|A tool to boost state corporate governance|
|Written by By Eugene N. Nforngwa|
|Tuesday, 16 March 2010 15:08|
Cosmas Cheka, Laws professor at the Univeristy of Yaounde II and author, on corporate governance and corruption
Rules for checking corporate misconduct is one of the main aspects highlighted in a new book titled Corporations & Enterprises of the Public & Quasi-Public Sector of Cameroon (Board Members Corporate Handbook) by Cosmas Cheka. The ministry of Supreme State Audit, the government department charged with promoting governance, has embraced the book and recommended it for all managers (including those sitting on boards) of state-run companies. Speaking at its launching last week, Siegfried Etame Massoma, the audit minister, said the book had made his work much easier.
Transparency International, the international corruption watchdog has also commended the publishing of the book. Speaking here on a visit that coincided with the release of the book, the president of the international board of governors the organisation, Huguette Labelle, said coming from Africa, the book was an initiative that needed to be replicated to other countries.
The author, Cosmas Cheka, is a law professor at the University of Yaounde II. He spoke to The Standard Tribune about the motive for the book and shared his thoughts about how best to deal with corruption in Cameroon.
You have just launched this book on corporate governance. Governance is a term that has been defined variously. What in your view is corporate governance?
Corporate governance concerns relationships between corporate managers, directors and providers of equity capital. This is a strictly private corporate concept. But then if you had to look at it within the framework of corporations from the private or public sectors, this definition is not that restricted. In that case corporate governance can be defined as laws, regulations and voluntary private sector practices that enable a company to attract capital and efficiently achieve the corporate activities, and in particular meet both legal obligations and general societal expectations. You can see from this definition in English that corporate governance does not have a kind of diluted meaning which it has in French. In French, corporate governance or gouvernance d’entreprise simply means the rules of ethics that govern the management of a company.
What is the content of the book?
The book contains a cornucopia of issues related to corporate governance. It deals with basic corporate governance concepts like accountability, transparency, corporate social responsibility and the importance of good governance, where an institution or a corporation chooses to embrace a corporate model to execute a specific activity. It also isolates and analyses the current law on state corporations (the 1999 framework law) and OHADA rules, which deal with companies that are financed by the state or partially with the private sector. The book addresses the 1999 law and the OHADA uniform act on companies and economic interest groups, strict questions of discipline and the relationship between the board and the executive; and explains the rights and obligations of board members, before proceeding to advise on how to prepare for board meetings and interpret a balance sheet.
What motivated you to write this book?
I know what you may be thinking. The current spate of the arraignment, arrest and incarceration of government ministers and state corporate executives was really not my reason. I wrote so as to edify board members on basic governance rules for checking corporate misconduct. That is one goal. Another goal was to revive public confidence in state corporations after its unfair bashing by the structural adjustment of the late 80s and 90s. Another objective was to contribute in enhancing the quality of oversights exercised by appointed board members of state corporations. Finally, it was to provide a contribution so that it guides those who are charged with the sector. They need to be guided on rules of integrity which should be embodied in the person who is proposed for appointment. And if they do, they will be helping the tax payer a lot, because it is important for those who are appointed to make an active contribution towards the activities of the board rather than just come there to fill numbers.
What was the problem with structural adjustment?
Between 1960 and 1980, the country put in place what I will describe as liberation or sovereignty enterprises. We had just acquired independence and it was necessary to let certain sectors function. The state therefore set up certain corporations to fulfill this goal. At this time, following the studies of an economic history specialist, it was established that in Cameroon, just like in other developing countries, the per capita growth of the state corporate sector was 1.6 per cent. Developing nations were concerned about this relatively low per capita growth. And with the difficulties of the 80s, the Breton Woods institutions came in with a proposal that what would be the cure for [weak] growth in developing countries would be structural adjustment. Cameroon, just like other countries, embraced this concept and privatized the productive aspects of the state corporate portfolio. Western nations were applying the neo-capitalist development theory whereby it is believed that the private sector is capable of regulating itself.
Between 1980 and 2004 the Cambridge specialist established again that structural adjustment did a great disfavor to developing nations because rather than progress by 1.6 percent in terms of per capita income as was the case prior to 1980, it had regressed to 0.3 percent. So, structural adjustment failed. It has even been proven recently to have been an abysmal failure by the way the West approached their private sector corporate crisis. When their companies failed they used public money to regulate the economy. By so doing they, set up the biggest sovereign block funds you can ever think of. If privatization was a solution to corporate sector failures in Africa, why is it that when it happened in the West, in structures that had already been privatized, instead of letting the structures to sink - because that’s the only way out - they were nationalised.
