Corporate Governance is a “system of rules, practices and process by which a company is directed and controlled. It involves balancing the interests of company’s many stockholders such as share holders, management, suppliers, workers, among others. It is an administrative/ management practice by which boards of directors ensure accountability, fairness, transparency in organisations. The main purpose of corporate governance is to facilitate “effective and prudent management that can bring about the success of a company”
Corporate Governance is thus important because it helps in ensuring the sound “health, and survival of the corporate organization and by implication the health and well being of the society. However, for reasons best known to them many CEOs have been known to violate corporate rules and regulations. Even some of them are not interested in having a Boards in place. They are less concerned with doing good corporate governance. As can be illustrated with the Nigerian experience, the result has been huge public enterprise failure. An objective evaluation of the Minister of State for Petroleum, Dr. Ibe Kachiku’s letter to President Muhammadu Buhari intimating him of the rudeness of Group Managing Director (GMD) of Nigerian National Petroleum Corporation, Maikanti Baru and the response to it by the NNPC shows signs of serious maladministration, poor governance culture in the oil house and misunderstanding of bureaucracy.The House must be saved from burning any further.
Corporate Governance does not happen in vacuum. It takes place within what Max Weber calls Bureaucracy defined as ” a system of administration based on rules, laws, standardized practices, processes, requirements,many desks, meticulous division of labour, and responsibility , clear hierarchies , professional and almost impersonal relations between staff” It has also been defined as a “system of government in which most of the important decisions are taken by state officials rather than by elected representatives”.
According to Max Weber, who admits that “unfettered bureaucracy” could hinder freedom and trap the worker ‘in impersonal iron cage of rule based rational control’ bureaucracy, is designed to ensure ‘ efficiency and economic effectiveness’. Among the qualities of bureaucracy are: “task specialization- which keeps workers to one area of specialization, hierarchical authority- trademark of business that ensures lines of power and authority, formal selection of staff based on knowledge, technical skills and competence, rules and requirement needed to ensure uniformity and coordination, impersonal relationship – to prevent nepotism and allowing personal feeling to jeopardize official business, career orientation based on experience and emphasis on expertise which helps in the deployment of personnel by putting “right people in right position”. It is needless to say here that the reference to hierarchy is important. The Board of a company is on top of the Management team.
While violation of rules has been known to result in bad governance and death of organisations, some analysts such as Femi Olaiton have created the impression that the Boards are not important. As shown below this is wrong and misleading. To begin, let it be observed that the NNPC is a parastatal which is defined by the Public Service Rule (PSR) no160101 as a ” government – owned organisation established by statute to render specified service(s) to the public”… While it operates ” under the policy directives of Government”…, its Board ensures that “there are no deviations from the general principles contained in the Public Service Rules”.
For those who think the Board is not important and the GMD has direct access to the Minister of petroleum , let them think twice because the PSR did not support their position. In chapter16,(2 a-c) of PSR, we learn of the establishment and functions of Boards/ Councils. Among others the Board “shall set operational and administrative policies in accordance with government policy directives”, “supervises the implementation of such policies”which may “include those relating to appointment, promotion and discipline of staff”. Of course, a board “shall not be involved directly in the day to day management of a parastatal, but a Minister shall exercise control … at policy level through the Board of the parastatal only”
Members of the Board “shall not be provided with accommodation and vehicles on “permanent basis”(160202). However, the Board has the “authority for appointments”. According to PSR number160301, all appointments to public offices both senior and junior shall be made on the authority of the Boards/ councils within the approved manning levels”. And such “Appointments…shall be “need- based”, “fair and open”, based on “merit” with due regard to “federal character”. Further more, it “shall approve all promotions without prejudice to its power to delegate”(160303) . Finally, the power to exercise disciplinary control over officers in parastatal is vested in the supervisory Board…., (16501). In this regard, “any officer who wishes to make a representation to the Head of Government shall route such representation through the proper departmental channels namely: the petitioner’s superior officer-the Chief Executive Officer – the Board/ Council -the supervising Ministry of the organisation” to the Head of Government (160601).
In summary it can be seen from the foregoing that the Boards were not established for fancy. More specifically, there is no where in the public service rule that permits the head of a parastatal to be superior to the minister of ministry.The Boards have a supervisory role to play and are to ensure the smooth running and compliance with operational guidelines – proper governance of the organization. NNPC as a parastatal cannot be an exemption: its board like others has statutory supervisory role to play to ensure compliance with rules and regulations. While Boards are normally in charge of appointments of staff, above all they are to ensure accountability of the company to the government, public and other stakeholders
Against this background, all the ethnic, regional, religious vituperations on the rift between Dr Kachikwu and Dr Baru were wrong and unnecessary. They betray a poor knowledge of bureaucracy especially the role of the Board and requirements for good governance. While one was used to such tribal or religious biases even when it was not necessary or helpful to exhibit them, one is nonetheless disturbed by what seems to one as commercial interest and thus misleading interpretation of the surrounding issues and unfair assessment of the matter under reference. One example will do here .For instance in an article entitled “why Kachikwu should go” a certain Femi Olaitan took sides with Baru by accusing Kachikwu of nursing grudges over his limited role as an assistant Minister.
