Over the last few weeks, there have been contributions from a range of organisations on an important topic. The rules that govern the appointment of directors to the boards of private sector companies and whether or not it is appropriate for former government officials to move into such private sector positions following the completion of their tenure.
This is an important discussion, and it is one that should be looked at carefully, without hype, insinuation, or premature conclusions. It is a discussion that is not just relevant in Nigeria but globally, where it is common practice for transitions to take place between the public and private sectors.
The insinuation behind the current debate is clear. Companies that appoint former government officials or regulators are achieving some kind of inappropriate benefit or preferential treatment because of the relationships, connections, or influence that these officials have. The potential for these ‘conflicts’ to exist is something that has been acknowledged globally, and clear and consistent best practices have been developed to ensure that they are managed properly.
“A decision by an individual to serve their government in an official role should not act as a future restriction on their right to trade or take up positions in the private sector.”
However, at the same time, it is commonly accepted that there is a need to be realistic and pragmatic. A decision by an individual to serve their government in an official role should not act as a future restriction on their right to trade or take up positions in the private sector. If such a principle were to be applied, would we have many young Nigerians choosing to enter government service? It is unrealistic to assume that a high-ranking member of the government will not operate outside of government at some point in their career. In fact, some of our most successful public officers have come from previous careers in the private sector. Do we block their transition into government on the basis that they might favour their former employers? That is why it is so important to have rules in place that govern the transition between the public and the private, and it is a mature space with significant literature, documented experience, and best practices.
Transparency International (TI) says that the most common tool used globally to manage the potential for conflict when public employees leave office is the ‘cooling off period’, defined as the period following departure from office during which an official is prohibited from undertaking tasks in the private sector that relate to their previous duties. In Norway, this is six months, while in Cyprus it is two years, and in the UK, members of the government are prohibited from engaging in lobbying activities for a period of two years after their departure from government.
Similar rules exist in some institutions in Nigeria. For example, the Central Bank of Nigeria typically enforces a two-year cooling-off period before former officials are allowed to take up positions in the private sector.
There is a clear rationale for the time period involved. The more sensitive the position, the longer you are likely to need to ‘cool off’ to ensure that your knowledge and influence are not used to unfairly benefit a particular private sector player. The generally accepted time period for senior officials is 2 years, after which it is assumed that your ability to benefit a new employer through relationships or knowledge is deemed to have decreased significantly.
So let’s apply these best practice examples and principles to the recent noise about this in Nigeria. MTN has been used as an example of a company with a number of former public officials on its Board of Directors. But when we take a closer look, what we find is that there was a minimum four-year cooling-off period and up to eight years of cooling-off for some of these appointees. Not only are they compliant with the existing rules in place, but they significantly exceed the guidance on cooling-off periods in Nigeria and globally.
It is equally important to realise the changes that took place in Nigeria’s political environment between 2010 and 2019, the period during which ‘cooling-off’ took place. In 2015, we saw a significant change in political control with the transition from the PDP to the APC and the Presidency of Muhammadu Buhari. With that change came significant changes across the regulatory ecosystem and in the leadership of MDAs. None of the relevant directors were members of the Buhari administration’s cabinet, nor did they lead MDAs.
MTN Nigeria has faced a number of regulatory challenges over the last decade and has expressed a clear commitment to enhancing and ensuring compliance, investing significantly in its capacity to do so. Rather than assuming nefarious intentions, would it not be equally fair to conclude that the company is seeking strong, expert guidance on ensuring that it is beyond reproach in the future? The individuals appointed to the board are recognised nationally, if not globally, as experts in their respective areas of responsibility and have extensive executive experience on the boards of local and international organisations.
Given all this context, it is important to ask why this has become an issue now, more than four years after the appointments were made and approved by the relevant regulatory authorities. It is clear that best practice has been followed, whether or not that practice is codified in Nigerian rules and regulations. Perhaps the most important outcome of this saga would be for the government to remove any ambiguity, establish clear, well-communicated, and universal rules that draw on the best practice examples I have referred to, and ensure that the potential for misinterpretation or misdirection is removed completely.
Robert is a Lagos-based corporate law practitioner
