GOVERNANCE MANUAL
GOVERNANCE MANUAL *This Governance Manual presents the Governance Framework; the Roles, Responsibilities, Authority and Approval Matrix; and the Policies, Procedures, and Expenditure Limits provided for in the Governance Instruments for the Lesotho Highlands Water Project
3
PART I INTRODUCTION, CONTEXTUAL CHALLENGES AND INTERPRETATIONS
4
5
1.5
In addition to the Governance Instruments, for the sake of completeness, there are several Other Instruments 4 that have a bearing on the LHWP. The list of these Other Instruments is not intended to be exhaustive. These do not have a direct bearing on the governance relationship between the LHWC and the LHDA in so far as it relates to the Governance Instruments for the Project.
B. Contextual Challenges and Interpretations of the Existing Governance Framework and the Governance Manual 1.6
Some contextual challenges are evident from the negative outcomes that have emerged from the application of the Governance Framework for the LHWP. One negative result is that the Governance Manual has contributed to ineffective implementation and inefficiency such as time delays and escalating costs for the Project.
1.7
At the core, these contextual challenges relate to the interpretation and application of the LHWP’s Governance Framework, and the interpretation and application of the roles, responsibilities, duties, authority, approval powers, and obligations of both the Commission and the Board as contained in the Governance Instruments for the Project. The Governance Manual is one such instrument.
1.8
The Commission and the Board spent years engaging about the subject of delegation and a large part of the year 2022 reviewing the causes of the above inefficiencies. The conclusion of this review process indicated that the overarching Governance Framework for the LHWP, and the policies, procedures, and expenditure limits contained in the Governance Manual have been interpreted and applied in practice in a manner that inappropriately centralises most of the authority and approval powers on the Project with the LHWC. This approach conflicts with the Governance Instruments and guidance for the governance of
4
The Other Instruments that have a bearing on the LHWP, as listed below, have no direct impact on the Governance Instruments in footnote 3 above which address the relationship between the LHWC and the LHDA: a. Extraordinary Government Gazette in Lesotho of October 1995 relating to privileges and immunities of International Organisations, the JPTC (now LHWC) in particular b. Government Gazette in South Africa of December 1994 relating to the conferment of Immunities and Privileges on the JPTC (now LHWC) c. LHWP Anti-Corruption Policy of 2011 d. Protocol I on the LHWP Royalty Manual e. Protocol II relating to the LHWP SACU Study f. Protocol III to the Treaty relating to the Apportionment of Liability for Costs of Phase 1A Project Works g. Protocol IV relating to specific Supplementary Arrangements Regarding Phase 1A
6
organisations and for corporate governance as recorded in internationally recognised standards5 and best practices6 7 8 9. 1.9
1.10
The current approach to governance is based on a narrow interpretation of the Treaty (as amended by Protocol VI) which indicates that the LHWC is responsible and accountable10 for the Project acting on behalf of the Parties. This narrowness incorrectly suggests that only the LHWC is responsible and accountable. The above interpretation loses sight of the fact that the LHDA Board, in terms of the LHDA Order (as amended) is legally both responsible and accountable for implementation, operation and maintenance of the Project11 and for LHDA because it is a governing body with fiduciary12 duties, first and foremost, obligated to act in the best interests of the body corporate13 that is LHDA while pursuing the LHDA’s core purpose as on organisation.
7
PART II GOVERNANCE FRAMEWORK
8
2.
An outline of the Governance Framework
2.1
Drawing from internationally recognised standards and best practices14, a Governance Framework for an organisation comprises two components, namely foundational laws and supporting prescripts (Mandatory Governance) plus various voluntary international best practices for the governance of organisations and corporate governance (Voluntary Governance). An outline of the Governance Framework (with Mandatory Governance and Voluntary Governance perspectives) as it applies to the relationship between LHDA, LHWC, and the Board is illustrated below in Figure 1: Governance Framework. Figure 1: Governance Framework
A. Mandatory Governance 2.2
14 15
Horizontal Section A (Figure 1A) extracted from Figure 1: Governance Framework shows the Mandatory Governance regime representing the Governance Instruments15 that apply to the relationship between the LHWC, LHDA, and the Board. In date order, these instruments are the following: a. The Treaty of 1986 b. The LHDA Order of 1986 c. Protocol VI of 1999 d. The LHDA Amendment Act of 2000 e. The Phase II Agreement of 2011, and f. The Governance Manual.
