Bonuses for state entity executives won’t be tied to profits, says Govt

TDT | Manama                                                      

The Daily Tribune – www.newsofbahrain.com

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A proposal to tie annual bonuses for chairmen and board members of government authorities and companies to profit achievements has been rejected by the government.

The draft law, submitted by MPs Ahmed Qarata and Abdulhakeem Al Shenu, suggested that bonuses should only be paid if profits were achieved, and not in cases of losses.

It also included three articles regarding the approval of annual financial reports by the Minister of Finance and National Economy.

In its response, the government argued that public authorities are established to manage services and specific sectors with the aim of achieving social and economic objectives that align with the public interest, rather than to generate profits.

It noted that these entities are responsible for developing services within their revenue limits without placing a burden on the general budget.

Public Service, Not ProfitMaking

The government highlighted the crucial difference between the goals of government bodies and those of commercial companies, explaining that government entities prioritize long-term national interests and strategic objectives set by the state.

Unlike private firms, government bodies do not produce financial reports in the same manner and are subject to oversight mechanisms to ensure the efficient use of resources for strategic goals.

Linking bonuses to profits, the government added, could create undue pressure and negatively impact public service quality.

Instead, incentives should be based on criteria like improved service quality or environmental sustainability.

Independent Rules for StateOwned Companies

Regarding state-owned companies, the government clarified that these entities operate as private legal persons with independent financial accounts and aim to generate profit to support national development.

While the government retains ownership of capital shares and associated rights, such as profit-sharing and management participation, the assets remain the property of the company itself.

Administrative Flexibility and Governance

The government also emphasized that these companies have specific legal rules within their bylaws, providing them with administrative and financial flexibility to determine work rules and bonus criteria aligned with their objectives, strategies, and commercial practices.

It argued that the proposed bill interferes with this flexibility, potentially disrupting the balance between financial and national objectives in managing state-owned companies.

In conclusion, while the government acknowledged the parliament's role, it urged a reconsideration of the proposal, citing potential negative impacts on government authorities and companies.

It stressed the importance of maintaining a balance between financial incentives and the national interest to ensure effective governance and the overall public good.