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Tuesday, 4 August 2020

NDDC – A Corporate Governance Failure One Too Many

NDDC – A Corporate Governance Failure One Too Many

The Niger Delta Development Commission (NDDC) was established as a body corporate in 2000 to succeed the Oil Mineral Producing Areas Development Commission (OMPADEC) earlier established in 1992 with a foremost objective for the development of the Niger Delta region.

Today, the vision of the Commission is to offer a lasting solution to the socio-economic difficulties of the Niger Delta region and to facilitate the rapid and sustainable development of the Niger Delta into a region that is economically prosperous, socially stable, ecologically regenerative and politically peaceful.

The NDDC though established as a corporate entity with powers to sue and be sued in its name is however not subject to the regulatory ambit of the Corporate Affairs Commission (CAC) and other regulatory compliance requirements applicable to non-government corporations such as the Corporate Governance Code.

Thus, while the NDDC is a corporate entity, the system for the governance of the corporation, like most other statutory corporations is to be found primarily in its establishment Act.

Section 2 of the NDDC Act 2000 establishes a Governing Board for the Commission with composition as follows:

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A Chairman, which position shall be rotated among the oil producing member States represented on the board.

One person who is an indigene of an oil producing area to represent the States of Abia, Akwa-Ibom, Bayelsa, Cross River, Delta, Edo, Imo, Ondo and Rivers.

Three persons to represent non-oil mineral producing Sates provided that such membership should be drawn from the remaining geo-political zones which are not represented in the Commission.

One representative of oil producing companies in the Niger-Delta nominated by the oil producing companies.

*One person to represent the Federal Ministry of Finance.

*One person to represent the Federal Ministry of Environment.

*The Managing Director of the Commission; and

*The two executive Directors.

Other governance mechanisms currently contained in the NDDC Act 2000 are listed as follows:

i.  A Niger-Delta Advisory Committee, which consist of all Governors of the member State of the Commission and two other persons determined by the President. This Committee is charged with the responsibility for advising the Board and monitoring the activities of the Commission with a view to achieving the objectives of the Commission.

ii. A Management Committee consisting of the Managing Director, two Executive Directors and Directors responsible for the Directorates established under the Act and such number of other members as maybe determined from time to time by the board. The Management Committee is responsible to the board for the general administration of the Commission.

iii. A Monitoring Committee which is to consist of such number of persons as the President may deem fit to appoint from the public or civil service of the Federation. This Committee is tasked with the responsibility to monitoring the management of the funds of the Commission and the implementation of projects of the Commission.

Apart from the governance provisions expressly provided for in the establishment Act of statutory corporations, under Chapter 16 of the Public Service Rules 2008, it is provided that a Minister exercise control of parastatals at policy level through the Board.

This informs the supervisory role being played by the Ministry of Niger Delta Affairs which was created during the regime of President Umaru Musa Yar’Adua in 2008.

The Ministry of Niger Delta Affairs was created to promote and coordinate policies for the development, peace and security of the Niger Delta region. The Ministry is responsible for coordinating the activities of Government Agencies in the Niger Delta Region.

The Interim Management Committee (IMC) which is not provided for under the NDDC Act but today sits at the helm of affairs of the Commission is also another governance mechanism being employed in the operation of the Commission.

While the legality of the IMC has been questioned by many, it is noted that statutory corporations comes under the policy directives of Government under the Public Service Rules 2008.

Notwithstanding the seemingly robust governance framework set out for the NDDC to position it for the effective execution of its mandate, it is apparent that just like its predecessor OMPADEC, the NDDC has also not lived up to expectation.

This conclusion is coming in the wake of allegations of endemic corruption and financial improprieties that the Commission is currently endeared in.

The NDDC has grossly failed to achieve its mandate 20 years after its establishment as there is little or no sustainable development in the Niger Delta Region commensurate with the humongous financial allocations that the Commission has received over the years.

Indeed, the Ministry of Niger Delta Affairs on its website expressly acknowledges that the failure of the NDDC to fully deliver expected results led to the establishment of the Ministry as a coordinating vehicle to drive the development process of the Region.

Governance structures in corporations exist for good reasons which include ensuring effective control that is fundamentally about ensuring transparency, integrity and accountability within the existing system towards a realisation of organisational objectives.

