LAHORE: In what appears to be a case of “conflict of interest and corporate misconduct,” one of the members of the Board of Directors of the National Transmission and Dispatch Company (NTDC), Mohsin M. Syed, has applied for the post of managing director of the most important company of the power sector.

“It is a case of a selector selecting himself,” remarked an insider. The same BoD, of which Syed Mohsin is a key member, is interviewing candidates for the post of managing director and plans to finalise process before April 25, as directed by the Supreme Court.

The BoD, as critics maintain, changed the age criteria and generalised academic qualifications to accommodate one of its members. In its first advertisement for the post (Jan 23, 2015), the BoD had set the age limit of the candidates at 60 years. Since Syed Mohsin had crossed that age limit, another advertisement was run subsequently (March 15) with an increased age limit of 65 years – allegedly to “accommodate” Syed Mohsin.

The BoD, however, sees nothing wrong with it. In its response to a questionnaire, without confirming or denying Syed Mohsin’s application, it claimed: “Article 52 of the Articles of Association of the NTDC provides that the Directors may elect one of their members to be the (post of) Chief Executive in accordance with the provisions of the Section 198 and 199 of the Company Ordinance 1984.”

The critics wonder if that is the case, why is board running a full-fledged recruitment drive for the last many months and why it doesn’t just nominate one of the members and save public money, time and hassle.

“The board is just trying to hide behind an old clause, which has been superseded twice since it was written; first by the Securities and Exchange Commission of Pakistan (SECP) rules and later by the Corporate Governance Rules 2013,” says a former member of the Board. The Corporate Rules Para 5(2) clearly describe how a chief executive is to be posted in public sector companies and Para 5(1) explains misconduct, including indulging in competing professional or personal conflict of interest situation.”

“This is gross and deliberate misinterpretation of the clause. The BoD is sure to attract legal as well as administrative problems for itself and the company if it persists with such a wrong interpretation of official rules,” he warned and added: “Both the applicant and the BoD are already guilty of corporate misconduct under Para 4 (2-C); one by moving and other by accepting the application.”

The BoD denies that age relaxation was aimed at favouring any particular person. “The Board was not able to attract sufficient number of qualified applicants when the age was set at 60.” About apparent conflict of interest in the application, it says “it is cognizant of conflict of interest provision under Rule 18 of Corporate Governance Rules 2013 and policy and upholds it in letter and spirit in all its discussions and decisions.”

About the allegation of corporate misconduct, it says misconduct is defined under Rule 5 of Corporate Governance Rules 2013 and the Board is ensuring and will ensure that there is no breach of the Companies Ordinance, Corporate Governance Rules and that Articles of Association of the Company and recruitment process is run in a fair, reasonable and transparent manner and that the Board sends the three best candidates to the Federal Govt for it to nominate one as Managing Director.”

“Sending three names to the government, as the BoD claims in its response, also flies in the face of earlier stance of electing one of the members as chief executive,” claims a former head of the Pakistan Electric Power Company (Pepco).

The Board seems to have misconceived its role. These are advisory, not executive, boards because they don’t have any equity in these companies. They are nominees of the government, which owns the company, placed to keep things transparent, not to add to the confusion by misinterpreting clauses and rules. They do so only at the cost of deteriorating health of the power sector, he concludes.

Published in Dawn, April 16th, 2015

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