ISLAMABAD: The Federal Government has dissolved Board of Directors (BoD) of Utility Stores Corporation (USC) due to purported infighting between the Chairman and Managing Director (MD).
On January 12, 2021, Industries and Production Division informed the Cabinet that the policy affairs of Utility Stores Corporation (USC), a Public Sector Company, are managed through its Board of Directors (BoD). The constitution of BoD of USC was notified by the Industries and Production Division, on the basis of two decisions of the Cabinet
The proper and successful function on healthy working relationship between the Board and Management, as per their respective assigned mandate is clearly delineated in Rules 4 and 5 of the Public Sector Companies (Corporate Governance) Rules, 2013. Unfortunately, however, it had been noticed that functioning of the Company had suffered over last 6-8 months due to a severe friction/infighting between the Board and the Management. This had caused destabilization in the entire organization and also led to purported exchange of allegations and counter-allegations between the Chairman and Managing Director.
The Chairman, BoD, who is said to be a close friend of Prime Minister (videos on social media) show he’s collecting funds in Saudi Arabia for PTI, admitted that he even appeared on certain electronic channels in this regard. This act of Chairman was found to be in violation of Rule 5(5)(a)(i) of the Rules.
The Industries and Production Division constituted a two-member fact-finding committee to look into the allegations and counter Allegations by the Chairman and Managing Director against each other.
The Committee arrived at the conclusion that “animosity” and “deep mistrust” exists between the Chairman and the Managing director which is not in the interest of the Company. Moreover, the Chairman had “failed” to run the affairs of the Board and discharge his responsibilities as envisaged in Rule 4 of Rules. He was interfering in day to day matters of the Company. “As per his own statement”, he has been holding frequent meetings with vendors. He announced signing of an MoU with EOBI “without” necessary approvals and documentation, established a full-time office for himself in USC Head Office; and used staff and logistics of the Company “without” any entitlement. Besides, he “failed” to disclose his prior relationship with two vendors of the Company, in violation of Rule 5(5)(c)(iii) and 5(7) (d) of the Rules.
The Ministry said under these circumstances, Industries and Production Division considered that review/reconstitution of existing BoD of USC was needed for smooth functioning of the Company. Besides, the term of the Managing Director is expiring in May, 2021 and the process of recruitment for the post should be conducted in an open, transparent, professional and merit-based manner by a new BoD.
Accordingly, as an interim measure, Industries & Production Division made the following proposals for the approval of the Cabinet: (i) the existing BoD of USC may be dissolved, in terms of 165(3) read with Section 164(1) and 165(l)(b) of the Companies Act, 2017;(ii) a new BoD, comprising of ex-officio Directors, may be constituted for the time being in terms of Section 164(1) of Section read with Section 165(l)(b) of the Companies Act, 2017: (i) Secretary, Industries and Production Division;(ii) Joint Secretary (Corporate Finance), Finance Division;(iii) Joint Secretary (Admin & Finance), Industries and Production Division;(iv) Director General (NSER), BISP;(v) Managing Director, USC and ;(vi) Director General, FIA or his nominee (as Co-opted Member on need basis).
Secretary, Industries and Production Division, may further be appointed as Chairman BoD, USC, in accordance with Rule 4(4) of Public Sector Companies (Corporate Governance) Rules, 2013, for a period of three months or till the appointment of a new Chairman, whichever is earlier. The Cabinet approved the proposal of the Ministry.
Copyright Business Recorder, 2021