July 3, 2008

Government tightens screws on parastatal investments

Board members of parastatals will be held fully accountable for investment decisions they make when an amendment to the act governing these institutions becomes law. It comes in the wake of millions of dollars squandered in failed investments, particularly by the Social Security Commission (SSC) - N$30 million, the Overseas Development Corporation - N$100 million, and the Namibia Development Corporation (NDC).
Prime Minister Nahas Angula tabled an amendment to the State-owned Enterprises Governance Act in the National Assembly, which outlines guidelines for the investment of funds from parastatal coffers. In total the three institutions lost more than N$130 million in unsuccessful investments. The SSC invested N$30 million in a little known investment company, Avid Investment. The matter became the subject of a Companies Act Inquiry in the High Court into the bankruptcy of Avid that took place between late July and early September 2005 before Acting Judge Raymond Heathcote. Almost three years down the line six Avid directors were arrested in April this year and now face criminal charges in the High Court. No board member or senior manager has so far been held accountable for the missing millions.
The Prime Minister's amendment if passed would compel parastatals to obtain approval from the relevant line ministries before making an investment. Explaining the amendment, Angula said "boards of SOEs should take full responsibility for investment decisions, and the Finance Minister will oversee such decisions".
The amendment stipulates that the boards of all SOEs must compile their own guidelines on policies, standards and procedures they want to apply for effective ways to supervise, manage and monitor "transactions for investments, including altering such investments or dealing with them which affects the terms of the initial investments."
The draft amendment further requires SOEs to consult with the line minister on these guidelines before they are made or are changed. As a further measure, the line minister must consult with the Finance Minister on these guidelines before they are finalised and applied. The guidelines must be drawn up within 90 days after the amendment bill is published in the Government Gazette. (The Namibian, Windhoek)

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