterprises”
Speaker’s speech. 10th April 2018 – Auditorium of CA Sri Lanka, Malalasekara Mw, Colombo 07.
I am pleased to be here with you on the occasion of launching of the Handbook on Good Governance for Chairmen and Board of Directors of Public Enterprises. While thanking you for inviting me to this important event I appreciate the timely directions of the Hon. Prime Minister given to NIHRDC to develop this Handbook of Good Governance in collaboration with the Institute of Chartered Accountants of Sri Lanka. I congratulate both the Institutions for the commendable endeavour.
As you are well aware, present Government has taken several initiatives to uphold transparency, accountability, rule of law, participation and good governance in managing the public sector.
Introduction of the 19th amendment to the Constitution and the appointment of independent commissions, enactment of the Right to Information Act and the proposed National Audit Act, Public Finance Act and the Public Enterprise Board Act are some of them.
Public Enterprises in Sri Lanka refer to public corporations, boards or bodies which are established under any written law including companies incorporated under the Companies Act No. 7 of 2007 in which the Government or a public corporation or local authority directly or indirectly holds fifty percent or more of the shares of that company. This includes institutions converted under the conversion of Government Owned Business Undertakings into Public Corporations Act No. 22 of 1987 and conversion of Public Corporations or Government Owned Business Undertakings into Public Companies Act. No. 23 of 1987.
Public enterprises play a vital role in the public delivery system and are major contributors to the national economy.
Some of the Enterprises are dominant players in the banking and financial services industry. They are trend setters in that sector.
Some are essentially infrastructure developers. Some operate in other important areas such as education, health and social security whilst others are predominantly service providers in the agricultural industry, engineering, construction and trade. They are an integral part of the National Budget and as such, funding arrangements are met from both domestic and foreign sources. Their development expenditure essentially reflects Government vision and the public investment strategy. Their products and services need to be at fair price while ensuring profitability, viability and accountability of the Enterprise.
Since Enterprises are established under statutes, their performance has to be in compliance with such statutory requirements subject to the provisions of the Constitution and other laws as may be applicable. Hence these enterprises should be professionally managed.
His Excellency the President has appointed a high level committee to examine and to recommend nominations to the boards of public enterprises and guidelines have been issued specifying the eligibility requirements of candidates for the appointment to such posts.
The Parliamentary Committee on Public Enterprises (COPE) in its recent reports to Parliament has expressed serious concerns about the management of public enterprises.
– Lack of transparency and accountability.
– Lack of professional management of Public Enterprises.
– Financial indiscipline, irregularities, manipulations and malpractices including large scale frauds and corporate failures.
– Non-compliance with statutes, rules and regulations
– Inefficiencies leading to heavy losses.
– Lack of proper management information systems.
– Ineffective progress review and performance monitoring.
– Ineffective internal controls, risk management practices and audit.
– Delays in tabling annual reports and accounts to Parliament.
– Inadequate disclosures in financial reporting.
– Non-declaration of assets and liabilities by Directors
– Loss of public confidence in financial reporting and auditing.
Boards of Directors of Public Enterprises must be able to interface with all stakeholders. They must make sure that sufficient time is spent to deliberate Board papers, especially those in relation to specific development projects and related activities, so that timely implementation of such projects is assured.
In pursuing its key purpose, a Board faces a uniquely demanding set of responsibilities and challenges. The Board must:
– Seek to ensure the financial viability of the Enterprise
– Collectively direct the affairs of the Enterprise.
– Monitor and control executive management
– Meet its stakeholders’ appropriate interests
– Ensure its moral and ethical commitment in areas such as bribery, corruption, political activity, gifts etc.
As the custodian of public resources, the Board should exercise its mandated rights and responsibilities with integrity and in good faith, within the legal and regulatory framework governing Public Enterprises under directions and control of the Minister/Ministry of Finance or the Treasury (Department of Public Enterprises) under the direct supervision of the line Ministry.
This handbook on good governance directed to chairmen and boards of directors of public enterprises would serve as a guide to manage the affairs of those institutions effectively.