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Wednesday, July 23, 2025

What is an independent director on a state board?

by

20151001

Chief ex­ec­u­tive of­fi­cer of the En­er­gy Cham­ber, Thack­wray Dri­ver said he does not ex­pect the first gas to come from the Lo­ran/Man­a­tee field be­fore 2020.

Over the next few weeks, a size­able num­ber of ap­point­ments to state boards will have con­tin­ue to be made by the new ad­min­is­tra­tion. More than 1,000 po­si­tions are need­ed to be filled. These ap­point­ments to state boards re­quire in­di­vid­u­als with the right cre­den­tials and there is a very small pool of qual­i­fied can­di­dates.

One of the ques­tions that has arisen dur­ing the ap­point­ment process has been the is­sue as­so­ci­at­ed with in­de­pen­dence. This has been caused prin­ci­pal­ly by the ap­point­ment of a for­mer in­de­pen­dent sen­a­tor as chair­man of the boards to over­see the op­er­a­tions of the Caribbean New Me­dia Group (CN­MG) and the Gov­ern­ment In­for­ma­tion Ser­vices Ltd (GISL).

Many com­men­ta­tors, po­lit­i­cal an­a­lysts, politi­cians, and cit­i­zens have weighed in on the ap­pro­pri­ate­ness of ap­point­ing sit­ting or for­mer in­de­pen­dent sen­a­tors to these state or­gan­i­sa­tions.

The dif­fer­ences of opin­ion may be ex­plained by par­ti­san­ship and per­son­al per­sua­sions of each of the speak­ers, but the com­ments ex­pose dif­fer­ent lev­els of un­der­stand­ing re­gard­ing the role of in­de­pen­dence on the board.

For ex­am­ple, Kam­la Per­sad Bisses­sar, Leader of the Op­po­si­tion, in her ap­point­ment speech on Sep­tem­ber 21 said: "Pub­lic dis­plays of ap­par­ent in­de­pen­dence should not be used as a mask for po­lit­i­cal ac­tivism."

Dr Win­ford James, po­lit­i­cal an­a­lyst, com­ment­ing to the me­dia on Sep­tem­ber 22 stat­ed that "Dray­ton now ap­pears to be po­lit­i­cal­ly taint­ed and her past con­tri­bu­tions as an in­de­pen­dent sen­a­tor would now be scru­ti­nised" and Vas­ant Bharath, Op­po­si­tion Sen­a­tor on Sep­tem­ber 20 stat­ed that Dray­ton was an "ex­cel­lent choice. He­len Dray­ton is a woman of great in­tegri­ty and she has a sig­nif­i­cant amount of com­pe­tence and she comes from a back­ground where she un­der­stands com­mu­ni­ca­tions and she un­der­stands peo­ple".

This ar­ti­cle dis­cuss­es the na­ture of in­de­pen­dence on the board and ad­dress­es many of the is­sues cur­rent­ly be­ing raised and ad­dress­es many of the is­sues raised.

What is in­de­pen­dence?

To an­swer this ques­tion we must first look at what the law says. In T&T, all com­pa­ny di­rec­tors are re­quired to act hon­est­ly and, in good faith, in the best in­ter­est of the com­pa­ny and ahead of oth­er in­ter­ests as cod­i­fied in the Com­pa­nies Act Chap­ter 81:01.

This is the cu­mu­la­tive ef­fect of sec­tions 99 (1)(2) which pro­vide that every di­rec­tor and of­fi­cer of a com­pa­ny shall in ex­er­cis­ing his pow­ers and dis­charg­ing his du­ties, act hon­est­ly and in good faith with a view to the best in­ter­ests of the com­pa­ny and ex­er­cise the care, dili­gence and skill that a rea­son­ably pru­dent per­son would ex­er­cise in com­pa­ra­ble cir­cum­stances.

In con­sid­er­ing what is in the best in­ter­est of the com­pa­ny, di­rec­tors are re­quired to con­sid­er both the share­hold­ers and the em­ploy­ees but these are not ex­haus­tive con­sid­er­a­tions.

The Com­pa­nies Acts of Bar­ba­dos and Ja­maica use al­most ex­act­ly the same ter­mi­nol­o­gy in sec­tions 95(1) and 174(1) re­spec­tive­ly. This du­ty, called the "Du­ty of Care", as­sumes that all di­rec­tors should be in­de­pen­dent­ly mind­ed and they would not be in­flu­enced in their de­ci­sion mak­ing by oth­er in­di­vid­u­als or par­ties.

