Governance Structures of State Owned Enterprises (SOEs) Create a Potential for Bad Governance; A Case Study of Botswana Unified Revenue Service (BURS)

Abstract

This paper argues that in the context of best practice corporate governance, Botswana Unified Revenue Service (BURS) governance structure does not conform to international best practice corporate governance principles such as the Combined Code (2003), King Code (2002, 2009), among others. Perhaps the structure was not intended to meet such high standards of governance because it (BURS) is a creation of an Act of the parliament of Botswana (mandatory), modelled in accordance with what is prescribed in the BURS Act of 2004. The researchers wonder why in this modern day and age, architects (parliamentarians) of the Act of parliament which brought about governance structures of BURS, chose to depart from what is considered international best practice governance as recommended under codes of best practice corporate governance. Second, the researchers also wonder whether the departure was by design or an oversight on the part of the architects of BURS governance structure. However, this aspect is not examined in this paper. Instead the paper investigates the extent of divergence between international best practice corporate governance and governance structures as recommended by BURS Act (2004), through a checklist. As such, the researchers conclude that the divergence of governance structures of BURS from international best practice has the potential to breed inter alia; incompetence, corruption, maladministration, dominance, cronyism and ultimately a weak institution. The results of this study have far reaching implications on governance structures not only of BURS but also other state owned enterprises (SOEs)/parastatal organisations in Botswana which are governed through Acts of parliament. First, this study generates debate on whether governance structures resulting from Act(s) of Botswana parliament promote poor governance practices prevalent in many SOEs in the African continent (e.g. lack of independence, transparency, accountability and responsibility, cronyism in management of SOEs, weak monitoring, payment of facilitation fees [bribes] and external influence by politicians). Second, it is anticipated that the results of the study may in future influence parliamentarians to consider the implications for the entire country, of crafting governance structures which concentrate power in the hands of a single individual. Third, it is hoped that the results of the study may conscientise architects of Acts of parliament that, poor governance practices may create negative perceptions in the minds of local and international investors on the suitability of a country as a safe and suitable destination for investment capital, ultimately scuppering efforts geared towards foreign direct investment.