Refer to the G20/OECD Corporate Governance Principles, the leading standard for the governance of organisations (ISO 37000:2021), the King IV Code on Corporate Governance, and the Mohlomi Code referred to in footnotes 5, 6, 7 & 8
Refer to footnote 3
9
Figure 1A
Section A showing the Mandatory Governance elements
B. Voluntary Governance 2.3
Horizontal Section B (Figure 1B) extracted from Figure 1 shows three of the world’s leading international standards and best practices16 for the governance of organisations. LHWC and LHDA subscribe to the fundamental principles for the governance of organisations as recorded in these instruments. Where the Treaty (as amended), and the LHDA Order (as amended) prescribe differently to these international best practices, then the Governance Instruments17 representing the Mandatory Governance component of the Governance Framework will govern the relationship between the Commission and the Board. Figure 1B Section B showing the Voluntary Governance Best Practices
B1. G20/OECD Corporate Governance Principles of 2015
2.4 The Commission and the Board subscribe to internationally recognised standards and best practices18 for the governance of organisations in line with the prescripts19 of the Treaty. At the forefront of these best practices are the G20/OECD Corporate Governance Principles20 released in 2015. 2.5 The introductory content to the G20/OECD Principles presents no material conflict with the fundamental provisions of the Treaty (as amended) and the LHDA Order (as amended). Where there are differences, the Mandatory Governance instruments21 led by the content of the Treaty and the LHDA Order takes precedence over international standards and best practices. The Governance Framework adopted by the LHWC and the LHDA draws from the introductory
10
11
12
13
Figure 1C Section C showing Corporate Governance Activities
Refer to these Internationally Recognised Standards and best practices referred to in footnote 5, 6, 7 & 8 relating to the G20/OECD Corporate Governance Principles, ISO 37000, King IV, and Mohlomi Code
29
14
2.16
The Governance Instruments30 provide little guidance to the Commission and the Board in relation to the application of these Corporate Governance Activities. These Corporate Governance Activities are summarised under the headings below followed by a brief description of a principles-based application thereof by the Commission and the Board. This gives more clarity and guidance for the application of governance activities, and for the governance relationship between the Commission and the Board on the Project. a. Setting Strategic Core Purpose b. Adopting and Steering Strategy c. Approving Policies, Procedures, Plans, and Expenditure Limits d. Consultation and Advising e. Transparency, Reporting, and Disclosure f. Oversight and Monitoring, and g. Accountability. C1. Setting Strategic Core Purpose
2.17
Strategic Core Purpose sets out the reason for an organisation’s existence. It must be defined and embedded at the core of all business activities, while the organisation ethically engages with stakeholders in shared and sustained value generation targeted at meeting the legitimate interests of society31.
2.18
Differentiated from the functional purpose of the Treaty32, namely, at its simplest being the implementation, operation and maintenance of the Project, the Strategic Core Purpose of the LHWP is articulated in the preamble33 to the Treaty.
2.19
This Strategic Core Purpose binds LHWC and LHDA to pursue the expectations of material stakeholders (the Parties) and stakeholders such as the peoples34 of Lesotho and South Africa. The purpose of the Treaty, and commensurately the common Strategic Core Purpose of both LHWC and LHDA, is recorded below. a. Development of mutual water resources to contribute towards peace and prosperity in the Southern African region and towards the welfare of its peoples. b. Enhancement of the conditions, including improvement of the livelihoods, of the peoples of Lesotho and South Africa. c. Enhancement, conservation, and equitable sharing of water resources. d. Promotion of the traditions of good neighbourly relations and peaceful cooperation.
15
2.20
2.21
LHWC and LHDA will exercise ethical, responsible, effective, and efficient direction of the Project, putting Strategic Core Purpose at the centre of all governance, business activities, and decision-making. For the effective application of the Governance Framework, it is critical to differentiate the interests of the LHWC and the LHDA. The table below (Table 1: Primary Interests of LHWC and LHDA) summarises the primary interests of both the Commission and the Board. The material difference lies in the fact that the Commission is bound by the Treaty to represent the best interests of the Parties to the Treaty. In turn, the Board is bound by law (the LHDA Order) with the fiduciary duties of a governing body to, first and foremost, represent the best interests of LHDA, a juristic person shaped as a body corporate with perpetual succession.
16
17
18
19
20
21
22
23
2.54
81
82
The above table provides additional context for the Cooperative Governance approach and it emphasises the organisational interdependencies in pursuit of the Strategic Core Purpose. With the above considered, it is the Commission that appoints and terminates the appointment81 of Board members. This is not a reflection of the sum total of the accountability obligations and liabilities which the Board and LHDA can face. LHDA can be sued and it faces the prospect of liabilities arising from its dealings with a diverse range of stakeholders. Because of this, the Board has a fiduciary duty as a governing body to act, first and foremost, in the best interests of the LHDA82.
Section 10(5) of the LHDA Order (as amended) provides for the termination of the appointment of a Board member by the Commission if it considers it necessary in the interests of the effective performance of the functions of the LHDA or if the public interest requires. Refer to these Internationally Recognised Standards and best practices referred to in footnote 5, 6, 7 & 8 relating to the G20/OECD Corporate Governance Principles, ISO 37000, King IV, and Mohlomi Code
24
PART III MATRIX OF ROLES, RESPONSIBILITIES, AUTHORITY, AND APPROVAL
25
83 84
Refer to footnote 3 Refer to these Internationally Recognised Standards and best practices referred to in footnote 5, 6, 7 & 8 relating to the G20/OECD Corporate Governance Principles, ISO 37000, King IV, and Mohlomi Code
26
the Board must, where required, engage in consultation85. Consultation must take place in a manner that is constructive, ensuring effectiveness and efficiency, while simultaneously respecting the demarcation of authority set out in the Governance Manual.
