Too many GLCs created without approval of Parliament, state assemblies

thing we can learn from the many emerging financial scandals is that federal and state governments have been incorporating companies left, right and centre.

This abuse must stop. Companies are created, then board of directors are created and filled by ex-ministers and civil servants who may or may not be qualified to hold that position.

If it is just an agency or department, there is no need to have a board of directors.

The unit head can report to the minister or secretary-general.

It is an accepted and time-tested procedure that a new agency or department to be created must be debated and approved in Parliament by way of its own act.

Somewhere along the way, someone cut short these processes and set up companies without reference to Parliament or the state assemblies, which is why there are so many companies mired in loss and scandal.

We must return to basics and practise substance over form.

The rule should be that any government vehicle, be it agency or statutory body or company set up under the Companies Act, must be approved by Parliament or the state assemblies.

In any case, a company incorporated under the Companies Act is not a suitable vehicle for government activities as the directors must act in the best interest of the company and not for the shareholder, that is, the government.

The example of the previous government mandating government-linked companies (GLCs) to spend one per cent of their profit before tax on corporate social responsibility (CSR) activities highlights the contradiction.

It is not GLCs’ role to carry out CSR activities. Their job is to create profit for the government so that it can be paid as dividends and taxes to the government.