But he went even wilder in his incorrect observation. According to him, “the junior minister conveyed..the impression of an apolitical operator without the slightest dent. He visited his frustration on Baru without let or hindrance blaming him for insubordination—insubordination to whom?’ he asked : “to the President/ Minister of Petroleum Resources to whom Baru is directly accountable or himself – a nominal Deputy Minister of an important ministry camouflaging as the overall boss”.
But before going further, let me say that there is nothing like’ junior’,’ assistant’, or ‘deputy’ minister as writers such as Femi have tried to paint. Sections 147-8 of the Constitution of Nigeria as amended is clear here. For the avoidance of doubt, all the Ministers were screened and confirmed by the Senate as ministers of the federation. While no one shall be “appointed Minister unless he is qualified for election as a member of the House of Representatives”, each Minister is a member of the Federal Executive Council and is part of 2/3 whose resolution can remove a President or Vice President on ground of “permanent incapacity”(144(a).
Mr President has the obligation to appoint a Minister from each of the states and each Minister is expected to declare his “assets and liabilities, and to swear to an oath of allegiance and oath for due execution of the duties of his office”.
He is expected too to advise the President, among other functions. To this extent all Ministers are equal and the portfolio each holds is at the discretion of Mr President. Were there to be such title as Deputy or junior Minister, the constitution would have so stated. Outside the constitution that title will truly fit the permanent secretaries who among others help the ministers to run ministries and write Council memos (PSR 160301-160601) .
According to Femi “operators in the sectors were taken aback” by what he calls Kachikwu’s ‘vituperations’ and “when he confronted Baru, he got the reply that the ‘President was aware of all undertakings”. But without questioning the morality or propriety of a head of a parastatal by-passing the Board to have direct dealings with the the head of government who also doubles as the of Petroleum, the writer continued:’Kachikwu alleged that Baru violated “sections 130(2) and 48(1) of the 1999 constitution” but the GMD said that he followed the law by consulting the President and that he followed the tradition laid by Kachikwu ‘ when he was the GMD.
He was not concerned with correct procedure or whether what Kachikwu was sub-standard or not. He seems fallacious and contradictory. One the hand he writes off Kachikwu as a “junior” who cannot hold Baru accountable. On the other hand he cites him as the new bible of NNPC from which Baru derives inspiration and direction from. He dismisses Kachikwu as fake “camouflaging as the overall boss” thereby under- estimating or undermining the role of the Board with one hand. But on the other hand the same Femi would agree that as the chairman of the NNPC Board, Kachikwu has the power and right to know what Baru was doing, he has the right to call the subordinate to order but chose to externalize the matter to embarrass the government—(The Nation October 23/2017).
While he ignored the allegation by the Minister that he wrote Baru without a “courtesy of reply” and held discussions with him to no avail, his position betrays a lack of conceptual clarity and theoretical support and correct understanding of the working of bureaucracy in general and Public Service Rules of Nigeria in particular. But suffice to note that bureaucracy is based on rules, laws and hierarchy and anarchy reigns when the rules are wantonly violated. It is the beginning of impunity and downfall of many organizations as result of poor governance.
Perhaps it will be helpful here to observe that it would appear that Femi has a knack for missing the main point of an issue. This is so because much earlier in the same piece, Femi had dismissed Sam Omatseye’s pungent and courageous article in the Nation Newspaper – ” When Silence means contempt” ( 16-10-2017 b/ p) on the matter which many readers believe spoke their mind as hasty and not the ‘way to write a column’ .
Yet in terms of positive effect on society and leadership behaviour in Nigeria, no writing in my view, has had greater impact on the presidency than that biting piece by Omatseye.
The purpose of the Omatseye’s article was to urge Mr President to speak and address issues timely. And that was achieved no sooner than the publication of the article.The immediate effect of the piece was vividly seen in the prompt reaction by Mr President to the Maina’s saga by returning him to “whence he hath come”. Ever since Mr President has remained active both in words and actions, including official visit to the South Eastern zone of the country, where he took titles and campaigned for Nwoye – the APC candidate in the 2017 Governor’s election. He went abroad for important global issues and went to Kano where his party endorsed him for a second term. At the time of writing Mr President was reportedly on the road to Daura Kastina State from Kano after which he went to France for a summit on climate change.
Many things were indeed wrong with Femi’s position. His was a morbid support without space for reason, laws, morality, traditions and practice . He was not concerned with the correctness or otherwise of Baru’s alleged uncooperative attitude and its implications for public service. He was heavily sarcastic and derogatory in language but by so doing, he betrayed a poor understanding of bureaucracy, Public service , the role of boards and idea of good governance. It is certainly not the right way to support a cause. It could lead to the fall of the NNPC- itself not good news for Nigeria.
