The Story within the Story…State boards’ officials, executives cannot be above the law

Feb 26, 2017 News

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By Leonard Gildarie
The country is venturing into uncharted waters. Several former executives of state entities are

before the court on fraud charges, so too is a former minister. In the coming days, according to the Government, a number of top former ministers and executives are likely to be charged as well.
Strictly from a legal perspective, it will be interesting indeed to see how well our laws…our courts…stand up to the test. There will be serious legal arguments by the defence.
Fraud cases, because of our capacity, have always been difficult to prosecute. You have to establish the procedures first and make a case saying that these were breached deliberately, with the ultimate intention that the person benefitted from something.
It will, of course, also have to be established that the opportunity existed and that the suspect was the only one that had the means.
We are a relatively young country that has largely escaped the wrath of the world economy, so some things will be new.
This week, I overheard a heated debate over the extent of which an executive can be held criminally responsible. Needless to say, I am appalled at any suggestion in which the buck can be passed, and in which the defence is that the executive was ordered to do so and so.
This can never be a defence, unless the executive has records to indicate that he objected to or advised differently a wrongdoing that he or she has been ordered to do by a government minister or official.
Is an executive or board fit to remain in place if it continuously breaks the law? That is another story.
There is a little something called fiduciary duty that governs how board members and executives operate. In essence, a fiduciary duty is an obligation to act in the best interest of another party. For instance, a corporation’s board member has a fiduciary duty to the shareholders, a trustee has a fiduciary duty to the trust’s beneficiaries, and an attorney has a fiduciary duty to a client.
The US calls the regulations that deal with the issue the ‘honest services law’. They have been successfully playing around with prosecutions using this weapon.
Online, at scholarship.law, I found an interesting piece which suggested that the US Supreme Court is continuing to be challenged by the complexities of charging public officers.
An excerpt read: “Following revelations of massive fraud and management wrongdoing at Enron and other public companies, the Justice Department employed § 1346 to indict executives accused of breaching their fiduciary duties. Former Enron CEO Jeffrey Skilling and former Hollinger CEO Conrad Black are just two of the corporate fiduciaries found guilty of breaching their duties and convicted under the statute.
Traditionally, Delaware law has governed the content and enforcement of executives’ legal duties, largely protecting public company fiduciaries from civil liability. Now, with the emergence of honest services fraud as a weapon against corporate wrongdoing, and pressure from Congress for more prosecutions, civil and criminal law are trending in opposite directions. Corporate fiduciaries may become criminally liable for conduct that would not subject them to civil sanctions.”
I am no lawyer or accountant but I like systems. I am of the distinct impression that when we elect persons to office, it is to make policies and manage the resources we have to improve our lives. These include finding investments, paying more, better roads, health care, education and less crime.
Most new governments on entering office immediately make a number of changes. Those changes are most apparent at the Presidential Secretariat. They filter down at such places like the state media and then state companies. Many of these entities have independent boards or commissions. The laws are very clear how they are supposed to operate.
I am sure that it does not say anywhere that illegal acts are immune from prosecution because they have the blessings from Cabinet.
In office, we have the responsibility to carry out our duties in keeping with the established procedures.
Unless there is evidence that you, as an executive or board member, objected, you would be complicit in any transaction that can lead to a charge.
I am not sure how we have reached to a point where it is felt that public office or an executive position on a state board is the Wild West. It is taxpayers’ dollars that are at stake.
With things as tough as they are, any political party in office will have to understand that the days of tolerance for indiscretions, waste, negligence, and plain mismanagement and corruption, have long gone.
The populace is demanding blood. The people want to see people charged.
According to the Companies Act of Guyana, every director and officer of a company, in exercising and discharging duties, must act honestly and in good faith, with the interest of the company being paramount. They must also “exercise the care, diligence, and skill that a reasonably prudent person would exercise in comparable circumstance”.
There is one paragraphs of the Companies Act that would be of interest.
“No provision in a contract, the articles of a company, its by-laws or any resolution, shall relieve a director or officer of the company from the duty to act in accordance with this Act or the regulations, or shall relieve him from liability for a breach of this Act or the regulations.”
We have some opportunities to get this thing right. We cannot break the country’s laws and then hide behind the petticoat of a politician or claim to be a creature of the Cabinet.

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