Government is working on a new law called the Public Sector Corporate Governance Act that will see corruption and other related maladministration in the public sector being punishable at law. The new law, which is likely to be effected next month, would largely incorporate recommendations made in the National Code for Corporate Governance that was crafted by Government and the private sector in 2014. Government has also set up two units that would deal with gross mismanagement and corruption in loss making entities looking at financial statements of all public sector institutions and followups on findings and recommendations of the AuditorGeneral.
Among other key issues, the code which is the organic foundation of the new law, critically evaluates issues of corruption in the public and private sectors, corporate disclosure, communication and mechanisms for creating trust between shareholders, boards, management and employees
The code was formulated following media exposure of massive and undeserved remuneration of top executives, flouting of tender procedures and other murky activities in both private and public entities. Addressing senior military officers attending Course 5 of 2016 at the National Defence College on Friday on “The code of corporate governance for parastatals and State enterprises: A national security threat”, Vice President Emmerson Mnangagwa said the Office of the AttorneyGeneral had already completed the first draft of the new law with the assistance of World Bank experts. “Equally significant is Government’s intention to give legal effect and consequence to the National Code by incorporating many of its recommendations into a Public Sector Corporate Governance Bill,” he said.
“The AttorneyGeneral’s Office, together with the World Banksponsored local experts, completed the first draft of the Bill on March 31 2016 and it is our hope that the Bill will become law by the mid of this year. “Enforcement of the Bill together with far stricter oversight over compliance therewith by line ministries and by the corporate governance unit in the Office of the President and Cabinet will contribute to a much improved level of compliance across the public sector, with the principles and practices of sound corporate governance.” VP Mnangagwa described parastatals and Stateowned enterprises as the engines of the economy adding that a strict monitoring of their activities has been put in place. “Government has also set up two units into aligning Stateowned enterprises, which have been hurting economic recovery through perennial dependence on the fiscus,” said VP Mnangagwa. “The units deal with gross mismanagement and corruption in the lossmaking entities. One of the units focuses on analysing financial statements of all public sector institutions, while the other follows up all audit findings and recommendations done by the AuditorGeneral. “
They ensure that whatever deficiencies revealed therein, are duly addressed by the line ministries and where such concerns are raised in respect of State enterprises, they have the role of ensuring that the line ministry in collaboration with the board and management of the entity effectively address those concerns.” VP Mnangagwa noted that several parastatals were grappling with high overheads, lack of good corporate governance and undercapitalisation that have adversely affected their operations.
He said as part of bringing sanity in corporate governance sector and for the country to remain internationally competitive, sweeping measures were being implemented including amendment of several laws. VP Mnangagwa said among the legislation currently undergoing amendment are the Banking Act, Companies Act, Audit Office Act, Public Finance Act, State Procurement Act, Insolvency Act and the AntiCorruption Act. He said the purpose of reviewing these pieces of legislation was fundamentally to address constraints to the ease of doing business in the country.