By Edgar Muzvidzwa.
Harare, Zimbabwe. (News Of The South) – There is information leak about NSSA’s enquiry into directing activities of the CBZ board of directors. NSSA is one of the major shareholders in CBZ Holdings. The CBZ board chairman, Eliot Mugamu is alleged to be receiving hefty allowances from the bank before their sitting allowances, a treatment which is leaving a thin line between being executive and non-executive. NSSA board chairman Robin Vela, wrote to the CBZ board and its management in December 2016 seeking clarification on issues of independence of the CBZH non-executive directors and salaries of senior management.
NSSA have proved to be very serious about issues of good corporate governance as reflected by the sacking of several members of their middle management last year, 2016. The employees were discharged of their duties after making some decisions which were in direct conflict to the goals of the organization and some led to big losses in the bottom line. NSSA’s board chairman again is showing his none tolerance of negligence when it comes to issues of accountability and good corporate governance.
Good corporate governance principles provide that the board of directors should be composed of executive and none executive directors. None executive directors should be independent and should not be involved in the day to day management of the business to enable them to objectively challenge the organisation’s senior managers on matters to do with how they carry out the business of the organisation. It is recommended that the board of directors should have sub committees who provide oversight roles in certain areas of business management like risk analysis and remuneration of senior management.
While the top management of CBZH are expected to organize for an annual general meeting (AGM) to discuss the issues that are being unearthed by NSSA as the shareholder, their failure to do so timely can lead to the shareholders calling for an extraordinary general meeting (EGM) which NSSA intends to do. NSSA’s board is very alert and competent as it is concerned that the CBZH board of directors may be relaxing their fiduciary duties as stewards of the resources of the shareholders which can lead to their failure to maximise the wealth of the shareholders.
The trigger to NSSA’s intervention is the fact that CBZH has been reporting big profits but not declaring dividends which are rationally relative to the profits. The question which is then asked is whether the agents should be enjoying the wealth more than the owners. The owners of the wealth are the shareholders who include NSSA and the agents who running the organisation on behalf of the shareholders are the CBZH board of directors and management.
The emphasis of good corporate governance is the separation between ownership and management. The modus operandi for good corporate governance anywhere requires that clear distinction between owners, stewards and oversight organisations.
What needs to be pointed out though is whether the CBZH board of directors has a subcommittee on audit and risk analysis. It is also crucial to ask whether the internal and external auditors are carrying out their oversight roles objectively. In their own case of 2016, NSSA got a lot of help from Grant Thornton their auditors who carried their audit roles effectively. The contemporary thrust regarding auditing and which is in line with good corporate governance is not just ticking and reconciling figures. Auditors should be prudent enough to identify risky areas and reveal where the organisation is likely to make losses. The board of directors or executive directors should be quick to respond to findings of external or internal auditors if they are to direct the organisation well.
Edgar Muzvidzwa can be contacted on edgarmuzvidzwa@gmail.com or onrockconsultants@gmail.com
Comments
About Author
