Rationalising remuneration

The government has finally decided to restrict huge financial benefits to bureaucrats on becoming directors or for attending the meetings of boards of directors of Public Sector Enterprises (PSEs), including financial institutions, corporations and privatised units that still carry government shareholding. According to a statement by Finance Minister Ishaq Dar on 20th November, 2013, the decision has been taken to "rationalise the fee of the government servants nominated by the government on boards of various PSEs and corporate entities." The maximum annual income, from now onwards, to a government employee against board memberships has been capped at Rs 600,000. Income over and above this level would be refunded and surrendered to the government treasury. Dar described this change as part of the policy which aimed to enforce austerity in PSEs and maintain financial discipline by ensuring that government servants received realistic fee for their contribution. According to a reliable source, the government is also working to limit the membership of a bureaucrat to represent the government on a board of only one company or entity to discourage the culture of patronage under which influential bureaucrats generally get directorships of many companies to earn huge financial benefits and joyride trips abroad.
The decision of the government, we feel, only fully justified; and it was long overdue. The practice had gone unnoticed for a long time and was, in a way, furtive in the sense that most of the people including the parliamentarians were probably unaware of this. Hardly anybody knew that powerful bureaucrats were making millions over and above their salaries and other perks by just attending the meetings of certain PSEs which were more than eager to reward them in one way or the other in the hope of getting some favours from the government. As the reports indicate, a privatised entity still having government shareholding was paying dollar 8,000 per meeting to all members of the board along with associated perks and facilities including hotel accommodation, etc. A bank privatised a few years ago was reported to be offering dollar 5,000 per meeting to board members. In certain cases, meetings were held overseas where spouses of board members also accompanied them. There were bureaucrats who represented the government on the boards of 4-5 companies and their additional income would go beyond Rs 5 million over and above their regular salaries in the government. This unhealthy practice promoted a culture of favouritism because sometime officers used political influence to secure board positions, with some even compromising government interest in the decision-making process of the concerned companies. At times, the government-nominated board members became so close with the administration of the respective entities that they exploited their positions to get highly paid jobs for themselves after retirement or use their influence to secure employment for their kith and kins. The irony is that most of the PSEs where they are board members are suffering huge losses and are a burden on the government exchequer. The Finance Minister, in our view, could even make it mandatory for bureaucrats to reject or decline any pecuniary benefits except boarding, lodging and travelling expenses from the companies/entities where they are board members on behalf of the government. Such a step would be fully justified because bureaucrats are full time employees of the government and if they are required to attend a board of directors meeting, they cannot attend to their original duty during this official engagement. They, of course, cannot be present at the two places at the same time. Anyhow, the total monetary impact of the government decision may not be much but a strong message has been sent to the bureaucrats that the old practice is not just and, therefore, cannot be allowed to continue, especially at a time when most of the PSEs are losing money and the government itself is starved of resources.