It is an indication of a bad diagnosis of the growth weaknesses of developing nations like Cameroon in the 80s. From this the lesson we learn is simple: be it in the public or private sector, we have to develop the enterprise culture, the board culture which enables those who sit on boards to provide better oversights, and in this manner protect the interest of the shareholders, or as concerns state corporations ,the stakeholders.
I’m not by this saying that privatisation is a bad thing. I’m simply saying that it doesn’t matter who is managing. What is important is that if they have the skills they’ll perform well. And the handbook provides them with one of those skills.
Your readership is rather thin; you are targeting board members of public corporate bodies. But we know that these companies are run by directors and general managers…
I’m sorry, the readership is not thin. The target audience of this book includes board members and managers of all the 165 state corporations in Cameroon. Some more [state corporations] have been created since January, which was the end date of data collected for this book. The next level has to do with advisers to the appointing authority of state corporations. Then we have the councillors of the 374 municipal councils in Cameroon as well as the regional councillors of the 10 regions. (...eventually we will have regions and these regions will have regional councillors or members sitting on the Senate). The next level has to do with state employees, who at any time may be called upon to represent the interest of the state in a state corporation. Also, there are the Cameroon taxpayers, that is, those who actually own state corporations because they are the majority stakeholders. Besides all of this target audience that I just mentioned, you have students interested in corporate governance, libraries and the general public.
Where does Transparency International come to your work?
Transparency International happens to be concerned with the way the public and private sectors carry out business. It was a coincidence that at the time I was ready to publish this book, I spoke to Barrister Akere Muna and he said he was interested in combining the book launch with the visit of the president of Transparency International to Cameroon. I found no objection to it. You can see that Akere wrote the foreword of the book.
Do you see corruption going away anytime soon?
I’m in development corporation work. Alexander Pope tells us that hope lies in the human breath: “So long as we breathe we live”. In this context we can only hope that corruption will go away. We don’t have to give up because we owe a responsibility to our children to do everything to preserve society in a state where they can inherit something to be better off.
Why is it so difficult to fight corruption in our country?
The fight against corruption is a collective effort. You have to believe that what is going on is wrong. But, at the same time, it is difficult to dissociate the level of corruption from the level of poverty that exists in the country. At all times those who are engaged in corrupt activities will tell you they have a duty to put food on their table in their homes. It is for this reason that fighting corruption through positive works like this is a worthwhile effort. But it must be combined with practical efforts which are realistic on the field, which improve the lot of mankind and discourage people from getting trapped into this conundrum, which eats and weakens the very fabric of economic activity.
What is the cost of corruption to a society’s economy?
In any society where corruption has been accepted as a culture, the playing field is no more level. Everything becomes unpredictable.
Some people think the government should not be involved in fighting corruption; after all, it is its agents that are considered most corrupt. What would you say to that?
To argue that the state is not in a position to fight corruption is like smoking a cigarette from the wrong end. It has been established that in the Cameroonian civil service you find very wealthy people, which is the reverse of what happens in the developed world, where it is those in the private sector that are very wealthy.
That is the point. Can you have a corrupt civil service fighting corruption?
There are many good people out there. The fact that there are corrupt Cameroonians in the civil service doesn’t mean that the whole civil service is corrupt. There are a few who do it in an exaggerated manner and get away with it. And this gives the impression that everybody is. That is not the case. The point is that perhaps our method for resolving it does not nib corruption in the bud. We are not punishing corruption quickly as it should be done in order to dissuade others from embarking on the same act. But to say everybody is, is an insult to honest Cameroonians.
After the book has gone out, what else do you plan to do?
The media is not the best channel for recommendations to government. I’ve been working in development cooperation for a number of years and we don’t do that. But what I may say on the contrary would be my dreams, as a teacher and a development cooperation worker and my hopes as a parent.
The time has come to revisit the state corporate portfolio because there are many that are limping and yet absorbing subsidies from the treasury when something else could be done to them. It is time to revisit them and align their objectives to the demands of the computer age and make changes which help to create wealth.
It is time to give the state corporate sector policy visions. My work on a hundred state corporations does not permit me to state today that we have the public sector corporate vision. It still lives and believes and operates as though the state corporate sector was an extension of the public service. How do you explain, for example, that civil servants who sit on the audit bench would argue that you should pay capped salaries to workers in all state corporations at a time when these state corporations compete for good manpower on the open market with companies in the private sector? They would never make it if the state continues on these principles.
What are these state corporations costing us?
In 2008 they benefited from state subsidies amounting to 89 billion CFAF. If you take into account the fact that in 2010 the annual budget of this country is some 2.570 billion CFAF, you would see that 89 billion is not a small sum. In 2009 state subsidies again to the state corporate sector amounted to about 79 billion CFAF. What is important to note about this figure is that we borrowed in the same year almost the same amount of money from the Western world. If we spend so much in subsidies to the state corporate sector, it is but normal that we should provide better oversights so that these resources are better used.
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