Corporate governance expert Professor Peter Goss has raised concerns about the newly published National State Enterprises Bill, stating that it is not immune to state capture. The Bill aims to re-organize state-owned enterprises (SOEs) by creating a new state-owned holding company and consolidating the state’s shareholdings in these enterprises. Additionally, a state asset management company will be established to oversee the management of state assets.
The Destruction of the Principle of Distribution of Power
Professor Goss highlights one of the fundamental problems associated with state capture, which is the super centralization of power. He argues that the National State Enterprises Bill contributes to this issue by allowing the President to serve as the sole representative of the holding company. This grants the President significant authority, even without consultation with the board of directors.
This concentration of power is concerning as it goes against the principle of distribution of power, which is a fundamental element of corporate governance. When power is concentrated in the hands of a few individuals, it can lead to corruption and abuses of power, as seen in previous instances of state capture.
The Consequences of Over-Centralizing Power
Over-centralization of power can have severe consequences for the country and its citizens. Here are a few examples:
- Reduced Accountability: When power is concentrated, there are fewer checks and balances in place to ensure transparency and accountability. Decision-making becomes centralized and less subject to scrutiny.
- Inefficient Governance: Concentrated power often results in slower decision-making processes, as decisions need to go through a single individual or a small group. This can lead to inefficiencies and delays in addressing critical issues.
- Increased Risk of Corruption: With power concentrated in the hands of a few, the risk of corruption and bribery increases. These individuals may use their authority for personal gain, undermining the interests of the state and its citizens.
The Need for a Balanced Approach
Professor Goss emphasizes the importance of maintaining a balance of power and avoiding over-centralization. He suggests that the National State Enterprises Bill should be revised to include mechanisms that ensure the involvement of multiple stakeholders in decision-making processes.
This could include the establishment of independent boards of directors with diverse expertise and backgrounds. These boards would provide oversight and ensure that decisions are made in the best interest of the enterprise and the country.
The newly published National State Enterprises Bill, aimed at re-organizing SOEs, has been criticized by corporate governance expert Professor Peter Goss for its potential vulnerability to state capture. The concentration of power in the hands of the President, without sufficient checks and balances, poses a risk for corruption and abuse of authority. To mitigate these risks, it is essential to ensure a balanced approach that includes multiple stakeholders in decision-making processes. By doing so, the interests of the state and its citizens can be safeguarded, and the chances of state capture minimized.