Opinion – Bypassed boards: Who holds the power?

The Telecom controversy should force Namibia to confront the dangers of weakening the authority of boards of directors.

Namibia needs to have an uncomfortable but necessary conversation about corporate governance. The issue is not simply whether a particular chief executive officer has made a good or bad decision. The deeper concern is what happens when those entrusted with managing a company begin operating as though the board of directors is an obstacle rather than the institution responsible for oversight.

Prof. Job Amupanda has publicly raised concerns about deals allegedly worth approximately N$400 million involving Telecom Namibia and questioned whether the company’s CEO properly informed or involved the board of directors. These remain allegations and should not be presented as established findings of fraud or corruption without proper investigation.

Corporate guardian of

** accountability**

A CEO is responsible for leading a company and implementing its strategy, but the CEO does not personally own the company. A company is a separate legal entity whose affairs must be conducted within the framework of its governing documents and applicable law.

Namibia’s Companies Act 28 of 2004 establishes important rules governing directors and officers.

Its provisions concerning directors’ interests in contracts, particularly sections 242 to 248, demonstrate the importance of transparency, disclosure and accountability in corporate decision-making. These provisions recognise that those exercising corporate power must operate within a framework where their interests and decisions can be scrutinised.

This is not merely a technical requirement for lawyers and accountants. It is a fundamental safeguard against corporate power becoming concentrated in the hands of a few individuals.

The board must therefore be more than a rubber stamp. While management may be delegated authority to conduct the day-to-day affairs of a company, delegation should not be confused with the abandonment of oversight. The board remains responsible for ensuring that delegated authority is exercised within the limits of the law and the company’s governance framework.

A strong board does not undermine management. It protects the company, its shareholders, its employees and, in the case of public enterprises, the broader public interest.

Namcor, danger of sidelining boards

NAMCOR operates in one of Namibia’s most strategically important sectors. Petroleum is not an ordinary commercial commodity when viewed against Namibia’s economic ambitions and the country’s natural-resource interests. Decisions involving petroleum resources, commercial partnerships and major transactions can have consequences for the national economy and future generations.

Where concerns arise that management has acted without sufficient board involvement, Namibia should neither rush to declare individuals guilty nor dismiss the concerns altogether. Allegations must be tested against evidence, corporate records and the law.

That distinction is important. The absence of a proven crime does not make corporate governance irrelevant. In fact, good governance exists precisely to reduce the possibility of wrongdoing occurring in the first place.

The board should not become relevant only after millions have been lost, contracts have collapsed or criminal investigations have begun. Its role is to provide oversight before major decisions expose a company to unnecessary financial, legal or reputational risks.

When management becomes dominant while the board becomes passive, accountability is weakened. Once meaningful oversight disappears, the environment becomes more vulnerable to conflicts of interest, reckless decisions, procurement irregularities and, in serious cases, fraud and corruption.

This does not mean that every management decision made without extensive board involvement is corrupt. It means that weak oversight creates opportunities for abuse.

Corporate power, responsibility

The same philosophy can be found in Namibia’s Close Corporations Act 26 of 1988. Section 42 places members of a close corporation under fiduciary obligations, requiring them to act honestly and in good faith and in the interests of the corporation. Section 43 similarly addresses the duty of care and skill expected from members.

The principle is broader than the technical operation of a close corporation. It reflects a fundamental idea in business law, corporate power comes with corporate responsibility.

Those entrusted with managing an organisation are not entitled to treat its assets, opportunities or resources as their personal property.

The greater the value and public importance of those resources, the greater the need for proper oversight.

This is particularly significant for state-owned enterprises. When a private company experiences governance problems, the consequences may primarily affect its shareholders and creditors. When a state-owned enterprise experiences serious governance failures, however, the consequences can ultimately reach the taxpayer.

Public enterprises therefore require boards that are independent enough to challenge management, informed enough to understand major transactions and courageous enough to intervene where necessary.

Namibia needs boards that govern

Perhaps Namibia’s greatest corporate-governance challenge is not a lack of laws. We have laws, boards, auditors, regulators, ministries and other oversight institutions. The challenge is whether these institutions are willing and able to exercise their responsibilities effectively.

A CEO should not fear a strong board. A strong board can actually protect management by ensuring that major decisions are properly considered, documented and authorised. When proper governance procedures are followed, executives are better protected from allegations that they acted outside their authority or for improper purposes.

The relationship between management and the board should therefore not be viewed as a struggle for power. It should be a system of checks and balances.

Management runs the business. The board oversees management. Shareholders and, in the case of public enterprises, the state exercise broader ownership and accountability responsibilities.

Problems arise when these roles become blurred.

Namibia should therefore use the Telecom controversy as an opportunity for reflection rather than simply another political confrontation.

If allegations concerning transactions worth approximately N$400 million are made, the answer should be found in transparency, corporate records and proper investigation, not speculation.

The same standard should apply to Namcor and every other public enterprise.

Namibia cannot afford a corporate culture in which boards learn about major transactions only after they have been concluded, or where executives become so powerful that meaningful oversight becomes impossible.

Governance failures can eventually become financial failures. The country should not wait for a company to collapse, millions to be lost or criminal investigations to begin before asking whether the governance structures were functioning properly.

A CEO is not the board. Management is not the board. Government is not the board.

The board exists to ensure that corporate power is exercised responsibly and that those entrusted with management remain accountable.

The Telecom Namibia controversy, together with broader concerns surrounding public enterprises such as Namcor, should remind Namibia of a fundamental truth: when the board is bypassed, accountability is weakened; and when accountability is weakened, the door to corporate abuse becomes wider.

****Brian Ngutjinazo is a law lecturer, holds B.Com, BA (Hon), LLB (Honours), and is an LLM (Corporate Law) candidate.

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