85
Refer to footnotes 52 to 55 for the specific matters requiring consultation in the Governance Instruments
27
PART III: MATRIX OF ROLES, RESPONSIBILITIES, AUTHORITY, AND APPROVAL
28
PART III: MATRIX OF ROLES, RESPONSIBILITIES, AUTHORITY, AND APPROVAL
28
Authority &
Approval
Row
No.
10.
11.
12. 13. 14. 15.
GOVERNANCE ROLE AND/OR RESPONSIBILITY LHDA to effect compensation to local communities LHDA Order Part IX: Compensation re. Section 44: Assessment of compensation Section 45: Time for claims and compensation Section 46: Execution of works in lieu of compensation
LHWC
Consultation Notification
Formulate
Compile
Establish
Nomination
Request
Monitor
Request
Audit Advise
LHDA Board LHDA
LHDA to establish comprehensive accounting and costing systems in accordance with the recommendation of financial management consultants The accounting and costing systems must provide for cost centres and accounting and costing procedures [see Article 10(6)] Systems to be subject to periodical review. JPTC (LHWC) shall have the right to request such review
LHDA
LHDA to apportion costs, in terms of the accounting and costing systems
and procedures, for delivery of water and generation of hydro-electric
power LHDA to establish effective and comprehensive management information
systems, with performance indicators to enable management decision
making during implementation, operation and maintenance of the Project
LHDA to effect catchment conservation and pollution prevention measures
LHDA
LHDA, at least six months prior to commencement of each Phase, and at least four months prior to commencement of each Financial Year compile: a. A long term cost plan b. Detailed cost plan for the following Financial Year c. Long term funding plan d. Short term funding plan for the ensuing financial year e. Schedule of repayment of loans, credit, borrowings
LHDA
LHDA
LHWC (Request)
GOVERNANCE INSTRUMENT Treaty, Article, 7, Paragraph 18; see PART IX of LHDA Order for COMPENSATIO N Treaty Article 7, Paragraph 19; Article 10, Paragraph 6; PART VII: FINANCIAL PROVISIONS of the LHDA Order Treaty Article 7, Paragraph 21
LHDA
Treaty Article 7, Paragraph 20
LHDA
Treaty Article 7, Paragraph 22 Treaty, Article 7, Paragraph 23
LHDA (Compile)
29
Authority &
Approval
Row
No.
10.
11.
12. 13. 14. 15.
GOVERNANCE ROLE AND/OR RESPONSIBILITY LHDA to effect compensation to local communities LHDA Order Part IX: Compensation re. Section 44: Assessment of compensation Section 45: Time for claims and compensation Section 46: Execution of works in lieu of compensation
LHWC
Consultation Notification
Formulate
Compile
Establish
Nomination
Request
Monitor
Request
Audit Advise
LHDA Board LHDA
LHDA to establish comprehensive accounting and costing systems in accordance with the recommendation of financial management consultants The accounting and costing systems must provide for cost centres and accounting and costing procedures [see Article 10(6)] Systems to be subject to periodical review. JPTC (LHWC) shall have the right to request such review
LHDA
LHDA to apportion costs, in terms of the accounting and costing systems
and procedures, for delivery of water and generation of hydro-electric
power LHDA to establish effective and comprehensive management information
systems, with performance indicators to enable management decision
making during implementation, operation and maintenance of the Project
LHDA to effect catchment conservation and pollution prevention measures
LHDA
LHDA, at least six months prior to commencement of each Phase, and at least four months prior to commencement of each Financial Year compile: a. A long term cost plan b. Detailed cost plan for the following Financial Year c. Long term funding plan d. Short term funding plan for the ensuing financial year e. Schedule of repayment of loans, credit, borrowings
LHDA
LHDA
LHWC (Request)
GOVERNANCE INSTRUMENT Treaty, Article, 7, Paragraph 18; see PART IX of LHDA Order for COMPENSATIO N Treaty Article 7, Paragraph 19; Article 10, Paragraph 6; PART VII: FINANCIAL PROVISIONS of the LHDA Order Treaty Article 7, Paragraph 21
LHDA
Treaty Article 7, Paragraph 20
LHDA
Treaty Article 7, Paragraph 22 Treaty, Article 7, Paragraph 23
LHDA (Compile)
29
30
30
31
31
32
32
33
33
Authority &
Approval
Row
No.
44.
GOVERNANCE ROLE AND/OR RESPONSIBILITY The Board may from time to time, and for improving effectiveness and efficiency, delegate any of its powers to the Chief Executive or any staff member of the LHDA
LHWC
Consultation Notification
LHDA Board LHDA
45.
The Board shall, in consultation with the LHWC, appoint the Chief Executive, an ex officio executive director Power to remove the CEO vests with the Board
LHDA
46.
Board shall determine the terms and conditions of service of the CEO
LHDA
47.
