In the context of the stated intention to dissolve the PCB, it is timely to understand what the PCB is and its role before looking at the implications flowing from the decision to dissolve the PCB.
What is the PCB.
The Privatization and Corporatization Board; PCB is a self-perpetuating legal entity that came into existence with the ratification of Law No. 3/2013, ‘Law regulating the privatization, corporatization, monitoring and evaluation of SOEs’ gazetted on 17th January 2013. It is vested with the direct and indirect powers to implement the Law, acquire assets and can lodge matters at the court and be sued by third parties.
The mandate of the Law states the PCB is the only entity that will assume the responsibility of privatization and corporatization of all SOEs that holds direct or indirect interests of the state. The separate functions of the PCB are stated in 19 separate functions listed in the law, relating to privatization, corporatization of SOEs and to analyze, and monitor the health and board appointments of SOEs. The PCB therefore is tasked with a very weighty mandate.
The objective of the Law is to decide on the criteria under which SOEs and their assets may be privatized, corporatized, shares sold to the public and how they should be monitored and evaluated.
The mandate of the Law states the PCB is the only entity that will assume the responsibility of privatization and corporatization of all SOEs that holds direct or indirect interests of the state. The separate functions of the PCB are stated in 19 separate functions listed in the law, relating to privatization, corporatization of SOEs and to analyze, and monitor the health and board appointments of SOEs.
The PCB therefore is tasked with a very weighty mandate.
Context of the enactment of the Law
In order to understand and weigh the implications arising out of dissolving of the PCB, it is essential to understand the context within which the law was enacted.
Close to 3 years and 3 months; on the 7th of February 2012, the elected President Nasheed who assumed office for a 5 year term on the 11th of November 2008, resigned amidst political upheavals and his Vice President, Waheed was sworn in as President.
During his tenure, on 28th of June 2010, the Male’ International Airport; the main airport of the country, was leased for 25 years to the GMR-MAHB Consortium with the Indian company GMR as the main partner. Public discontent regarding the lease of the main airport, was one of the key factors leading to the political upheaval that culminated in the resignation of President Nasheed on 7th of February 2012.
This lease was terminated by the government on 27th November, soon after President Waheed was sworn in.
During this period, the government also sold seven percent of its shareholding in Dhiraagu to Cable & Wireless UK in 2009, resulting in the government losing it’s majority shareholding position in the premium, telecommunication provider of the country.
The Law drafted and enacted during the very early days of President Waheed is understood as the means by which the legislature restricted the absolute impunity of governments to divest, lease and otherwise privatize or corporatize SOEs of the state without pre-prescribed, steps approved through the Parliament.
The quick and relatively speedy enactment of the Law is best appreciated and more amenable to rationale within this context, and as consequential and reactionary to certain incidents that transpired regarding the loss of the degree of state control of essential SOEs during the November 2008 – February2012 period.
Functions of the PCB as stated in the Law
The functions of the PCB are stated under 19 separate functions detailed in article 12 of the Law. Of these 19 functions as specified in the Law, the first 8 functions relate to the separate and detailed steps that need to be followed in any privatization and/or corporatization of an SOE.
Functions 9-11 detail the steps through which investors can be selected. The remaining functions detail the administrative procedures, confidentiality, including various studies and analyses and the requirement to keep the public informed, that need to be followed during any privatization and corporatization decision.
That is, except for function 18; a late entrant, detailing the monitoring, evaluation, study and appointments and dismissals to the board of SOEs. Article 19 is the legal ‘gap filler’ enabling the PCB to take all necessary action to fulfil and achieve the functions of the PCB as stated in the Law.
The working of PCB
While both the context within which the Law came into existence and the functions as stated in the Law concern weightier issues, the working of the PCB thus far, make it easy to be portrayed as the formal entity that appoints the board of SOEs including its Managing Director.
PCB is indeed understood as a shadowy and mystic entity that suddenly, and without cause or reason, appoints and dismisses people to board level positions of SOEs in a way that always, by coincidence, align with the interests of the powers at play.
Yet SOE board appointments is only 1 of the 19 functions of the PCB, as stated in the Law.
The decision to dissolve the PCB.
The intention of the AG to dissolve PCB therefore, need to be understood in the context of what the PCB is tasked to do, rather than the more limited role that the PCB is widely seen as fulfilling. The PCB was conjured into existence to safeguard, and administer the process of privatization and corporatization of SOEs including the identification of investors and related parties to such transactions.
Appointments and dismissals is largely a postscript of the law and believed to be an afterthought, which was not even included in the earlier drafts of the Law.
The reason for the intention of dissolving the PCB is best appreciated in the context of what happens to the functions of the PCB, when the Law is no longer in existence.
Board level appointments and dismissals of SOEs, previously undertaken by the state and their monitoring functions, previously under the purview of the Minister of Finance will continue as long as SOEs exist and used as a tool of the governments in play.
What will be lost is the other 17 functions of the PCB Law; – the power of the PCB to be the single arbiter of privatization and corporatization of SOEs of the state.
While the legislative has, so far, not functioned to the expectations of the public, a scenario where they have no role in the process of corporatization, privatization and sale of sale of shares of SOEs will be the stuff of nightmares and not auger well for the economy and the people.
Unless replaced by a similar entity together with similar articulated to the legislative body, the dissolving of the PCB, may by itself, take us back to the days when the current government may, by itself, recourse to privatization and corporatization of state assets to private parties without adequate rationale or justification. The power to divest state assets and functions of functions of SOEs to private parties, will then, be held only by the Executive without the need to consult the legislative.
While the legislative has, so far, not functioned to the expectations of the public, a scenario where they have no role in the process of corporatization, privatization and sale of sale of shares of SOEs will be the stuff of nightmares and not auger well for the economy and the people.
