Parastatal boards, CEOs face the chop

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STATE Enterprises and Parastatals minister Gorden Moyo has threatened to fire parastatal boards and CEOs who fail to meet set targets by year-end, six months after they signed performance-based contracts with specific benchmarks.

Report by Staff Writer
Parastatal boards and CEOs have long been accused of receiving hefty packages despite poor performances, before being forced to sign performance-based contracts in June.

 
Moyo said this week boards signed performance-based contracts with line ministers while CEOs and general managers signed contracts with their respective boards to ensure turnaround of ailing state entities.

 
Although they signed the performance-based contracts in June, Moyo said a six-month evaluation would be done and those found wanting would be fired.

 
“It’s a way of making sure the boards and CEOs are working,” said Moyo.

 

“Board members are paid sitting allowances and their core business is to direct and give guidance to CEOs. In turn, CEOs have no time to idle around; gone are the days when they would hang their jackets in the office and disappear without working.”

 
The new performance-based contracts, Moyo said, are meant to bring sanity to parastatals which have been severely underperforming and on the brink of total collapse, in addition to being a drain on the fiscus.

 
“The parastatals are draining the fiscus. Only a fool can believe that parastatals are performing,” said Moyo.

 
However, economist John Robertson criticised the performance-based contracts saying they would be ineffective policy because CEOs are arguing that the government is not playing its role in providing financial resources to turn around parastatals.

 
“The CEOs who are accused of failing to perform are also accusing the government of failing to fulfil its mandate. Therefore, the policy won’t achieve anything because there is going to be a lot of excuses,” he said.

 
Economic commentator Eric Bloch said the performance targets would stir CEOs and boards members to take their duties seriously.

 
“The performance contracts are a common feature in the private sector so it should be in the public sector. It’s a noble policy,” he said. But in a parastatals performance report compiled by State Enterprises Restructuring Agency, the companies showed slow growth with capacity utilisation increasing from 30% in 2009 to about 60% in 2011.

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