When the board fails to tame a CEO

This story is an ‘alleged’ transcript of an actual radio conversation between a US naval ship and Canadian maritime contact off the Canadian coast in October 1995.

Americans: “Please divert your course 15 degrees North to avoid a collision.”

Canadians: “Recommend you divert your course 15 degrees South to avoid collision.”Americans: “This is the captain of a US Navy ship; I say again divert your course.”

Canadians: “No. I say again, you divert YOUR course.”

Americans: “This is the aircraft carrier USS Lincoln, the second largest ship in the United States’ Atlantic fleet. we are accompanied by three destroyers, three cruisers and numerous support vessels. I demand that you change your course 15 degrees north, that’s one five degrees north, or counter-measures will be undertaken to ensure the safety of this ship.”
Canadians: “We are a lighthouse; it’s your call.”

Legal mandate

Watching the vacuous exchanges that went on between parastatal boards, defiant parastatal CEOs and Ministries over the last 12 months reminded me of the story above.

Beginning with last year’s nail-biting saga between the Board of the Kenya Youth Enterprise Development Fund, its CEO and the Minister for Youth Affairs saga to the more current saga at the Kenya Ports Authority with the on-again off-again suspension of the CEO.

It all boils down to who’s got the legal mandate to tell a CEO to take a walk.

Is it the board which is the reporting authority for the CEO and from whom power to manage the institution emanates from, or is it the ultimate authority in the form of the parent ministry who essentially represent the shareholders of the institution, in this case the Government of Kenya?

No doubt that it forms the legal conundrum that a CEO can hide behind as he continues to enjoy or fight for the office and stature that he has become accustomed to.

The government, represented by the parent ministry, ends up playing the role of the Canadian lighthouse.

It is entrenched on solid ground, the fundamental source of the power which it delegates to the Board through the constitutive document, which is the Act of Parliament, creating the parastatal.

The government simply cannot be moved.

The parastatal board on the other hand is an amorphous creature from the government’s view point; it can be changed at will with directors serving at its pleasure and who can be asked to change strategic direction depending on where the minister’s wind is blowing.