State enterprises law unto themselves

WHEN we think of government, we think of ministries, regulators and agencies. But we seldom think of one of the most important actors: the state enterprise sector.

State enterprises, mostly incorporated under the Companies Act, have over decades assumed greater and greater importance.

According to the State Enterprises Investment Programme for the years 2022-2025, the estimated total cost distribution among these entities totalled $36.3 billion, $39.5 billion, $33.2 billion and $30.1 billion. Huge chunks of the budget pass through them.

Yet, there has been no commensurate increase in transparency and answerability. In fact, the very notion of a chain of command between the central executive that runs the country and these hybrid legal beasts is often subject to heated dispute. There is much uncertainty over who exactly calls the shots, how those shots are to be called and when.

That must change.

The impasse between the new Kamla Persad-Bissessar administration and some of these entities is but the latest symptom of a bigger accountability problem.

On May 29, Ms Persad-Bissessar lamented, at a post-cabinet media briefing, that unspecified board members had refused to step down, saying, “the principle is that when the government changes, you go.” The PM called on officials to do the right thing. But some have decided doing the right thing means not leaving.

A good example has been unfolding at Plipdeco, where, on June 2, an executive was fired after he raised concerns about alleged political interference at an enterprise still ruled by a board left in place by the previous government. Similar spats have been playing out elsewhere since the April 28 general election.

The state enterprise sector comprises 47 corporations, of which 37 are wholly-owned, six are majority-owned and four of which the government has a minority shareholding in.

Plipdeco – which oversees the country’s second major port – was incorporated in 1996 and is a public company, 51 per cent owned by the government and 49 per cent by private shareholders.

Posing a serious challenge to uniform practices and protocols of governance is this variety of legal arrangements. Being a publicly traded company, for instance, raises completely different expectations than being a statutory authority.

The current impasse proves the need for the state to make a rational choice: either it lets the private sector run things in a mass divestment drive, or it passes legislation to exert better and clearer levers of control.

In 2023, state enterprises generated at least $35 billion in foreign exchange, $2.6 billion in corporation tax and $1.4 billion in dividends. They are far too important to be left to go rogue after each election. The government has issued a warning. But it may soon have to act in the interests of the treasury.