- NEWSDAY.CO.TT - A la Une - 25/Jul 05:55

Bulwark against corruption

THE HIGH Court ruling of July 23 ordering former directors of the Sports Company of TT (SporTT) to pay damages for rubber-stamping a suspect contract might seem relevant to one entity, but its implications extend to the entirety of the state enterprise sector. It’s a timely precedent, raising a fresh bulwark against sleaze. Justice Ricky Rahim, one of the most senior on the bench, ruled the company’s 2012 sole-select award of a $34 million contract under the ill-fated LifeSport programme a breach of fiduciary duties to exercise care and reasonable oversight. Precipitating the award had been a specific ministerial directive issued under the first Kamla Persad-Bissessar administration and a blurring of the lines between a cabinet committee and SporTT. But this was no excuse. “Boards of state enterprises are not rubber stamps,” the judge declared, imposing $40,000 in nominal damages against each of the 14 officials named in the case, which was brought by a reconstituted board under the PNM years after Ms Persad-Bissessar took action to kill the LifeSport programme. It is too soon to say whether these findings will be truly transformative when it comes to corporate culture at state companies. The ruling might be appealed. History also suggests that the culture of just doing what the government wants may well prevail. That board members have fiduciary duties to shareholders is hardly a novel proposition. It is because the government is ultimately the controlling shareholder of many state enterprises that those duties turn out to be moot: an administration can simply remove a board at an extraordinary general meeting. With million-dollar contracts at stake, directors might also feel a thousand-dollar fine is a small price to pay to curry favour with a government that has access to the treasury and controls regulation. Governing laws, too, give ministers explicit powers to instruct the boards of some statutory corporations, overriding discretion. Still, in affirming what is self-evident under the Companies Act and in applying damages, the ruling bolsters the standard of review expected at state companies, as well as the notion that directors, political or not, must exercise independent discernment and skill in executing policy. Further, facing the prospect of scrutiny from a vigilant board challenges an executive to issue only the most well-grounded and well-justified of directives. That’s all good for taxpayers. Widespread could be the impact of a cultural shift brought on by this judicial finding. There are at least 141 state companies. But the ruling leaves unresolved the deeper tensions inherent in private companies performing public functions without requisite transparency and accountability. Nonetheless, because it emboldens officials to challenge rash executive orders, it should be welcomed as a fillip to the anti-corruption fight. The post Bulwark against corruption appeared first on Trinidad and Tobago Newsday.