These statu­to­ry oblig­a­tions, there­fore, sub­sume all per­son­al views and agen­das to a com­mon ob­jec­tive of look­ing af­ter the com­pa­ny's best in­ter­est. In dis­charg­ing these oblig­a­tions, di­rec­tors are not statu­to­ri­ly re­quired to be or think in­de­pen­dent­ly al­though it is ex­pect­ed that in mak­ing board de­ci­sions they ought not be in­flu­enced by con­sid­er­a­tions oth­er than those that are in the com­pa­nies best in­ter­est.

This may be re­gard­ed as in­de­pen­dence of judg­ment which means that di­rec­tors, in mak­ing board de­ci­sions, must act per­son­al­ly an not as an agent or rep­re­sen­ta­tive of any per­son, group or or­gan­i­sa­tion notwith­stand­ing how and by whom they were nom­i­nat­ed, elect­ed, or se­lect­ed. The ex­cep­tion to this gen­er­al prin­ci­ple is where the ap­point­ment is made pur­suant to an act of par­lia­ment which ex­press­ly iden­ti­fies and pro­vides for the ap­point­ment of di­rec­tors as rep­re­sen­ta­tives of cer­tain groups or as­so­ci­a­tions.

In­de­pen­dence is con­sid­ered in more de­tail in the T&T Cor­po­rate Gov­er­nance Code (TTCGC) 2013 (see Box 1).

This im­por­tant code ap­plies to all or­gan­i­sa­tions with­in T&T "with a pub­lic ac­count­abil­i­ty" and the pro­vi­sions in the code ap­ply to all of the 59 or­gan­i­sa­tions in T&T that the Gov­ern­ment cur­rent­ly holds shares (59 is the num­ber stat­ed in the State En­ter­pris­es' In­vest­ment Pro­gramme 2015, oth­er ways of count­ing re­sult in high­er num­bers, up to 110 en­ter­pris­es in which the state holds shares; in a dif­fer­ent ar­ti­cle we will ex­am­ine these dif­fer­ences to­geth­er with re­gion­al and in­ter­na­tion­al com­par­isons, and al­so ad­dress cor­po­rate gov­er­nance pro­vi­sions to be ap­plied to the gov­ern­ing bod­ies of the more than 110 Statu­to­ry Boards and oth­er bod­ies in T&T).

For state boards di­rec­tors should be mo­ti­vat­ed by a de­sire to pro­vide an im­por­tant ser­vice to the pub­lic at large.

Many di­rec­tors of state bod­ies that have de­cid­ed to fo­cus up­on good gov­er­nance have found it use­ful to use the sev­en in­ter­na­tion­al gov­er­nance prin­ci­ples known as the Nolan Prin­ci­ples. These in­ter­na­tion­al prin­ci­ples were de­vel­oped in the 1990's in a re­port pub­lished in the UK by the Com­mit­tee of Stan­dards in Pub­lic Life that was chaired by Lord Michael Nolan (see Box 2).

In small is­land states there are few­er de­grees of sep­a­ra­tion be­tween in­di­vid­u­als com­pared to the larg­er de­vel­oped coun­tries with­in the Or­gan­i­sa­tion for Eco­nom­ic Co­op­er­a­tion and De­vel­op­ment (OECD). In is­land states main­tain­ing good re­la­tion­ships mat­ter a great deal and good re­la­tion­ships are un­der­scored by pro­fes­sion­al deal­ings since rep­u­ta­tions are eas­i­ly lost.

Ac­cord­ing­ly, a state-ap­point­ed di­rec­tor will be well served if he or she is guid­ed in­ter alia by the law (the Com­pa­nies Act), a pro­fes­sion­al stan­dard (through mem­ber­ship in a pro­fes­sion­al cor­po­rate gov­er­nance body such as CC­GI and the Nolan Prin­ci­ples) and a code (the T&T Cor­po­rate Gov­er­nance Code).

Ques­tions mem­bers of state boards should ask:

Does our board:

�2 Un­der­take an as­sess­ment of the in­de­pen­dence of the board each year?

�2 Pub­lish in the an­nu­al re­port which non-ex­ec­u­tive di­rec­tors are con­sid­ered to be in­de­pen­dent?

�2 Act sole­ly in terms of the best in­ter­est of the com­pa­ny?

