Protecting us from ourselves

While I was recently on a Saturday morning interview on national radio I opined that persons appointed by the government as chairman of a public authority and regulatory body should not remain in their post for more than two terms or a maximum of 10 years. Independent of their merits and capabilities. It is just not healthy to have the same person occupying the same post for year after year, transforming a public structure into a private fiefdom.

In the United States Franklin D. Roosevelt’s four terms of office led some to worry about the risks of an imperial President. In 1947 Congress passed the 22nd Amendment to the US Constitution, which was ratified by all 50 states in 1951, limiting US Presidents to two four-year terms. On an international scale this subject has been widely debated, in particular in the corporate world. In the UK the average tenure of a chairman for the FTSE 100 is now just short of six years. From a recent survey of the top 250 companies listed on the UK Stock Exchange, there is largely a consensus that five is the minimum while nine years should be the maximum.

We are all human, all too human. We have to work hard at behaving ethically in our public duty. We need to be protected from our own failings through a system of checks and balances. The former US Secretary of State, James Baker, in an interview on the 4/5 June, 2016, told the Financial Times that American Presidents can do a lot but they can only do so much through the system of checks and balances. “We are a country of laws, limited by bureaucracy and the power structure in Washington. Presidents are not unilateral rulers. If they do not know that, they will find out soon enough”, he said.

Making a cursory search as to how international bodies deal with such a question, one finds that for example since 2000 the number of chairmen at the IMF were five, four at the World Bank, and three at the Federal Reserve, the Bank of England and the European Central Bank respectively. This greatly contrasts to our own thinking. At the equivalent of these institutions, the Malta Financial Services Authority, there has been only one chairman who remains in place.

One does not find a written code dealing with the appointment of chair at the bodies referred to above, but are these not leading by example? I would definitely say yes. Why is our thinking still different from those whom we look up to and see as our mentors? Why are we afraid to adopt these exemplary good corporate governance practices? Surely Malta does not lack professional, capable people of high calibre.

The merits of having term limits should provide a painless way for a chairperson to retire gracefully and automatically. Serving as a chair of a public authority requires intensive commitment of time and energy. When one rotates the chair of a board it will ensure that no individual dominates the territory, while providing periodic injections of new energy, ideas and freshness. It will surely prevent staleness.  

One must also look as to why certain persons want to continue retaining the post of chairman in a public authority, if possible forever. It may reflect their own personality, the entrapments of public office, such as the chauffeur-driven luxury car, fully expensed travelling and entertainment at quality venues, the false adulation from those who see in them a source of enrichment, as well as the power, and contacts where it matters.

Obviously, this besides an attractive remuneration package which they will not be able to obtain elsewhere. These type of persons can become very attached to the entity they chair and will see it as part of their own identity. If they stop, what are they going to do?  They do not want to let go even if they are already in their seventies.

As a seasoned board member remarked to me, he ‘had never heard a real-life complaint about term limits for a chairman, but heard many complaints about their absence’. Perhaps a quote from Sir Simon Robertson, deputy chairman of HSBC Holdings, NED Economist Group and former chairman of Rolls-Royce Holdings, on this subject, should inspire these type of persons – “A good chairman should be self-aware and put the interest of the organisation first. After a while, you get stale and you should have the good sense to decline too many compliments and know when it is time to make an elegant exit”.

However governments would do well not to expect this type of chivalry, and should seriously consider imposing a maximum term on those appointed chairpersons of public entities and authorities.

Evarist Bartolo is minister of education and employment