The matter of the management and governance of the National Health Insurance Scheme has brought up broader issues of the governance of publicly owned corporations in our land. The federal government has made statements that go directly to the purpose and overall value of the Boards of Governing Councils of our agencies of government. The Boss Mustapha Doctrine deserves scrutiny.
The NHIS matter is complicated. The Minister of Health as supervising authority sanctioned its chief executive, Usman Yusuf. The Executive Secretary ignored the order of the minister, Isaac Adewole, and insisted that only the President, who appointed him, could discipline him. Mr President returned his appointee to the NHIS, this agreeing with Yusuf’s reading of the situation.
A few months later, Yusuf earns another sanction from the Governing Board of the NHIS. They had issued queries which the Executive Secretary spurned. They suspend him. Enter the Secretary to the Government of the Federation, Boss Mustapha, a lawyer. Mustapha pronounces that only Ministers and not the Councils or Boards can discipline heads of agencies of government.
In less than a year, therefore, Boss Mustapha has made two striking pronouncements on the powers of Governing Councils of federal government agencies. In the first, he relayed the ruling of Mr President for Yusuf to the effect that only the President who appoints can discipline the head of a government agency. In the second, he now says only Ministers can do so.
Mustapha laid down the rules in October at the Induction programme for batches 2, 3 and 4 Governing Board Members of Federal Parastatals, Universities and Medical Centres at Transcorp Hilton Abuja. The Presidency had an earlier one from 26-28 July for board members of publicly owned companies.
Mustapha said that parastatals are established to provide services and are under the supervision of the Presidency or a Minister. He added that “the roles of Governing Boards/Councils as the case maybe, are prescribed by the statutes, guidelines and extant circulars”. According to reports, Mustapha stated that the Governing Boards/Councils headed by chairman should strictly focus on providing policy direction and project implementation to enable the parastatals to achieve their mandates.
Mustapha defined the duties of the boards of government-owned corporations as follows. Set operational and administrative policies to accord with government policy directives. Supervise implementation of policies above. Avoid involvement in the daily management of a parastatal or agency. Minister to control the parastatal through its Board. Boards operate part-time.
Mustapha added a proviso. The Governing Councils may “articulate infractions, investigate wrongdoing and make recommendations to the government through the supervisory ministry”.
We now have a situation where Governing Boards effectively have responsibility without authority. They can design policies but how do they implement the policies and supervise them if they lack authority over the link between the Board and Management? The Chief Executive of each parastatal is the representative of the board in the execution of policies.
The managers of a business are agents of its shareholders. Boards represent the shareholders principally. Their role as representatives of the shareholders is the reason many boards act in a fiduciary capacity and have enormous powers. The Mustapha doctrine on governing boards effectively deprives the representatives of shareholders the power of sanctions.
For the boards of the over 400 publicly-owned enterprises of the federal government, much more is at stake. The parastatals represent an investment in billions throughout more than fifty years. They are the organs for effecting the policy direction of the executive arm.
Both CAMA and other regulations spell out clear roles for Boards. CAMA, in particular, expects that the board must “ensure proper management of the company”. Boards are required to focus on strategic issues, provide intelligent “capital” including ideas to enhance performance, networking and corporate best practices and empower management while holding them accountable.
The Secretary to the Government tries an uncomfortable balancing act as the government tries to protect the interests of its appointees as Chief Executives while limiting the roles of its boards. It cannot work. There is either a board, or there is none.
Our government-owned companies should be catalysts for value creation. The boards of such agencies should “should have the necessary authority, competences and objectivity to carry out their functions of strategic guidance and monitoring of management. They should act with integrity and be held accountable for their actions”, as the OECD declares in its guidelines.
There is now an urgent need for the federal government to take a closer look at the expectations from its parastatals. this holistic review would look at the Agencies, their purpose and expected contributions to society, their management and governance practices. Such a review is critical to ensure that the wooliness in the declarations on the roles of governing boards does not contribute to further deterioration in the perfomance of these agencies delivering sub-optimal services.