Do I and the oth­er board mem­bers:

�2 Avoid any fi­nan­cial or oth­er oblig­a­tion to out­side in­di­vid­u­als or or­gan­i­sa­tions that might seek to in­flu­ence us in the per­for­mance of our of­fi­cial du­ties?

�2 Make choic­es on mer­it when mak­ing pub­lic ap­point­ments or gov­ern­ing the process for award­ing con­tracts?

�2 Hold our­selves ac­count­able to the pub­lic for de­ci­sions and ac­tions and sub­mit our­selves to what­ev­er scruti­ny is ap­pro­pri­ate?

�2 Re­main as open as pos­si­ble about all our de­ci­sions and ac­tions we take and give rea­sons for our de­ci­sions?

�2 De­clare any pri­vate in­ter­ests re­lat­ing to our pub­lic du­ties

�2 Take steps to avoid any con­flicts aris­ing in a way that pro­tects the pub­lic in­ter­est?

The Caribbean Cor­po­rate Gov­er­nance In­sti­tute (CC­GI), which is a not-for-prof­it Foun­da­tion, has a man­date to cre­ate ef­fec­tive or­gan­i­sa­tions and ef­fi­cient mar­kets through board di­rec­tors that can be trust­ed (based on their train­ing, con­tin­u­ous de­vel­op­ment and pro­fes­sion­al val­ues that they for­mal­ly com­mit to as pro­fes­sion­al mem­bers), and the re­search, pub­li­ca­tion, and mon­i­tor­ing of cor­po­rate gov­er­nance best prac­tice stan­dards ap­pro­pri­ate for the Caribbean.

As part of CC­GI's pro­gramme aimed at pub­lic di­rec­tor­ships, the CC­GI aims to sup­port gov­ern­ment min­is­ters, per­ma­nent sec­re­taries, CEOs, cor­po­rate sec­re­taries, di­rec­tors and oth­er of­fi­cers of pub­lic bod­ies in im­prov­ing gov­er­nance in the pub­lic sec­tor with­in T&T.

The CC­GI is a re­gion­al, in­de­pen­dent, non-prof­it, pro­fes­sion­al mem­ber­ship or­gan­i­sa­tion reg­is­tered with the Ac­cred­i­ta­tion Coun­cil of T&T. CC­GI is the award body that pro­vides the cer­tifi­cate and diplo­ma in cor­po­rate gov­er­nance and the char­tered di­rec­tor qual­i­fi­ca­tion through­out the Caribbean.

The CC­GI wel­comes mem­ber­ship ap­pli­ca­tions and par­tic­i­pa­tion in its cours­es and events through­out the re­gion. +1 (868) 221-8707 www.caribbean­gover­nance.org In an in­ter­view with the Busi­ness Guardian, Dri­ver said that the de­ci­sion was good news for the coun­try but that it will take some time for first gas to reach Point Fortin. He ex­plained: "I ex­pect that any de­vel­op­ment will be in the medi­um-term (5 years) as there are still many com­mer­cial agree­ments that will have to be ne­go­ti­at­ed, in­clud­ing gas sales con­tracts and spe­cif­ic field de­vel­op­ment agree­ments. The in­tend­ed pur­chase of BG by Shell means that there will prob­a­bly be a new en­ti­ty en­ter­ing in­to the dis­cus­sions for the first time in 2016. "

Last week, the BG ex­clu­sive­ly re­port­ed that the Venezuela gov­ern­ment has agreed to send some of its por­tion of the nat­ur­al gas in the Lo­ran/Man­a­tee cross-bor­der field to T&T to be processed as Liq­ue­fied Nat­ur­al Gas (LNG).

Mul­ti­ple sources in both Cara­cas and T&T con­firmed that the South Amer­i­can coun­try has de­cid­ed that it made sense to have the gas liq­ue­fied in Point Fortin and last Tues­day a del­e­ga­tion from the Bo­li­var­i­an Re­pub­lic led by its new Min­is­ter of Oil Eu­lo­gio Del Pino met with Prime Min­is­ter Kei­th Row­ley and a tech­ni­cal team to pro­vide fur­ther im­pe­tus to the de­vel­op­ment.

Dr Dri­ver said the ad­di­tion­al gas will en­sure that the coun­try has the nat­ur­al gas to ex­tend the life of the down­stream petro­chem­i­cal sec­tor.