Duties and responsibilities of the CEO a. Present proposals re implementation, operation and maintenance for Board approval, and re internal administration and procedures (also in LHDA Order as amended) b. Prepare and present annual budget and proposals for borrowing to the Board for approval (also LHDA Order as amended)
LHDA
LHWC
(Consultation)
Formulate
Compile
Establish
Nomination
Request
Monitoring
Request
Audit Advise
GOVERNANCE
INSTRUMENT
Treaty, amended by
Protocol VI,
Article 7,
Paragraph 34(b)
Treaty,
amended by
Protocol VI,
Article 7,
Paragraph 35(a); LHDA
Order Section
7(1) as amended Treaty, amended by
Protocol VI,
Article 7,
Paragraph 35(b); LHDA
Order Section 7(1) as amended Treaty, amended by
Protocol VI,
Article 7,
Paragraph 38;
34
Authority &
Approval
Row
No.
44.
GOVERNANCE ROLE AND/OR RESPONSIBILITY The Board may from time to time, and for improving effectiveness and efficiency, delegate any of its powers to the Chief Executive or any staff member of the LHDA
LHWC
Consultation Notification
LHDA Board LHDA
45.
The Board shall, in consultation with the LHWC, appoint the Chief Executive, an ex officio executive director Power to remove the CEO vests with the Board
LHDA
46.
Board shall determine the terms and conditions of service of the CEO
LHDA
47.
Duties and responsibilities of the CEO a. Present proposals re implementation, operation and maintenance for Board approval, and re internal administration and procedures (also in LHDA Order as amended) b. Prepare and present annual budget and proposals for borrowing to the Board for approval (also LHDA Order as amended)
LHDA
LHWC
(Consultation)
Formulate
Compile
Establish
Nomination
Request
Monitoring
Request
Audit Advise
GOVERNANCE
INSTRUMENT
Treaty, amended by
Protocol VI,
Article 7,
Paragraph 34(b)
Treaty,
amended by
Protocol VI,
Article 7,
Paragraph 35(a); LHDA
Order Section
7(1) as amended Treaty, amended by
Protocol VI,
Article 7,
Paragraph 35(b); LHDA
Order Section 7(1) as amended Treaty, amended by
Protocol VI,
Article 7,
Paragraph 38;
34
c. Control expenditure and borrowings, in line with limits set by Board, recording and allocating costs d. Provide information required by the Board to discharge its duties (also LHDA Order as amended) e. Issuing tenders, signing agreements, undertakings and contracts on behalf of LHDA (also LHDA Order as amended) f. Appointing and terminating managerial, professional and administrative staff (also LHDA Order as amended) g. Other duties assigned by the Board (also LHDA Order as amended)
Section 8 (1) of the LHDA Order as amended
Authority &
Approval
Row
No.
48.
GOVERNANCE ROLE AND/OR RESPONSIBILITY
LHWC
The Office of the Chairman of the Board of the LHDA shall act as the channel of communication between the Board and the LHWC
49.
The Board shall report to the Lesotho Highlands Water Commission on a quarterly basis on matters covering: (i) general Project overview (ii) progress against strategic plans (iii) main operational activities (iv) actual expenditure against budget (v) any issues and/or challenges facing the Project (vi) summary of Board resolutions (vii) summary of delegations, and (viii) such contracts as LHWC may from time to time identify
50.
The Board shall provide the LHWC with information it may reasonably request in order to take appropriate action in terms of Article 9, Paragraph 8 (see immediately hereunder)
Consultation Notification
Formulate
Compile
Establish
Nomination
Request
LHDA Board LHDA
LHDA
LHWC
Monitoring
Request
Audit Advise
LHDA
LHWC
(Monitor)
LHWC
(Request)
GOVERNANCE INSTRUMENT
Treaty, as
amended by
Protocol VI,
Article 7,
Paragraph 39
Treaty as
amended by
Protocol VI,
Article 7,
Paragraph 41
Treaty,
amended by
Protocol VI,
Article 7,
Paragraph 42
35
c. Control expenditure and borrowings, in line with limits set by Board, recording and allocating costs d. Provide information required by the Board to discharge its duties (also LHDA Order as amended) e. Issuing tenders, signing agreements, undertakings and contracts on behalf of LHDA (also LHDA Order as amended) f. Appointing and terminating managerial, professional and administrative staff (also LHDA Order as amended) g. Other duties assigned by the Board (also LHDA Order as amended)
Section 8 (1) of the LHDA Order as amended
Authority &
Approval
Row
No.
48.
GOVERNANCE ROLE AND/OR RESPONSIBILITY
LHWC
The Office of the Chairman of the Board of the LHDA shall act as the channel of communication between the Board and the LHWC
49.
The Board shall report to the Lesotho Highlands Water Commission on a quarterly basis on matters covering: (i) general Project overview (ii) progress against strategic plans (iii) main operational activities (iv) actual expenditure against budget (v) any issues and/or challenges facing the Project (vi) summary of Board resolutions (vii) summary of delegations, and (viii) such contracts as LHWC may from time to time identify
50.
