Korle-Bu Teaching Hospital – A Tale Of Two Doctors (4)

Good corporate governance is critical for the success of any organisation. Most of the state corporations or public intuitions fail because of the lack of practice of good corporate governance

The term “Corporate Governance” does not subscribe to standard definition. To make a complex situation worse, the word “good” is often used to prefix “corporate governance”. Thus “corporate governance” has come to be known and accepted as “good corporate governance”. Various definitions have been offered in the past for corporate governance, some of which are as follows:

  • “The system by which businesses are directed and controlled”;
    • UK Cadbury Report
  • “The set of rules applicable to the direction and control of company”;
    • Belgium Cardon Report
  • “The legal and factual regulatory framework for management and supervising a company”;
    • Berlin Initiative Code
  • “The set of rules according to which firms are managed and controlled, based on norms, tradition and patterns of behaviour developed by each economic and legal system”; and
    • Italy Preda Report
  • “A code of conduct for those associated with the company…consisting of a set of rules for sound management and proper supervision”.
    • The Netherlands Peter’s Report

Perhaps, the simplest working definition of corporate governance is one given by L.S. Bohen as: “the responsibility and accountability for the overall operation of an organisation.

The Companies Act, 1963 Act 179 attempts to provide a fine mechanism to the practice of corporate governance. Part O: Acts by or on behalf of the Company or the Act states in  part under section 137:

“(1) A company shall act through its members in general meeting or its board of directors or through officers or agents, appointed by, or under authority derived from the members in general meeting or the board of directors.

(2)  Subject to the provisions of this Code, the respective powers of the members in general meeting and the board of directors shall be determined by the company’s Regulations.

(3)  Except as otherwise provided in the company’s Regulations, the business of the company shall be managed by the board of directors who may exercise all such powers of the company as are not by this Code or the Regulations required by the members in general meeting.

(4) Unless the regulations shall otherwise provide, the board of Directors when acting within the powers conferred upon them by this Code or the Regulations shall not be bound to obey the directions or instructions of the members in general meeting”.

A company, being an artificial human being created by law acts through its board of directors or the members (owners) in general meeting. Act 179 under section 179 (1) provides this meaning to directors: “for the purposes of this Code, the expression ‘directors’ means those persons, by whatever name called , who are appointed to direct and administer  the business of the company”.

Section 182 states the category of persons qualified to be appointed as directors of a company and provides penalties for the contravention of the section. Section 203 of the Act which states the duties of directors is very crucial and has been the bane of the failure of most state institutions. Because of the importance of that section, it is quoted in full here.

“(1) A director of a company stands in fiduciary relationship towards the company and shall observe the utmost good faith towards the company in any transaction with it or on its behalf.

“(2)   A director shall act at all times in what he believes to be the best interest of the company as a whole so as to preserve its assets, further its business, and promote the purposes for which it was formed, and in such manner as a faithful diligent, careful and ordinarily skillful director would act in the circumstances.

“(3) In considering whether a particular transaction or course of action is in the best interests of the company as a whole, a director may have regard to the interests of the employees, as well as the members of the company, and, when appointed by, or as representative of a special class of members, employees, or creditors may give special, but not exclusive consideration to the interests of that class.

“(4) No provision, whether contained in the Regulations of a company, or in any contract, or in any resolution of a company shall relieve any director from the duty to act in accordance with this section or relieve him from any liability incurred as a result of any breach thereof”.

Sections 138 and 193 of the Act allows the board of directors  from time to time to appoint one or more of their body to the office of managing director and may delegate all or any of their powers to such managing director. So under good corporate governance practice, the power to appoint chief executive officers lie with the board of directors and not the members of the company.

If one puts these provisions of good corporate governance enunciated under Act 179 against the vile administration of bad corporate governance enunciated under the ill-advised provisions of the 1992 Republican Constitution, then one opens a Pandora box which virtually all the political administration in this country we have had since independences have used to destroy public institutions established under both the public service and the civil service. The provisions of the 1992 Constitution are antithesis to the provisions of the Act.

The 1992 Republican Constitution under Chapter 14: The Public Services, creates the public services of Ghana, the civil service and public corporations. The 1992 Republican Constitution under various articles and clauses, especially, articles 70, 193 and 195 give the President frightening powers of appointment into the public services administration contrary to the practice of good corporate governance. The power of the President to appoint virtually every employee within the public services administration is curtailed only in the case of higher educational institutions in which the1992 Republican Constitution states under article 195 (3) as follows: “the power to appoint persons to hold or act in an office in a body of higher education, research or professional training, shall vest in the council or other governing body of that institution or body”.

This power of the President to appoint and in reverse dismiss has been applied highly capriciously and vindictively by virtually all past political administration despite article 191 of the 1992 Republican Constitution which seeks to provide protection to public officers. The immediate dismissal of all members of boards of state institutions by John Atta Mills NDC administration on assumption of office without giving them the chance even to prepare their handing over notes and the shameful dismissal of Prof. Kwabena Frimpong Boateng by the same John Atta Mills NDC administration under what appeared to be a certificate  of urgency where the venerable heart surgeon was given 24 hours to vacate his office are classical examples of how to destroy state institutions by not applying good corporate governance practices.

Again the appointment of chief executive officers to state institutions many of whom do not have constituted board of directors by the presidency is a clear breach of good corporate governance practice.  How can a body exist without a board of directors as it do happen many times with state institutions and very often managed by an acting chief executive officer. Indeed the report of the DAILY GRAPHIC gives the information that the present chief executive officer of Korle-Bu Teaching Hospital. Dr. Felix Anyah was appointed into office at a time when there was no board in place. How do you embarrass such a fine gentleman?

 E-mail: macgyasi@gamil.com

From Kwame Gyasi