Reading through the rift, I see a gross misunderstanding of bureaucracy by the leading gladiators and some commentators with grave implications for the country. Among others it is bad and dangerous because it smacks of personal rivalry and attracted the wrong response from the public informed by mundane issues of tribe, region and religion. But there was knowledge gap. For instance both leaders failed to appreciate that bureaucracy is rule -based and so thrives on the respect for the rules of the game. They appear to lack patience for the details of bureaucracy and to observe its tenets to the full.They were bureaucratic without willing to subject themselves to the rigours and discipline of bureaucracy.
For example Dr Baru behaved as though there was no board, pretending that he was only responsible to the Minister of Petroleum Resources – a post held by Mr President today. He fails to realize that the direct link with the Minister of Petroleum Resources ceased the moment the NNPC Board was constituted. He is definitely an important player but certainly not the referee of the game or the final arbiter on some issues such as appointment of senior officers and some contracts above certain value. There is a supervisor around.
As Chairman NNPC Board, Dr Kachikwu had bureaucratic powers which he failed to use to check the alleged defaults of the company’s management. He failed to use the power of bureaucracy to make the Board visible but instead asking the president to empower the Board to do the needful. He seems to emphasize more his ministerial position than the chairmanship of the governing board of the NNPC which actually gave him supervisory authority over Baru and his NNPC management.There is no evidence of decision made by the Board calling the NNPC to order which was violated by Dr Baru in his letter to Mr President.
He might have written or held discussions with the GMD but for sure, he is not the Board, but only its Chairman. For all his declared good intention in his letter to the President, he cannot act alone. He needs to carry the members of the Board along. For instance, the letter he signed was not on behalf of the Board, but as a Minister of State, Petroleum Resources in which he promised to give anticipatory approval thereby also giving the impression that the Board was merely a rubber stamp body. It was addressed to the President where- as the Board reports directly to the Minister for necessary action.
Above all each of the gladiators tried to individualize a bureaucratic institution whose trademark is impersonal relationship and by so doing created a rift that could lead to the fall of the NNPC and injure the entire country. Kachikwu as former GMD can truly be described as a victim of Peter’s law – having somewhat been promoted to a level of irrelevance or incompetence by being made a Minister. However, he was saved some real frustration by being appointed as Chairman NNPC Board thereby still having a supervisory role to play in the NNPC but via the Board. But while he failed to use his powers as Board Chairman, Dr Baru was simply pretentious that some rules and traditions did not matter any longer. Both seemed to have forgotten the rules of the game. Yet as already noted, rules are important in bureaucracy. Without them, bureaucratic organisations run into trouble and could crumble if not timely fixed. It was egotism taken too far or personality clash at a frightening height.
The foregoings are not the stuff good governance of companies are made of. For sure they are capable of derailing any organisation by stalling effective communication, unity of purpose, efficient administration, effective management and progress. Dr Kachikwu calls the situation at the NNPC “bravado management style” which he said “runs contrary to the “cleansing spirits and transparency” of the present administration”. For a way out, he prayed Mr President to intervene “to save the NNPC and the Oil industry from collapse arising from non – transparent practices, suspend recently announced reorganization in the NNPC to allow for wider inputs – to avoid emplacement of stunted growth, save the office of the Honorable Minister from further humiliation…, empower the Board to do the needful and the NNPC to follow due process ….”
But what power was the Minister seeking from Mr President that was not already there in the relevant book? Except that many Nigerians often go with the unhelpful belief betraying a lack of confidence and trust that some Nigerians are untouchable in public service or are even above the law, I did not see any good reason the Hon Minister failed to use the power inherent in bureaucracy especially the Public Service Rule to rein in the GMD to the Board decisions. The rules and hierarchy had since been set and established and it would be wrong for the president to start changing them after the game has started.
Most of the criticisms were outside the walls of bureaucratic practice. Though many people are reportedly not comfortable with bureaucracy because according to them it is ‘slow, dehumanizing, stifling’ and all that, yet as Max Weber observes it is an “indispensable method of social organization, a bastion against ” despotic arbitrariness” and a “rational organization aimed at promoting efficiency and economy”.
I agree with him that it is the “most efficient and rational way to organize human activity, to set up an organization and run an administration, maximize efficiency, eliminate favoritism”. Based on rules of law, it offers equal treatment to all comers of the same grade. A poor understanding and violation of its operational rules caused the ripples at the oil house. For sure a refresher course on these rules with emphasis on improved inter- personal communications skills and imperative of good corporate governance would be helpful here especially to the leading gladiators and top management of the NNPC.
Dr John Abhuere FNIM, is Director for Centre for Child Care and Youth Development, Abuja