The Board shall provide the LHWC with information it may reasonably request in order to take appropriate action in terms of Article 9, Paragraph 8 (see immediately hereunder)
Consultation Notification
Formulate
Compile
Establish
Nomination
Request
LHDA Board LHDA
LHDA
LHWC
Monitoring
Request
Audit Advise
LHDA
LHWC
(Monitor)
LHWC
(Request)
GOVERNANCE INSTRUMENT
Treaty, as
amended by
Protocol VI,
Article 7,
Paragraph 39
Treaty as
amended by
Protocol VI,
Article 7,
Paragraph 41
Treaty,
amended by
Protocol VI,
Article 7,
Paragraph 42
35
The LHWC shall be responsible and accountable for the Project, shall act on behalf of and advise the governments and be the channel of all government inputs relating to the Project
Treaty,
amended by
Protocol VI,
Article 9,
Paragraph 8 Authority &
Approval
Row
No.
51.
GOVERNANCE ROLE AND/OR RESPONSIBILITY The Board shall be responsible for ensuring that such additional information as is necessary to enable the LHWC to perform its functions is continuously passed on to it in a timely and effective manner
52.
In case of emergency, and in particular in the event that the safety and
security of the Project are threatened, the Chief Executive shall, after
consultation with the Board Chairman, take such appropriate steps as are
necessary to deal with the emergency [also LHDA Order as amended
Section 8(2)] The Chief Executive shall as soon as practicable submit a report to the
Board on such action taken [also LHDA Order as amended, Section 8(3)]
53.
LHWC shall monitor the activities of the LHDA (against milestones and
performance indicators agreed with the Board or Head of Operation and
Maintenance, as applicable) and have advisory powers in respect of the activities of the Lesotho
Highlands Development Authority LHDA Order: Section 19(1)(d) undertake monitoring activities in accordance with recognised standards to ensure safe and efficient design, construction and use of all works carried out in connection with an approved Scheme
54.
LHWC
Consultation Notification
Formulate
Compile
Establish
Nomination
Request
Monitoring
Request
Audit Advise
LHDA Board LHDA
LHDA
LHWC
LHWC
(Monitor
and Advise) LHDA
LHDA
(Monitor)
GOVERNANCE
INSTRUMENT
Treaty, amended by Protocol VI, Article 7, Paragraph 43
Treaty,
amended by
Protocol VI,
Article 7,
Paragraph 44;
and Section 8(2);
and 8(3) of the
LHDA Order as
amended Treaty,
amended by
Protocol VI,
Article 9,
Paragraph 9 LHDA Order, Section 19(1)(d)
36
The LHWC shall be responsible and accountable for the Project, shall act on behalf of and advise the governments and be the channel of all government inputs relating to the Project
Treaty,
amended by
Protocol VI,
Article 9,
Paragraph 8 Authority &
Approval
Row
No.
51.
GOVERNANCE ROLE AND/OR RESPONSIBILITY The Board shall be responsible for ensuring that such additional information as is necessary to enable the LHWC to perform its functions is continuously passed on to it in a timely and effective manner
52.
In case of emergency, and in particular in the event that the safety and
security of the Project are threatened, the Chief Executive shall, after
consultation with the Board Chairman, take such appropriate steps as are
necessary to deal with the emergency [also LHDA Order as amended
Section 8(2)] The Chief Executive shall as soon as practicable submit a report to the
Board on such action taken [also LHDA Order as amended, Section 8(3)]
53.
LHWC shall monitor the activities of the LHDA (against milestones and
performance indicators agreed with the Board or Head of Operation and
Maintenance, as applicable) and have advisory powers in respect of the activities of the Lesotho
Highlands Development Authority LHDA Order: Section 19(1)(d) undertake monitoring activities in accordance with recognised standards to ensure safe and efficient design, construction and use of all works carried out in connection with an approved Scheme
54.
LHWC
Consultation Notification
Formulate
Compile
Establish
Nomination
Request
Monitoring
Request
Audit Advise
LHDA Board LHDA
LHDA
LHWC
LHWC
(Monitor
and Advise) LHDA
LHDA
(Monitor)
GOVERNANCE
INSTRUMENT
Treaty, amended by Protocol VI, Article 7, Paragraph 43
Treaty,
amended by
Protocol VI,
Article 7,
Paragraph 44;
and Section 8(2);
and 8(3) of the
LHDA Order as
amended Treaty,
amended by
Protocol VI,
Article 9,
Paragraph 9 LHDA Order, Section 19(1)(d)
36
Authority &
Approval
Row
No.
55.
56. 57.
58.
59.
60.
GOVERNANCE ROLE AND/OR RESPONSIBILITY
LHWC
LHWC shall have the right to subject to management audit, all aspects of management, ORGANISATION and accounts of LHDA
LHWC
Demarcation of the respective roles and responsibilities Paragraph 11(a) Demarcation of roles and responsibilities of the LHWC and the Board shall be guided by the following principles: (i) LHWC shall have responsibility for strategic overall policies (ii) Board shall have responsibility for operational policies and for implementing the Project in the respective area of responsibility (iii) Board shall be accountable to the LHWC Policies, procedures and expenditure limits shall aim to achieve effectiveness and efficiency
LHWC
Consultation Notification
LHDA Board
LHWC
Paragraph 11(d) LHWC shall have approval powers on any matter for which
no appropriate policy, procedure or expenditure limit is laid down in the
Governance Manual.
