Frances Essiam’s fight with the GCMC board, matters arising

The ongoing clash between Frances Essiam, Managing Director of the Ghana Cylinder Manufacturing Company Limited (GCMC), and her board of directors, over who has ultimate authority over some decisions is not uncommon in the board rooms of state owned enterprises and other public institutions.

The difference this time is that the fight has spilled into the public domain. Admittedly this is not the first time we have witnessed such a spectacle in this country. It has happened under almost every government of the 4th republic.

The Problem is a Complicated and Confused Legal Regime and the Absence of Clear Corporate Governance Guidelines

I had the privilege of serving on the Board of the Gaming Commission of Ghana from April 2015 to January 6, 2017 under the Mahama administration. I witnessed at first hand the potential for conflict between public boards and their Chief Executive Officers (CEOs) over who has ultimate authority over some decisions.

I have also consulted for some public institutions in the past, and have seen how it can be confusing to boards and CEOs on who has the final say on some matters.

The public institutions space is complex.

Chapter 14 of the 4th republic constitution of 1992 constitution defines the public services of Ghana to include “(i) public corporations other than those set up as commercial ventures; (ii) public services established by this Constitution; and (iii) such other public services as Parliament may by law prescribe”.

Then there are limited liability companies established under the Companies Code Act 170.

Public Services established by Law

Public services established by law includes the likes of the Gaming Commission of Ghana, Driver and Vehicle Licensing Authority, Ghana Revenue Authority, Ghana Highway Authority, National Road Safety Commission, Ghana Standards Authority, Ghana Civil Aviation Authority, National Communications Authority, Ghana Cocoa Board, Grains and Legumes Development Board, Ghana Ports and Harbours Authority, Social Security and National Insurance Trust, public universities, etc.

These public institutions have their individual acts of establishment that set them up as a body corporate with defined objects and functions. They can sue and be sued.

Typically the establishment act will provide that the ‘governing body’ (i.e. Board) is composed by institutional representatives from the Ministries, other public services, the private sector, and presidential appointees.

For instance under its establishment law (Act 721, 2006) the Board of the Gaming Commission has 11 members – the Chairperson; one (1) representative each from the Ministry of Finance, Police Service, Ministry of Local Government and Rural Development, Ministry of Interior, Ministry of Tourism, and

Ghana Revenue Authority; the Games Commissioner (or CEO); and 3 other persons nominated by the President.

Like other public boards, Act 721 provides that the members of the Commission’s Board are appointed by the President under Article 70 of the constitution which requires that the President shall appoint boards in consultation with the Council of State.

For the appointment of a CEO (or Deputy CEO in some cases), the constitution in Article 195 requires the President to appoint the person “acting in accordance with the advice of the governing council of the service concerned given in consultation with the Public Services Commission”.

The confusion starts when there is a new government and party activists with the backing of their godfathers and godmothers are jockeying, fighting and undermining each other to grab ‘juicy appointments’. And make no mistake, this happens even when the party in office is reelected.

So we have the abnormal but regular instances when a President announces the appointment of a CEO before appointing a Board. In some cases the Board and CEO are announced at the same time.

The confusion is further deepened when the Public Services Commission (PSC) flexes its muscles. The PSC exercises its mandate under Act 482, 1994 by requiring that all Chief Executives, Deputy Chief Executives and other senior officials of a public institution attend an interview.

The absurdity is this: A President appoints a CEO before the person attends a PSC interview to confirm the appointment. Until then the CEO remains acting, and can remain so for as long as 8 years.

If the CEO fails the PSC interview he/she could lose the job. And that seems to explain the sacking of Peter Abum-Sarkodie by the President in April 2018 as Boss of the Environmental Protection Agency.

The PSC interview and Presidential confirmation process for a CEO can get murky with political and other interests pulling strings to influence or delay the process. The process could also include background checks of the appointee by National Security.

Typically the PSC will write to the Chairman of the board of the institution to nominate a Board member to sit on the CEO interview panel.

The PSC will report on the outcome of the interview to the President copying the sector ministry and governing board.

Imagine Francis Essiam’s Board Chairman being a member of the PSC interview panel. Guess what will happen!!!

Also imagine what will happen when a Board Chairman decides, with the silent objection of other Board members, to become Chairman of the Procurement Committee of the Board!!!

In Part II, I will focus on a new dynamic – public services that have gone off government subvention and the implications for corporate governance at these entities.

Part III will examine corporate governance at the ‘hybrids’, the government controlled limited liability companies like Ghana Cylinder Manufacturing Company Ltd, Ghana Airports Company Ltd, Metro Mass Transit Ltd, GOIL, GCB Ltd, National Investment Bank Ltd, etc which are established under the Companies Code, Act 170.

Part IV will propose a way forward to resolve this national dilemma of instituting effective corporate governance in our public services and state owned enterprises.