In governance administration, interlocking directorships refers to the practice of members of a corporate board of directors serving on boards of multi-corporations or related entities. Strictly speaking, interlocking directorates are not illegal in corporations that do not compete, but Forbes Magazine makes an interesting point in an article written by Paul Hodgson.
“No corporation or corporate board functions in isolation. Corporate entities and their leaders are enmeshed in intricate intersecting relationships that exert a powerful influence. The study of governance-related issuer risks is simply incomplete without a thorough look at the broader context of influences on corporate decision-making. Getting things done depends largely on knowing the right people. But what are those things we want to get done? Some of them are undoubtedly good things, but some are also bad. Very bad.” (Hodgson, 2012).
As I read these words, I thought of them as being particularly poignant in relation to the situation at the Ministry of Science, Energy and Technology (MSET). It is generally agreed that governance and accountability broke down significantly under the stewardship of Dr Andrew Wheatley, but clearly not to the level where the prime minister thought it necessary to hold his minister responsible, and therefore culpable.
Dr Wheatley was appointed minister in March 2016 and proceeded to set up boards with interlocking directorships that were clearly purpose driven.
Let us examine the interlocking directorships of Dr Andrew Wheatley and determine for ourselves whether their enmeshment was for good things or very bad things. Dr Perceval Bahado-Singh was appointed director/chairman in rotation of Petrojam, director of the Petroleum Corporation of Jamaica (PCJ), and director of Jamaica Aircraft Refuelers (JARS), although he was ensconced in the United States, where he resides and works.
Richard Creary, the Jamaica Labour Party mayor of Port Maria, was appointed a director of the PCJ, Petrojam and JARS and chaired important subcommittees.
Yolande Ramharrack was appointed a director of the PCJ and the Spectrum Management Authority. Significantly, she was also chairman of the Human Resource Subcommittee of the PCJ board. Hence, in January 2017, while still a PCJ board member, she applied for the job as human resource manager of Petrojam, which is a subsidiary agency of the PCJ. In documents submitted to the PAAC, the interviewing panel for her hiring included Richard Creary, her colleague member on the PCJ board, and at least one other person who is not a board member or known within the agencies of group of companies.
By July 20, 2016, the country woke up to the news that Howard Mollison, the general manager of Petrojam at the time, was terminated with immediate effect and Floyd Grindley would assume the role as the new general manager by November 2016. He also resided in the US at the time of recruitment.
Carolyn Warren was appointed a director of the Universal Service Fund (USF) and in October ascended to managing director of National Energy Solutions Ltd, NESol, replacing Garfield Daley.
Suzette Camile Buchanan, who was a colleague councillor in the St Catherine Municipal Corporation, during the tenure of Dr Andrew Wheatley as mayor of Spanish Town, was appointed managing director of the USF, following the termination of Hugh Cross, a 10-year veteran of the organisation.
Most of these ousted CEOs have ended up aggrieved and headed either to the Ministry of Labour, the Industrial Dispute Tribunal (IDT), or the Supreme Court for reparation.
So, by the end of 2016, Dr Andrew Wheatley had put in place new management teams at Petrojam, NESol, and USF, headed by first-time CEOs, except for Ms Buchanan, who had a disastrous stint at Caymanas Track Ltd. In addition to interlocking directorates, laced with people known to him in professional and political life, he also replaced the top management team in the agencies under his ambit.
Interlocking directorships is not necessarily a negative use of human resource, but according to Hodgson, some interlockers can do very bad things. It would appear that the minister designed interlocking structures through which he ran things, bypassing all established rules and regulations.
Remember Hodgson’s advice: “Getting things done largely depends on knowing the right people … . Some of those things are undoubtedly good and some bad. Very bad.” He went on to say such social networks can spread the bad just as quickly as they can the good.
The interlocking directorates gave Minister Wheatley the perfect platform to exert complete control of mandates, policies, finances, staffing and outcomes. In other words, the minister was responsible for the systems architecture of MSET.
It is against this background that it is impossible for the minister to excuse himself from the outcomes, which are largely defined by the lack of accountability, incompetence, nepotism, cronyism and perhaps corruption that have permeated so many of the agencies under his supervision.
CLEAR EVIDENCE
CEO employing daughter; CEO employed without any vetting; CEO suddenly vacating office while in the midst of the PAAC hearings; chairman racking up a US$75,000 travel bill; board not meeting for nine successive months; HR manager demanding a compensation package of J$13m annually; incompetence in the negotiations for the VDU system; overruns in the construction of a perimeter fence; 70 per cent of procurement were awarded using emergency and direct contracting methodologies and emergency fuel purchases at higher prices and not used for an extended period; and the arrest of a highly placed employee, caught with J$85m in cash, among other malfeasance. The evidence of the interlocking directorships is clear.
As the responsible, culpable minister, Dr Wheatley was appointed by the prime minister and given his areas of responsibility by the governor general under the broad seal. The country still awaits full accountability. The prime minister, in turn, awaits the conclusion of investigative reports from the auditor general and the new anti-corruption agency – the Integrity Commission. But, as Dr Paul Ashley said on CVM a few nights ago, “No minister under investigation could remain in his Cabinet while under investigation.”
Many political commentators and scholars would agree with that position. Yet, our prime minister insists on a criminal standard, proof beyond a reasonable doubt. This would be unheard of in Westminster, which is our model; and worst, when matched against the personal standards outlined by the prime minister at his inauguration; or against speeches made in Parliament or at news conferences as opposition leader urging the then Government to take action on a Cabinet minister. Compared to his present stance, the prime minister could hardly escape the label of being a waffler.
Accountability standards broke down comprehensively in the Ministry of Science, Energy and Technology and agencies under Minister Wheatley. Yet, the minister bears no responsibility and hides behind the same interlocking directorships, which he established to run the three companies, Petrojam, the USF and NESol, for good and, as has turned out, for bad. The situation is so bad that the prime minister himself admitted that there is corruption following a recent visit to Petrojam.
Minister Wheatley needs to understand three words: authority, responsibility and accountability. When he attends the good governance training, which the prime minister says is coming, if he remains in the Cabinet, he should pay keen attention to those three words and their meanings. Authority is the power to achieve certain objectives; responsibility indicates the obligations and duties; and accountability is the liability created for the use of authority and hence the answerability for performance.
In appointing the interlocking directorates and the subsequent failure in these organisations, Jamaica has been short-changed and out of pocket millions of dollars.
Minister, responsibility is an obligation and cannot be delegated.