Firms need to keep up standards

THE PNG Institute of Directors (PNGID) president Anthony Yauieb said it is obvious that some of the Kumul entities are not considered as international best practice.
“The legislations governing the Kumul entities, the models that are used there, would not be considered as international best practice because what it does is it conflates the role of the owner with the roles and responsibilities of the director,” he said. “What you typically see is that the appointments for example, the CEO, is the responsibility of the board.
“But what the legislation allows is that government, through the minister and cabinet, actually have a place in the boardroom to make a decision.
“So they have to approve a budget and can choose its CEO, sack the CEO, issue directions to these SOEs and that is not good governance.
“Under the Companies Act, it means that anybody who is able to influence the decision of the board becomes what is called a ‘shadow director’.
“Also under the Act is something called directors liability – so if you make a decision that leads to a material loss, it impacts the balance sheet, the network of a company and you can be held liable, so what we see is a lot of suboptimal choices that these SOEs are making because they are being forced to making
decisions that are not in the financial interests of these organisations.”
Yauieb said PNGID was a membership organisation formed back in 2000 to represent directors and improve standards for directorship and particularly around professionalism and to improve ethical behaviour.
He said among its objectives, PNGID was to establish a greater standard of corporate governance.
Our roles and responsibilities that provides stewardship for more organisation, he added.
Yauieb said the PNG Institute of Directors was undergoing a transformation exercise where they were trying to move from a membership body to a professional body.