Sunday, 29 March 2015

Déjà vu Dr. Mitchell:Chronic crisis in State owned Enterprises in Grenada.


A plethora of articles have appeared in Grenada’s weekly newspapers about the chronic crises that continue to plague state owned enterprises (SOE’S) in the tri-island state.

It was reported that a team from CARTAC submitted a report to the government from a mission which took place between 22ndApril to 7th May 2014. The report examined the financial performance of Grenada’s SOE’s, the relationship between SOE’s and General Government, the policy improvements that could be made to the framework to manage the fiscal risks presented by SOE’s and to make recommendations on institutional reforms of SOE’s.

The Structural Adjustment Programme which the government has pursued in response to the country’s fiscal and economic crisis requires that these enterprises be put under serious scrutiny. Dr. Mitchell held a meeting with Chairpersons and Managers of SOE’s to read the “riot act” and reiterated, tongue in cheek that “it will not be business as usual”.
Dr. Mitchell seems unable to recognise that the state of the SME’s is as a direct result of his personal doing which date back to the late eighties. He used his position as Minister of Communication and Works to saddle these entities with his political cronies and hangers-on. It was his way of building his political empire and to roll out his nascent political thrust to unseat Herbert Blaize as leader of the New National Party (NNP).

The Worrel Commission of Inquiry laid bare the corrupt and reckless utilization and mismanagement of state resources in the SOE’s. The report fingered prominent cronies of Dr Mitchell including the present Minister of Communication and Works Hon Gregory Bowen.

The script is simple.
Persons are appointed to Boards of Directors based on political considerations.
They in turn appoint weak and oft times incompetent individuals as managers.
The Chairman then acts as a supra manager while the Manager is expected to do his bidding.
Goods and services are procured from business owned by their political friends.
They appoint auditors who are friendly to the NNP infrastructure.
Job positions are given based on political direction and not on the actual human resource needs of the enterprise. Hence many SOE’s are overstaffed
Contracts are sometimes bloated and given based on political direction
Political big wigs and other cronies of the ruling party oft time ignore their obligations to service credit granted by SOE’s

The outturn is predictable. Institutional paralysis coupled with poor management only leads to weak economic performance. In the face of crisis, other opportunities are created for others to “eat a food” from these hapless SOE’s. Directors are sometimes replaced by others from the political tribe, debt rescheduling and refinancing options become available for another set of political vultures lurking in the dark, many of whom have links to financial institutions in neighbouring islands.

The extent to which this rot is played out before our very eyes is in itself mind boggling. Directors sometimes show up and purport to give instructions to managers and employees alike. There have been cases where Managers are told that they must not place ads in certain newspapers which the Directorate consider to be anti government.

The NNP administration has fingered Gravel Concrete and Emulsion Corporation as their first stop on the divestment highway. The process can best be describes as nebulous as there is not tender document and the” Invitation to Submit Proposals” speaks to other proposals “already been received”. Is it that these persons who sent in proposals before the Notice had insider information?

The real issue is management. SOE’s were intended to succeed where Central Government failed. The mantra was that these institutions will use private sector management principles. Clearly they have not been allowed to do so. Management by Cabinet decree cannot substitute competent and empowered management.

A participant of the meeting with PM Mitchell indicated that he (Dr Mitchell) gave the impression that the present morass has nothing to do with him. This conduct can only be best described in the contents of the great novel “Dr. Jekyll and Mr. Hyde”.

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