Public sector units: Careful not to throw out the baby with the bathwater

The issue of dismissals and appointments in key positions in government and parastatal bodies is likely to be a dominant theme of debate over the coming weeks. It is looking more and more like Vishnu Lutchmeenaraidoo will come to regret the statement he made rather hastily about filling the posts of CEOs of Public Sector Units (PSUs, including Corporatized Bodies) after a process of advertising and selection.

Although he was well meaning and motivated by all the right intentions, the hard facts of realpolitik will most likely come to haunt him as a series of “political appointees” start filling the ranks in those positions. The first crack in the armour came with the statement of the Prime Minister during his year-end speech to the nation when he announced that only “some” of the posts will be advertised.

As far as dismissals are concerned, the author of these lines having himself been the subject of a rather summary dismissal (debarred from attending office from one day to the next without any process or warning for a post for which he had been selected by an interview panel after advertisement) by a Labour-led government in the mid-90s, is well informed about the rashness and vindictiveness which usually accompany such actions by ANY party acceding to power. Only those who then protested publicly and as a matter of principle against such treatment being meted out to others can justifiably complain about the same practices being applied today.

Our starting point is therefore that all the hue and cry of protests which we shall witness over this issue coming from politicians of all descriptions is all hypocrisy and political horseshit. The fact of the matter remains however that a modern Mauritius can no longer afford to continue with such behaviour coming from any party which professes to lead us on the road of progress, real socio-economic development and most of all respect for institutions.

People who are genuinely concerned about the issue should therefore start by admitting that these shameful practices belong to a forgone era and engage in serious cross-party debates about how to deal with the problems of transition and hand-over when there has been a change in government. In this connection we propose here to share some thoughts with the hope that these could contribute to a larger debate. We shall restrict the exercise to those larger and more critical institutions such as SIT, SIC, Air Mauritius, CEB, Public Utilities, BOM, SBM and some others.

For starters, a more formalized and structured approach would need to meet the following characteristics:

1. An efficient and transparent mechanism for appointments

All parties will agree that the Chairmen and CEOs of these institutions are Political Appointees and form part of the “administration” of the incoming government. They will be appointed by the Cabinet upon recommendation of the Minister concerned.

In the case of Corporatized Bodies (private companies in which government holds a controlling interest), Cabinet acting as the surrogate major shareholder will recommend a person to the Board of the Company. Under justifiable circumstances, the Board may reject the nomination. Otherwise it would submit the Cabinet’s recommendation for approval to the AGM.

2. Rule based and predictable procedures for dismissal when there is a change in government

Political appointees will resign or will be deemed to have resigned as soon as there is a change of government. Adequate compensation shall be payable to the incumbent when he resigns after an election. The quantum of this compensation shall be determined by a well-publicized formula which will apply as a general rule for all political appointees.

3. Accountability to Parliament and publicity regarding the performance of these institutions

The Chairmen and CEOs of these institutions have a fiduciary duty towards the general public by virtue of the fact that they are dealing with public funds. The Annual Reports of the institutions will be submitted to a permanent committee of Parliament for scrutiny. The Committee may decide to call the CEO of the company for further explanations and submit a report to Parliament in cases of serious departure from normal practice. Banks and other institutions which are supervised by a Regulatory Authority shall be exempted from such scrutiny.

These are a few of the main parameters which could be formalized into well-defined processes of appointment and dismissal of “political appointees.” It is far from being an exhaustive list and could be further elaborated keeping in mind the objectives of transparency, political accountability and efficient management of public funds. In addition the whole process including the eventual quantum of compensation should be adequate for attracting the best people for these jobs.

Having said so, one needs to be mindful about avoiding falling into the trap of not being able to see the wood for the trees. This whole issue of high-level appointments in PSUs is intricately associated with the view that one takes of the role of the State in the economy. One would expect that left-leaning governments would tend to consider these institutions as effective instruments for shaping the future economic landscape of the country. The concept of democratization of the economy, for example, should have relied on the mobilization of these corporations in order to drive the economic agenda.

The famous Public-Private Sector partnership which is so characteristic of the successful development model of Mauritius could have been taken to a higher gear through intelligent design of the role of these Public sector units (PSUs). Unfortunately the real strategic value of these units never seemed to have been understood. An organization like the State Investment Corporation, for example, seems to have completely lost the sense of its mission with its role having been reduced to that of a supplier of capital to private sector-led projects, sometimes unfortunately of dubious quality.

We should have a clearer view of the intentions of the new government in the coming weeks about what roles they intend to attribute to these important institutions in the country’s future economic development. Beyond the drive to “put order” in those institutions, one would hope that there will be a total rethink of their missions and how they can impact our future economic configuration.

* Published in print edition on 16 January  2015