"Ob­vi­ous­ly it is ex­cel­lent news for Trinidad & To­ba­go that the Venezue­lan gov­ern­ment has in­di­cat­ed its agree­ment that gas could be ex­port­ed from Venezuela to Trinidad. This is a ma­jor shift in their his­tor­i­cal pol­i­cy and of­fers an ex­cel­lent op­por­tu­ni­ty for Trinidad & To­ba­go to ex­tend the life of our petro­chem­i­cal and LNG in­dus­tries."

In the first five months of 2015 nat­ur­al gas pro­duc­tion av­er­aged 200 mil­lion cu­bic feet a day less than in 2014. For the pe­ri­od Jan­u­ary to June 2015, nat­ur­al gas pro­duc­tion stood at 3.8 bil­lion cu­bic feet per day (bcf/d). In the pe­ri­od pe­ri­od last year, it stood at just over 4 bcf/d.

A fur­ther ex­am­i­na­tion of the low­er pro­duc­tion sta­tis­tics in­di­cate that the fall in pro­duc­tion has been main­ly due to low­er out­put from bpTT. In fact, bpTT's pro­duc­tion moved from 2.18 bcf/d in Jan­u­ary 2015 to 1.85 bcf/d by June this yea, a de­cline of 18 per cent. In 2014, bpTT av­er­aged nat­ur­al gas pro­duc­tion was 2.165 bcf/d.

To put it in per­spec­tive the loss of 200 mil­lion cu­bic feet of nat­ur­al gas per day is al­most all the gas need­ed to pow­er the en­tire coun­try on a dai­ly ba­sis. It is al­so enough to ser­vice an am­mo­nia or a methanol plant.

The fall in nat­ur­al gas pro­duc­tion has had a rip­ple ef­fect on the sec­tor be­cause a re­duc­tion in the pro­duc­tion does not just mean less mon­ey for the gov­ern­ment at the well­head, it al­so means low­er pro­duc­tion of oth­er gas-based prod­ucts.

For the first five month of 2015, LNG pro­duc­tion was down by 178 mm­cf/d av­er­ag­ing 2 bcf/d down from 2.178 bcf/d in 2014, a de­cline of 9 per cent. This is a ma­jor de­ci­sion that is like­ly to lead to ei­ther the con­struc­tion of a new LNG fa­cil­i­ty in Point Fortin or the redi­rec­tion of gas from LNG to do­mes­tic use. Sources in­di­cate that there is a short­age of be­tween 400 to 600 mil­lion cu­bic feet of nat­ur­al gas per day and once pro­duc­tion is flow­ing from the Lo­ran/Man­a­tee field that gap will no longer ex­ist.

The Busi­ness Guardian has been in­formed that while no de­ci­sion has been tak­en on this is­sue, the Gov­ern­ment is favour­ing the redi­rec­tion of the nat­ur­al gas rather than the fur­ther ex­pan­sion of At­lantic LNG. This, the BG was told, would en­sure that the high cost of build­ing a new plant and the length of time it will take for the con­struc­tion is re­duced.

Dr Dri­ver said the de­ci­sion on whether there should be a new LNG train built or if the gas should go to the ex­ist­ing train was one for the re­spec­tive Gov­ern­ments, the com­pa­nies - PDVSA, Chevron, BG and Shell (as­sum­ing the pur­chase goes ahead) � and po­ten­tial cus­tomers in T&T. He said: "I think it is too ear­ly to make any firm com­ment at this time."

Ac­cord­ing to the CEO of the LNG Cham­ber, the news al­so means op­por­tu­ni­ties for lo­cal ser­vice com­pa­nies to do more work on both sides of the bor­der.

As he ex­plained: "It is cer­tain­ly pos­i­tive news and does open up the pos­si­bil­i­ties for fur­ther in­vest­ment in the en­er­gy sec­tor, in­clud­ing for en­er­gy ser­vice com­pa­nies and con­trac­tors based in Trinidad & To­ba­go who could pro­vide ser­vices to a new de­vel­op­ment in the Platafor­ma Deltana re­gion."

Ne­go­ti­a­tions be­tween Venezuela and Trinidad and To­ba­go have con­tin­ued for the last 12 years start­ing in 2003 with the sign­ing of a mem­o­ran­dum fol­lowed by five years of tech­ni­cal stud­ies of sev­er­al reser­voirs to de­ter­mine if they crossed and to what ex­tent they crossed the bor­der.

A frame­work treaty was then signed and a unit op­er­a­tor se­lect­ed. The op­er­a­tor is now work­ing on a de­vel­op­ment plan and af­ter then ap­provals will have to be sought and the fi­nanc­ing de­ter­mined.


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