Jan 21, 2022 News
– Private Sector having nominee also concerning –Goolsarran
Kaieteur News – Like many other industry stakeholders who have examined the PPP/C’s rushed Natural Resource Fund (NRF) Legislation, Chartered Accountant and former Auditor General, Anand Goolsarran finds the document with several concerning features and provisions.
In a detailed and ongoing examination of the law that was taken to Parliament on December 16, 2021 and passed less than two weeks later, Goolsarran wrote that he finds troubling, the provisions governing the appointment of a Board of Directors for the NRF. He said this is especially the case when it is examined against the Santiago Principles, one of which states: “There should be a sound governance framework that establishes a clear and effective division of roles and responsibilities in order to facilitate accountability and operational independence in the management of the SWF (Sovereign Wealth Fund).”
Goolsarran noted that the governance arrangements are detailed in Sections 5-14 of Guyana’s NRF law. He noted that the Board of Directors has overall responsibility for the management of the Fund, including preparing an Investment Mandate and monitoring the performance of the Fund. It comprises not less than three and not more than five persons appointed by the President who also appoints the chairperson. One representative each must be from the National Assembly and the private sector.
Goolsarran posited, “On the face of it, this arrangement is an improvement over the predecessor legislation since there was no provision for the establishment of a Board, and the Minister was responsible for the overall management of the Fund and for preparing the Investment Mandate. We had expressed that in that legislation there was an over-concentration of powers in the hands of the Minister.”
“Our concern with the new legislation, however, relates to the composition of the Board and how its members are to be appointed.”
Expounding further, the Chartered Accountant said three members would be woefully inadequate to execute the Board’s mandate while noting that the Act does give the President flexibility to select up to five persons.
On this note, Goolsarran said, “But if the President decides to appoint a five-member Board, three members will be selected by him based on his own deliberate judgment, which is undesirable.”
While the President can follow in the footsteps of the late President Desmond Hoyte and rise to the occasion by selecting persons with the appropriate technical and professional backgrounds and who are considered politically independent in the eyes of the public, Goolsarran said it would have been preferable if the legislation had limited the President’s selection to one member.
He said in his analysis published in one of the nation’s daily newspapers, “It would have been a good idea if the membership of the Board could have comprised of two representatives from the accounting profession, one from the legal profession and one from academia, leaving the President to choose the other member. At least three members should constitute a quorum.”
What also troubles Goolsarran is that the private sector will be able to have a nominee for the NRF’s Board of Directors. He reasoned that since the private sector will be the main beneficiary from the withdrawal and utilization of the resources of the Fund, its representative should not be part of the Board as this may present a conflict of interest.
He added to his commentary that “There have also been credible allegations that some key members of the Private Sector Commission, the parent body, are so closely associated with the ruling party that this may pose some difficulty for the selected person to act independently and objectively.”
In addition, with the Government holding the majority in the Assembly, and a nominee for the Board would also be pulled from the House, Goolsarran said it is likely that the representative will be selected from among Government members. He said it would have been more comforting if the legislation had specified that the representative should be from the political Opposition.
Further, Goolsarran said it is unclear what mechanism will be used by President Ali to select the persons for membership to the Board. Goolsarran said he would have preferred if such mechanism was embedded in the law, mandating the Public Accounts Committee to identify suitably qualified and trained persons after due consultations with the representative bodies and submit their names to the Assembly for approval, with the President making the appointment.
He also believes that the President should not be responsible for selecting the Chairperson as prescribed in the Law. Goolsarran opined that Board members should have been given the power to elect their own chair while warning that an imposed chairpersonship can create tensions within the Board.
Given the foregoing, among other notable concerns, Goolsarran alluded that the rushed NRF Legislation, is indeed flawed while leaving room for improvements in the area of governance.
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