The Public Sector is mandated to lead the growth process in the economy and to create a stimulating environment where private sector growth appears to be stagnant.

To meet the challenges occasioned by this responsibility, the Public Sector must modernise to better allow for timely, efficient and effective responses to the needs of the economy. Thus, changes to organisational structures must be coupled with a concomitant improvement in the caliber of available human resources. The proposed implementation of flexible work arrangements, and the creation of more executive agencies are two measures under consideration in this paradigm shift.

These activities are complemented by the increased emphasis on corporate governance, accountability and transparency, in addition to the institutionalisation of the necessary framework to enable periodic review and corrective action.

CORPORATE GOVERNANCE

Recent events, local and international, point to the challenges of engendering the confidence of various groups. The major lessons show that the system by which institutions are directed and controlled has to be constantly reviewed and strengthened. More urgently, there is need to ensure better compliance with internal controls, greater accountability and transparency aimed at improving profitability, sustainable productivity and efficiency of enterprises and the overall economy.

Where public funds are utilised for their intended purposes, that is, to improve the standard of living of a country’s citizenry, there will be greater confidence in elected officials, the system of government, and increased investor confidence.

Increased focus on corporate governance will result in better-defined and detailed responsibilities of the Board of Directors including its vigilance to ensure that management operates an internal control system, which will adequately monitor and report on the policies adopted by the Board.

TRANSPARENCY AND ACCOUNTABILITY

Public Bodies Management and Accountability Act 2001

The Act was passed in December 2001. The legislation seeks to address the matter of corporate governance, transparency and accountability in public bodies. Based on the advice of the Attorney General, the Act is to be amended to ensure applicability to all public entities inclusive of statutory bodies and statutory authorities. The duties and responsibilities of Boards of Directors included in the Act are clearly defined and include principles that should guide their actions. These provisions have also been included in the proposed Companies Act as it is intended that this will promote a consistent and unified approach, so that both Public and Private Sectors are held to the same levels of accountability and transparency.

At an Institute of Chartered Accountants of Jamaica (ICAJ) Seminar on "Company Law Reform and Corporate Governance" held in late 2001, it was noted that of all the legislation evaluated (passed and proposed), this Act was the only legislation to the presenters knowledge in which the terminology "Corporate Governance" is explicitly stated. This was considered "…a step in the right direction…"

 

Audit Committees

The mandatory establishment of the audit committee is another step towards better corporate governance. In another paper presented at the ICAJ Seminar, it was stated that the results of a recent survey conducted disclosed that of 155 public sector entities surveyed, only 17 had audit committees.

It is noteworthy that specific provisions have been included in the Public Bodies Management and Accountability Act and the proposed Companies Act for the mandatory convening of audit committees.

Reforming the Public Enterprises Sector

The reform of the Public Enterprises Sector continued over the past year. Action taken in the rationalisation of public sector entities within the financial year included:

• Closure of Sugar Industry Housing Limited and the transfer of its mortgages to the National Housing Trust (NHT);

• The commencement of winding-up of the activities of Things Jamaican Limited;

• Restructuring exercises at the Bureau of Standard, the Statistical Institute of Jamaica, the Jamaica Information Service and the Creative Production and Training Centre;

• The subsuming of the Project Analysis and Monitoring Company within the Ministry of Finance and Planning;

• A change in the management of the Jamaica Unit Trust in an effort to return it to profitability and position it for divestment;

• The creation of the National Environment Protection Agency which combines the operations of the Natural Resources Conservation Authority and the Town and Country Planning Authority into one Executive Agency responsible for environmental issues;

• The appointment of a new Chairman of the Jamaica Racing Commission and an Executive Chairman of the Betting, Gaming and Lotteries Commission with a view to improving the management and operations of the industry ;

• A new management contract signed with APM Terminals of Denmark, with a view to enhancing global competitiveness of the transhipment port operations.

During this financial year on-going efforts should result in the further execution of reform recommendations.

It is expected that a lease concession to operate the Sangster International Airport as well as plans for the rehabilitation of the rail services will be finalised in this period.

Oversight concerns

The Ministry of Finance and Planning has completed the compilation of the database to reflect five-year data on each selected public sector entity. This has been collated from the respective Entities’ Annual and Management Reports and will provide a basis for the Ministry’s analyses.

The Ministry will continue its efforts to keep a close watch on any changes in the stock of contingent liabilities and, in general, monitor public enterprise activities to reduce and where possible, eliminate areas of fiscal risk and vulnerability.

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