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THE government is crafting the Public Sector Corporate Governance Bill, which when enacted, would among other provisions, provide for lifestyle audits for board members and managers of parastatals and state-owned enterprises (SOEs).

Shortly after salarygate shook the nation early last year, the government proposed a public sector reform process to bring sanity to how its business is conducted. It started exploring measures to come up with a law to enforce this, realising that moral suasion alone cannot be effective.

At that time, heads of parastatals and SOEs were earning mega salaries while shop-floor employees went unpaid and general service delivery poor. Premier Service Medical Aid Society chief executive, Cuthbert Dube, who was later fired, was earning more than $500,000 monthly and ZBC’s Happison Muchechetere $40,000 monthly. A disclosure that parastatal executives took home $600 million in salaries and allowances from 2009 to April last year put salarygate into its proper perspective, thus the government’s move to normalise the situation. Yet, the challenge has not been solely executives and board members paying themselves huge allowances and salaries amid failing service delivery. There is a culture of corruption among parastatals where heads violate tender procedures for personal gain, mismanage finances and pay little regard to good corporate governance. The Mpilo Hospital saga that has seen the chief executive, Lawrence Mantiziba and his senior team being suspended for violating tender processes is a case in point as well as the Air Zimbabwe scandal in which the bosses, Peter Chikumba and Grace Pfumbidzayi were involved in an insurance scandal that prejudiced the flag carrier of millions. Chikumba and Pfumbidzayi were recently jailed for that. Now, the Attorney General’s Office is drafting the Bill to facilitate a new culture of acceptable corporate governance, improved service delivery in which heads of parastatals and SOEs are geared towards profitability.

In addition to providing for periodic lifestyle audits, the Bill would cap salaries for managers at $6,000 per month with exceptions here and there. Board members and managers would be compelled to declare assets and those who violate its provisions can be prosecuted.

This is a law that Zimbabwe has been waiting for. There is no formal framework within which executives are mandated to operate, no clear goal towards profitability and no system to correct or punish any contrary action. It was a feast for the bosses all this time.

Zimbabweans hope that Parliament would pass the Bill as soon as possible. We argue that some of the problems affecting the economy emanate from poor administration and corruption among parastatal bosses. The $600m that was lost to parastatal heads and boards in excess salaries and allowances is a massive sum of money that could have been used to improve service delivery in the economy.

Impromptu lifestyle audits can be effective in instilling discipline. A boss who knows that there is a system dedicated to watching his conduct and wealth is unlikely to engage in corruption. He does not know when an auditor would knock on his door asking difficult questions.

Asset declaration, working hand in hand with lifestyle audits is good too. It can be used to track a boss’ assets from the point of getting their job to the stage when they decide to quit or anywhere in between. Any extraordinary asset accumulation would have to be explained.

Having said this, we suggest that a system be put in place for the government to independently verify that assets declared are indeed the only ones a boss owns. The government cannot rely on what the managers say they are worth, some might misrepresent facts for corrupt ends.

The proposal to cap salaries at $6,000 monthly can be useful in limiting leakages of scarce resources through higher salaries. Some governments have used this approach effectively. For example, in August last year, the Chinese Communist Party approved a plan to cut hefty salaries of executives of large SOEs.

“Deepening the reform of the payment system for executives of major SOEs is an important part of China’s efforts to establish a modern corporate system and push forward the reform of the income distribution system,” said the CPC Political Bureau.

We find it intriguing that, the annual salaries that were to be cut ranged from 650,000 to 700,000 Yuan in 2010 and 2011. This is equivalent to $104,823 to US$112,886 yearly or US$8,735 and US$9,407 monthly. Now, if a party running the world’s second largest economy can decide to cut salaries of US$9,407 for its massive SOEs, how about us?

We are aware that certain skills cannot be competitively rewarded within the $6,000 monthly salary bracket. There is a possibility that if it is adhered to rigidly, the cap can result in skilled personnel leaving parastatals for the private sector where salaries and working conditions are better. We recall NetOne managing director Reward Kangai complaining the other day that after the parastatal had spent so much money and resources training its technicians a few years ago; a competitor in the mobile communication sector came along to snatch them, enticing them with higher salaries and perks.

To prevent such occurrences, the proposed law can provide for salary cap exceptions for such skills to be retained in the public sector.