Vacant SOEs chief executives worries oversight body
No sucesssion plans for Chairs, CEOs common SOEs prone to corporate governance lapses- Majinda
The Botswana Accountancy Oversight Authority ( BAOA) has bemoaned prolonged periods for appointment of chief executive officers at Public Interest Entities ( PIEs).
Over the past years, most state- owned enterprises and private companies have been placed under the watch and custodian of acting executives. The BAOA Chief Executive Officer, Duncan Majinda said the leadership gap affects corporate governance and is one of the indicators for embedded problems within public interest entities.
Addressing participants at the Botswana Stock Exchange ( BSE), Tshipidi Mentorship Program 2021, Majinda lamented at companies that have acting or no CEOs, particularly, for prolonged periods. Currently, some of the entities on the market that are acting CEOs include, Letlole La
( LLR), Human Resource Development Council ( HRDC), Botswana Innovation Hub ( BIH), Botswana Housing Corporation and Botswana Meat Commission ( BMC), among others.
Majinda further highlighted that the public interest entities are also prone to not having boards or full boards for prolonged periods, persistent delayed finalisation of Financial Statements, poor reports from internal, external auditors, and regulators. In addition, he cited that such entities suffer high staff turnover at management level and above, lack action plans and modified audit opinions, while suffering persistent losses.
Majinda said the Authority’s data indicates that 78 percent of companies are not compliant to cor
porate governance while 22 percent are compliant, and only 13 percent of state owned enterprises are compliant. Some of the areas include, not having a code of corporate governance, no succession plans of chair and CEO, constitution of board inappropriate, appointment of directors, evaluation of boards and members, disclosure of remuneration, internal audit not effective, audit committees not effective and disclosure of director’s information.
Though BAOA is worried about the gaps in the country’s corporate governance, Majinda is optimistic that the new Financial Reporting Amendment Act, 2020, whose implementation is pending approval of the regulations should resolve some of the challenges. In addition, Majinda is advocating for Botswana’s own corporate governance code and urges country wide stakeholder participation in compilation of the code. Meanwhile, BAOA has selected King III as the most suitable corporate governance code for Botswana. “PIEs are therefore expected to adopt the King III corporate governance code, or any other code that includes practically all the recommended best practice corporate governance elements and principles, and as required by applicable laws, rules, and codes,” said Majinda.