Despite the governance arrangements set out for the NDDC, accountability and transparency appears to be non-existent in the Commission, thereby calling into question the efficacy of the role of the Advisory Committee, the Monitoring Committee, the Supervisory Ministry, the successive Board of Directors, Management Committee and more recently the Interim Management Committee of the Commission.

Some of the reasons for the monumental failure of the Commission are not hard to decipher. Firstly, the constituted governance arrangements for the Commission have not been functional, while others have been ineffective or at best very weak in seeing to designated responsibilities.

For instance, the shabby projects usually executed in States of the Advisory Committee members clearly shows that these Governors have failed in their monitoring responsibilities.

Also, the alleged mismanagement of funds by the IMC and allegations of corrupt practices by the Supervising Minister which bother on the integrity amounts to governance failure.

It is a well-known fact that the Board of Directors of a corporation which is responsible for setting strategic policies and direction that dictates how the organisation’s management oversees the operations of the organisation to a large extent determines the success of such organisations.

In other words, the calibre and quality of persons who become board members of an organisation are key to determining the effectiveness of such a board. While non-statutory corporations seem to give priority to this fundamental factor, the same cannot be said of most statutory corporations.

Under the NDDC Act 2000, other than the requirement that the persons to be appointed to the Board shall be persons of proven integrity and ability, there is nothing else to guide the choice of persons to be appointed as Board members.

This vague requirement has indeed led to the appointment of unworthy individuals as board members of the Commission. This is evident in the nature of projects, contracts and policies that have been pursued by successive boards of the Commission which have been incapable of bringing about the desired development or creating any sustainable long term value in the Region.

The Commission on its path concedes that there have been many plans made in the past to improve the lives of the people of the Niger Delta but that sadly, each ended with very little to show for the time and resources spent. The bitter reality is that nothing has changed thus far.

The effectiveness of a Board invariably boils down to the nature of individuals that make up the Board. Every member of the Board is expected to leverage on his/her expertise to make meaningful contributions to deliberations of the Board that would eventually shape the policies and practices that would be set by the Board.

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It is therefore expedient that the criteria for appointment as a Board member of the Commission should be reviewed and more explicit provisions made that would spell out the qualifications for “proven integrity and ability”.

Better still, more stringent requirements set out that would see to the appointment of seasoned technocrats as board members to achieve the objectives of the Commission. It is about time more attention is paid to merit and competence rather than “interest” in the selection and appointment of the Commission’s Board Members. What the Niger Delta people and indeed Nigerians in general want is positive result.

It is said that one cannot continue doing things in a particular way and hope for a different result. For change to happen, a change in strategy is almost always required, and it is about time the Federal Government beams its touch light of change to the governance structure of non-performing statutory corporations towards repositioning such organisations for optimal performance.

Another governance defect confronting the NDDC is the similar objectives it appears to be pursuing with the Ministry of Niger Delta Affairs, which is more or less a duplication of effort by the Government.

This situation certainly calls for a critical evaluation of the objectives of both the NDDC and the Ministry. This is to streamline the operations of both institutions so that their efforts are not counter-productive.

While I do not necessarily support the call for the scrapping of the NDDC, as the vision and objective of the organisation remain valid despite the miserable performance of successive managements of the Commission, the fundamental question is that since the Ministry of Niger Delta Affairs was established due to the ineffectiveness of the NDDC in achieving its objectives, is it prudent for both institutions to continue to exist as respectively constituted presently?

Finally, one of the things that may have guided non-government corporations in faring better than statutory corporations, especially public quoted companies is the several regulatory compliance requirements they are made to abide by which promotes ethical practices.

With the revelations of financial recklessness and corruption currently rocking statutory corporations such as the NDDC, the Economic and Financial Crimes Commission (EFCC) and many more yet to come to light, it is about time that a code of Corporate Governance designed specifically for statutory corporations be developed and implemented by the Financial Reporting Council of Nigeria given that the Nigerian Code of Corporate Governance 2018 do not apply to statutory corporations.

This no doubt may bring about a paradigm shift in the corporate governance practices of statutory corporations that may lead to the realisation of the yearnings for better governance by the Nigerian populace who happen to be the key stakeholders.

Omagbemi, a Lawyer/Policy Strategist writes from Lagos


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