Sarmaya-e-Pakistan Limited: Instead of PM, private-sector expert to head firm’s board

Law Division says PM, ministers can’t be board members as they hold public office

ISLAMABAD: Prime Minister Imran Khan has withdrawn from the chairmanship of board of directors of a new Rs500-billion company named Sarmaya-e-Pakistan Limited following concerns expressed by the Law and Justice Division that he holds a public office, which can lead to conflict of interest.

Sources told The Express Tribune that the federal cabinet had earlier approved Prime Minister Imran Khan as chairman of the Sarmaya-ePakistan board, three ministers and advisers as members and seven members from the private sector with high professional experience.

However, according to the sources, in a recent meeting, the cabinet was told that the Law and Justice Division had voiced concern over the constitution of the new company’s board, saying the prime minister, ministers and advisers could not be made part of the board of directors as they were all public office-bearers. Afterwards, the matter was reexamined and discussed with the Law Division.

Following deliberations, it was decided that secretaries of finance, industries and production, and power would be members of the company from the government side. Apart from these, the company’s chairman would be picked from the private sector as well as seven more professionals as members of the board.

The Pakistan Tehreek-e-Insaf (PTI) government has planned to set up Sarmaya-e-Pakistan with capital injection of Rs500 billion in a bid to take over management control and have better oversight of all publicsector companies, which will likely lead to a turnaround in the performance of loss-incurring firms.

The new company will be incorporated with 100% federal government shareholding. Government shares in existing public-sector companies will be gradually transferred to the new firm. According to the plan, nominations for the board of directors of all state-owned enterprises will be made by the board of Sarmayae-Pakistan.

Final approval will be given by the government.

The performance of public-sector enterprises has deteriorated over the past many years because of a host of factors, particularly the lack of relevant skills and expertise in administrative ministries and divisions for guiding and helping these companies perform in a professional and competitive way.

Moreover, the uniform application of instructions issued from time to time by the Finance Division and relevant ministries has further complicated operations of the publicsector enterprises in a competitive market economy.

In order to revive these enterprises, the PTI government has decided to frame an appropriate governance structure keeping in view the international best practices followed in Singapore and Malaysia.

The Finance Division has also been advised to play a leading role in developing proposals for the purpose. Accordingly, comprehensive deliberations and consultations were held in the Finance Division with key stakeholders including the Law and Justice Division and the Securities and Exchange  Commission of Pakistan (SECP).

After the huddle, it was decided that there was a need to appoint qualified professionals on boards of directors of the public-sector companies who could make prudent decisions. At the same time, qualified professionals would be included in the senior management in line with the best corporate governance models in order to improve efficiency.

Apart from these, it was suggested, the oversight and control of the companies may be given to the professionals having extensive experience and expertise contrary to the current practice where the administrative ministries and divisions had full control of the companies.

The Finance Division had proposed some steps for setting up the new company. It suggested that the company may be incorporated with authorised capital of Rs500 billion and initial paid-up capital of Rs100,000, which would be gradually increased after acquisitions.

The appointment of directors on the board will be approved by the prime minister. The companies engaged in commercial operations will be converted into companies having share capital and subsequently will be transferred to Sarmaya-e-Pakistan.