Corporate reshuffling: Defying rules, govt appoints CEO of Pak Reinsurance Co

Caretakers’ move not in line with corporate governance rules for state companies.


Kazim Alam May 20, 2013
It also stated explicitly that the board, and not the government, will appoint the chief executive in a public-sector company. CREATIVE COMMONS

KARACHI:


With its brief stint in power approaching an end, the caretaker government seems to have gone into overdrive transferring and appointing civil servants to key positions in state-owned organisations.


The latest centre of caretakers’ attention is Pakistan Reinsurance Company (PRC) – the country’s sole reinsurance company – where the government has appointed Shoaib Mir Memon as chief executive officer (CEO).

Like a number of private and public-sector companies, the chairman of PRC also held the position of CEO until now. However, PRC is governed under the listed companies’ Code of Corporate Governance 2012 issued by the Securities and Exchange Commission of Pakistan (SECP), which clearly lays down the procedure for the appointment of a CEO.

The separation of CEO and chairman and the election of chairman from non-executive directors must take place at the time of the next election of directors, according to the Code of Governance. The next election of PRC is due to be held on December 31 this year.

Furthermore, as per a statutory regulatory order issued by the Ministry of Finance on March 8 regarding the Rules for Corporate Governance in Public-Sector Companies 2013, the appointment of CEO must be done through a specific procedure, which has not been followed in the case of PRC’s CEO.

“The board shall evaluate the candidates based on the fit and proper criteria and the guidelines specified by the commission for appointment to the position of chief executive, and recommend at least three individuals to the government for appointment as chief executive of the public-sector company,” the SRO said.

It also stated explicitly that the board, and not the government, will appoint the chief executive in a public-sector company.

Many important state-owned enterprises have seen executive postings and transfers after May 11, including the National Highway Authority, National Electric Power Regulatory Authority, Sui Southern Gas Company, Sui Northern Gas Pipelines, Pakistan Mineral Development Corporation, National Fertilizers, Oil and Gas Development Company, State Life Insurance Corporation, Pakistan Tourism Development Corporation, Software Export Board and Federal Investigation Agency.

Memon is a life-long civil servant who has served as an executive director on the board of State Life for many years.

Published in The Express Tribune, May 21st, 2013.

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