There's a Hidden Cost to Statutory Boards That Nobody Seems to be Talking About

In my recent piece about the Ministry of Public Enterprises' Statutory Board of Directors, I highlighted the structural inefficiencies inherent in maintaining these outdated governance bodies. Today, I want to delve deeper into an equally concerning aspect i.e. the hidden costs and conflicts of interest that plague this system.

The current structure of our Statutory Boards creates not just administrative redundancy, but a potentially dangerous overlay of private interests onto public enterprises. While the Ministry of Public Enterprises already possesses the mandate and capability to oversee these institutions, we've allowed an additional layer of governance that serves as a gateway for private sector players to influence public policy decisions.

Let's be frank about what's really happening here. Many of the individuals seeking positions on these boards are themselves business owners or industry players with direct interests in sectors like energy, ports and telecommunications. While their industry expertise might seem valuable on paper, we must ask ourselves, "can someone with substantial private interests in a sector truly serve as an impartial overseer of public enterprises operating in that same space?" This is a question that needs to be answered by the Board of Directors themselves, and not by the CEO or professional staff of the Ministry of Public Enterprises.

The tax-paying citizens of Tonga deserve to understand the full implications of this arrangement. When we maintain these boards, we're not just paying for additional administrative overhead, we're potentially subsidizing a mechanism that allows private interests to shape public enterprise policy for their own benefit. This is particularly concerning in our small island nation, where markets are concentrated and the line between public and private interests can easily blur.

Consider the telecommunications sector, for instance. The case of Tonga Cable Ltd (TCL) presents a perfect example of how these structural conflicts can harm public interests. As the wholesale provider of submarine optical fiber internet capacity, TCL's governance structure allows both major retailers i.e. Tonga Communications Corporation and Digicel to serve as majority shareholders with lifetime voting positions on the Board of Directors. This creates an inherent conflict where the very companies that should be competing to provide the best service to consumers are instead controlling the wholesale infrastructure that determines market access and pricing.

The same problematic pattern repeats across all sectors where our public enterprises operate. The conflict isn't just theoretical, it's built into the very structure of the system, as the TCL example clearly demonstrates. When board members wear multiple hats as both overseers of public infrastructure and beneficiaries of its use, the public interest inevitably suffers.

Moreover, these boards create an unnecessary buffer between executive decision makers and the consequences of their actions. The Ministry of Public Enterprises, through its CEO and professional staff, should be directly accountable for the performance and governance of our public enterprises. Instead, we've created a diffusion of responsibility that makes it harder to implement meaningful reforms and harder still to hold anyone accountable when things go wrong.

The solution is clear and becomes more urgent with each passing day,we must dismantle these Statutory Boards. This isn't about minor reform or adjustment, it's about recognizing that some institutional structures, regardless of their historical importance, can become obstacles to progress and good governance.

By eliminating these boards, we would:

1. Remove a layer of bureaucracy that delays decision-making and dilutes accountability

2. Eliminate potential conflicts of interest that compromise the integrity of our public enterprises

3. Save taxpayer money currently spent on board member compensation and administrative costs

4. Create clearer lines of responsibility and authority within our public enterprises

   
   

The path forward requires empowering the Ministry of Public Enterprises to fulfill its mandate directly, without the interference of intermediary bodies whose members may have competing priorities and interests. This would result in more efficient, more transparent, and more accountable governance of our public enterprises.

To those who argue that we need these boards for their expertise, I counter that expertise can be better utilized through direct professional roles within our public enterprises or through clearly defined consulting arrangements. What we don't need is a permanent structure that institutionalizes potential conflicts of interest under the guise of oversight

The time has come for Tonga to recognize that good governance doesn't mean more governance by adding another layer of bureaucracy. It means creating clear, efficient structures that serve the public interest, and only the public interest. Let's put these Statutory Boards to rest and move forward with a governance model that truly serves the needs of our nation and its people.