Too much politics in state companies

AT THE grand ballroom of the Hilton Trinidad, Port of Spain, a group of worried shareholders gathered on June 6.

The occasion was the annual general meeting of the entity known as National Enterprises Ltd or NEL, the holding company with fingers in the pies of some of our most important special-purpose state enterprises like Telecommunications Services of TT Ltd (TSTT), National Flour Mills (NFM), Power Generation Company (PowerGen) and more.

When we think about the country’s overall economic health, we think of things like the annual budget presentation, Central Bank bulletins, reports from the International Monetary Fund (IMF). We think of ministers of finance rising in Parliament, as Colm Imbert did this week, to present mid-year reviews.

We seldom think about or are afforded an opportunity to gain insights from private citizens and investors who may know a thing or two about what’s going on behind state boardroom doors.

But this week, a sombre alarm was raised by shareholders who were at the Hilton to query not only the performance of the state enterprises under NEL’s portfolio, but to also question whether there is, to put it simply, too much politics in state companies.

“When politics is involved in business, they don’t thrive,” said ordinary shareholder Gokool Seemungal.

Noting relatively subdued performances, he gave his personal assessment: “In most of these companies that we have here there is a significant inflow of politics.”

This is an important issue.

It’s an open question whether the regular incursion of party politics into the affairs of state enterprises has hindered the ability of these entities – which oversee billions in our assets – to reach their maximum potential.

The recent wranglings at TSTT over a security breach, with its attendant intersections of governance issues and commerce, are an excellent example of the messy realities that obscure the ability of shareholders – far less ordinary citizens – to repose confidence in management and management systems.

Of course, governments and business have mixed since time immemorial. Because special-purpose entities were set up years ago to deal with critical and strategic aspects of our economy, there is a need for a degree of state oversight. Political directives might be unavoidable.

This would not be such a bad thing if we had a strong culture of transparency and if institutional frameworks – such as those relating to the Integrity Commission and the public procurement regime – were working as they should. A balance, premised on accountability, could be struck.

Instead, it seems the decades-old policy of setting up private companies to perform public functions has done little to bolster performance. In fact, all it has probably achieved is keeping the most important shareholders, the citizens, in the dark.