LHWC
Monitoring
Request
Audit Advise
LHWC (Audit)
LHDA
LHWC
Paragraph 11(b) LHWC may in respect of any matter determine policies,
procedure and expenditure limits. Policies, procedures and expenditure
limits shall be guided by the principles outlined in paragraph 11(a) and
determined in consultation with the Board Paragraph 11(c) The policies, procedures and expenditure limits shall be recorded in a document called the Governance Manual
Formulate
Compile
Establish
Nomination
Request
LHDA
(Consultation)
GOVERNANCE
INSTRUMENT
Treaty, amended by
Protocol VI,
Article 9,
Paragraph 10 Treaty, amended by Protocol VI, Article 9, Paragraph 11(a) DISCUSS THE OLD INTRODUCTORY PARAGRAPH 11 OF THE TREATY Treaty, (as amended), Article 9, Paragraph 11(b) Treaty (as amended), Article 9, Paragraph 11(c) Treaty, amended by Protocol VI, Article 9, Paragraph 11(d)
37
Authority &
Approval
Row
No.
55.
56. 57.
58.
59.
60.
GOVERNANCE ROLE AND/OR RESPONSIBILITY
LHWC
LHWC shall have the right to subject to management audit, all aspects of management, ORGANISATION and accounts of LHDA
LHWC
Demarcation of the respective roles and responsibilities Paragraph 11(a) Demarcation of roles and responsibilities of the LHWC and the Board shall be guided by the following principles: (i) LHWC shall have responsibility for strategic overall policies (ii) Board shall have responsibility for operational policies and for implementing the Project in the respective area of responsibility (iii) Board shall be accountable to the LHWC Policies, procedures and expenditure limits shall aim to achieve effectiveness and efficiency
LHWC
Consultation Notification
LHDA Board
LHWC
Paragraph 11(d) LHWC shall have approval powers on any matter for which
no appropriate policy, procedure or expenditure limit is laid down in the
Governance Manual.
LHWC
Monitoring
Request
Audit Advise
LHWC (Audit)
LHDA
LHWC
Paragraph 11(b) LHWC may in respect of any matter determine policies,
procedure and expenditure limits. Policies, procedures and expenditure
limits shall be guided by the principles outlined in paragraph 11(a) and
determined in consultation with the Board Paragraph 11(c) The policies, procedures and expenditure limits shall be recorded in a document called the Governance Manual
Formulate
Compile
Establish
Nomination
Request
LHDA
(Consultation)
GOVERNANCE
INSTRUMENT
Treaty, amended by
Protocol VI,
Article 9,
Paragraph 10 Treaty, amended by Protocol VI, Article 9, Paragraph 11(a) DISCUSS THE OLD INTRODUCTORY PARAGRAPH 11 OF THE TREATY Treaty, (as amended), Article 9, Paragraph 11(b) Treaty (as amended), Article 9, Paragraph 11(c) Treaty, amended by Protocol VI, Article 9, Paragraph 11(d)
37
Authority &
Approval
GOVERNANCE ROLE AND/OR RESPONSIBILITY
LHWC
The LHWC shall establish such non-executive sub-committees it may find necessary for its operations including finance, environment and legal subcommittees to: (i) facilitate relations with relevant government departments, and (ii) advise on and assist with specific specialist areas The LHWC shall have full responsibility and shall be accountable for the sub-committees' actions which shall be advisory only
LHWC
63.
The LHWC shall determine the remuneration of the Board and
remuneration policies of the LHDA, and annual adjustments thereto LHDA Order as amended reads: A member of the Board shall be paid such remuneration, fees and
allowances as may be determined by the Commission and reimbursed for
any expenses incurred
LHWC
64.
The LHWC shall be responsible for ensuring that such information as is
necessary to enable the Board to perform their respective duties is passed
on in a timely and effective manner
LHWC
65.
The Board of the LHDA shall have the power to institute, and after prior notification to the LHWC, the minimum action required to safeguard the safety and integrity of the Project during the period in which the dispute procedure provided for in this Article is in operation
Row
No.
61.
62.
Consultation Notification
LHDA Board
LHWC
LHDA
LHWC
(Notification)
Formulate
Compile
Establish
Nomination
Request
Monitoring
Request
Audit Advise
GOVERNANCE
INSTRUMENT
Treaty,
amended by
Protocol VI,
Article 9,
Paragraph 29
Treaty,
amended by
Protocol VI,
Article 9,
Paragraph 30
Treaty,
amended by
Protocol VI,
Article 9,
Paragraph 32;
and LHDA Order,
Section 13 as
amended Treaty,
amended by
Protocol VI, Article 9, Paragraph 33 of Treaty (NEW) Treaty, (as amended), Article 16, Paragraph 3
38
Authority &
Approval
GOVERNANCE ROLE AND/OR RESPONSIBILITY
LHWC
The LHWC shall establish such non-executive sub-committees it may find necessary for its operations including finance, environment and legal subcommittees to: (i) facilitate relations with relevant government departments, and (ii) advise on and assist with specific specialist areas The LHWC shall have full responsibility and shall be accountable for the sub-committees' actions which shall be advisory only
LHWC
63.
The LHWC shall determine the remuneration of the Board and
remuneration policies of the LHDA, and annual adjustments thereto LHDA Order as amended reads: A member of the Board shall be paid such remuneration, fees and
allowances as may be determined by the Commission and reimbursed for
any expenses incurred
LHWC
64.
The LHWC shall be responsible for ensuring that such information as is
necessary to enable the Board to perform their respective duties is passed
on in a timely and effective manner
LHWC
65.
The Board of the LHDA shall have the power to institute, and after prior notification to the LHWC, the minimum action required to safeguard the safety and integrity of the Project during the period in which the dispute procedure provided for in this Article is in operation
Row
No.
61.
62.
Consultation Notification
LHDA Board
LHWC
LHDA
LHWC
(Notification)
Formulate
Compile
Establish
Nomination
Request
Monitoring
Request
Audit Advise
GOVERNANCE
INSTRUMENT
Treaty,
amended by
Protocol VI,
Article 9,
Paragraph 29
Treaty,
amended by
Protocol VI,
Article 9,
Paragraph 30
Treaty,
amended by
Protocol VI,
Article 9,
Paragraph 32;
and LHDA Order,
Section 13 as
amended Treaty,
amended by
Protocol VI, Article 9, Paragraph 33 of Treaty (NEW) Treaty, (as amended), Article 16, Paragraph 3
38
Authority &
Approval
Row
No.
66.
67. 68. 69.
70.
71.
72.
73.
GOVERNANCE ROLE AND/OR RESPONSIBILITY
LHWC
Any dispute concerning the interpretation or application of this Protocol shall be resolved in accordance with the provisions of Article 16 of the Treaty
PHASE II AGREEMENT Purpose: Operation and maintenance of Phase I & Implementation, operation and maintenance of Phase II Article 3: Relationship with Treaty Provisions of the Treaty remain in force unless expressly or by implication amended by this Agreement. Everything undertaken in terms of the Treaty remains valid unless determined otherwise by this Agreement Article 6: Institutional Arrangements and Governance Establish a Technical Sub-Committee (TSC) to advise and assist the Board - Chaired by a Board member Comprising Board members TSC to include external specialist members (on technical, engineering, environmental and social matters) appointed by the Board in consultation with the LHWC Delegates and alternates may attend all TSC sub-committee meetings in exofficio capacity Terms of Reference of the Technical Sub-Committee to be formulated by the LHDA and approved by LHWC
Consultation Notification
Formulate
Compile
Establish
Nomination
Request
Monitoring
Request
Audit Advise
GOVERNANCE
INSTRUMENT
Protocol VI,
Article 6 Para 2
read with
Article 16 of
Treaty
LHDA Board
Phase II Agreement, Article 2 Phase II Agreement, Article 3
LHDA
LHDA
LHWC
(Consultation)
LHWC
LHWC
LHDA
(Formulation)
Phase II
Agreement,
Article 6,
Paragraph 1(a)
Phase II Agreement, Article 6, Paragraph 1(a) Phase II Agreement, Article 6, Paragraph 1(b) Phase II Agreement,
39
Authority &
Approval
Row
No.
66.
67. 68. 69.
70.
71.
72.
73.
GOVERNANCE ROLE AND/OR RESPONSIBILITY
LHWC
Any dispute concerning the interpretation or application of this Protocol shall be resolved in accordance with the provisions of Article 16 of the Treaty
PHASE II AGREEMENT Purpose: Operation and maintenance of Phase I & Implementation, operation and maintenance of Phase II Article 3: Relationship with Treaty Provisions of the Treaty remain in force unless expressly or by implication amended by this Agreement. Everything undertaken in terms of the Treaty remains valid unless determined otherwise by this Agreement Article 6: Institutional Arrangements and Governance Establish a Technical Sub-Committee (TSC) to advise and assist the Board - Chaired by a Board member Comprising Board members TSC to include external specialist members (on technical, engineering, environmental and social matters) appointed by the Board in consultation with the LHWC Delegates and alternates may attend all TSC sub-committee meetings in exofficio capacity Terms of Reference of the Technical Sub-Committee to be formulated by the LHDA and approved by LHWC
Consultation Notification
Formulate
Compile
Establish
Nomination
Request
Monitoring
Request
Audit Advise
GOVERNANCE
INSTRUMENT
Protocol VI,
Article 6 Para 2
read with
Article 16 of
Treaty
LHDA Board
Phase II Agreement, Article 2 Phase II Agreement, Article 3
LHDA
LHDA
LHWC
(Consultation)
LHWC
LHWC
LHDA
(Formulation)
Phase II
Agreement,
Article 6,
Paragraph 1(a)
Phase II Agreement, Article 6, Paragraph 1(a) Phase II Agreement, Article 6, Paragraph 1(b) Phase II Agreement,
39
Authority &
Approval
Row
No.
74.
GOVERNANCE ROLE AND/OR RESPONSIBILITY
LHWC
Establish, staff and procure the Project Management Unit using open tendering
LHDA Board LHDA
75.
Annual audit of LHDA by independent external firm of internationally recognised chartered accountants
LHDA
76.
Article 10: Procurement of goods and services LHDA to ensure that all procurement fosters competitiveness, transparency, cost effectiveness and quality Tendering shall be by competitive bidding without discrimination as to nationality of any tenderer, unless the parties agree such requirements Ensure that a tax clause (for the disclosure of all payment certificates in relation to payments made to the contracting party to its staff) is contained in all tenders issued
LHDA
77. 78.
79.
8o.
Preference margins shall be determined by LHWC for procurement from companies registered in Lesotho and RSA Unless otherwise agreed by LWHC, the Party requesting the preference margin shall bear the cost of any increase in the contract price Recruitment of personnel
LHDA LHDA
LHWC
LHDA
Consultation
Notification
Formulate
Compile
Establish
Nomination Request
Monitoring
Request
Audit Advise
Article 6,
Paragraph 1(c)
GOVERNANCE
INSTRUMENT
Phase II
Agreement,
Article 6, Para
2(a) to (d); and
Article 11,
Paragraph 2 Phase II Agreement, Article 6, Paragraph 3 Phase II Agreement, Article 10 (a) Treaty, Article 6,
Paragraph 16
Phase II
Agreement,
Article 14,
Paragraph 20
Phase II
Agreement,
Article 10 (f);
10(g) Phase II Agreement, Article 11, Paragraph 1
40
Authority &
Approval
Row
No.
74.
GOVERNANCE ROLE AND/OR RESPONSIBILITY
LHWC
Establish, staff and procure the Project Management Unit using open tendering
LHDA Board LHDA
75.
Annual audit of LHDA by independent external firm of internationally recognised chartered accountants
LHDA
76.
Article 10: Procurement of goods and services LHDA to ensure that all procurement fosters competitiveness, transparency, cost effectiveness and quality Tendering shall be by competitive bidding without discrimination as to nationality of any tenderer, unless the parties agree such requirements Ensure that a tax clause (for the disclosure of all payment certificates in relation to payments made to the contracting party to its staff) is contained in all tenders issued
LHDA
77. 78.
79.
8o.
Preference margins shall be determined by LHWC for procurement from companies registered in Lesotho and RSA Unless otherwise agreed by LWHC, the Party requesting the preference margin shall bear the cost of any increase in the contract price Recruitment of personnel
LHDA LHDA
LHWC
LHDA
Consultation
Notification
Formulate
Compile
Establish
Nomination Request
Monitoring
Request
Audit Advise
Article 6,
Paragraph 1(c)
GOVERNANCE
INSTRUMENT
Phase II
Agreement,
Article 6, Para
2(a) to (d); and
Article 11,
Paragraph 2 Phase II Agreement, Article 6, Paragraph 3 Phase II Agreement, Article 10 (a) Treaty, Article 6,
Paragraph 16
Phase II
Agreement,
Article 14,
Paragraph 20
Phase II
Agreement,
Article 10 (f);
10(g) Phase II Agreement, Article 11, Paragraph 1
40
Authority &
Approval
Row
No.
81.
GOVERNANCE ROLE AND/OR RESPONSIBILITY
LHWC
LHDA to adopt appropriate staff performance and development policies for approval by LHWC
LHWC
LHDA Board LHDA
82.
LHDA to compile Annual Cost Allocation Report
LHDA
83.
LHDA to compile Annual Cost-to-Funding Reconciliation Report to be submitted to the LHWC for approval
84.
LHDA to endeavour to optimise funding sources for the benefit of the Project
LHDA
85.
Treasury function of the Project to be managed with minimum personnel required
LHDA
86.
LHDA to prepare a funding strategy for Phase II to be approved by LHWC
LHWC
87.
Existing funding arrangements between LHDA and TCTA for the Common
Monetary Area facility remains in force as approved by the LHWC. LHDA to
keep two separate bank accounts (for Lesotho and RSA) for monthly
contributions
LHWC
LHWC
Consultation
Notification
Formulate
Compile
Establish
Nomination
Request Prepare
LHDA (Adopt) LHDA
(Compile)
LHDA
(Compile)
LHDA
(Prepare)
Monitoring
Request
Audit Advise GOVERNANCE
INSTRUMENT
Phase II
Agreement,
Article 11, Paragraph 1(c) Phase II Agreement, Article 12, Paragraph 1 Phase II Agreement, Article 12, Paragraph 3 Phase II Agreement, Article 13, Paragraph 1(b) Phase II Agreement, Article 13, Paragraph 1(c) Phase II Agreement, Article 13, Paragraph 2 Phase II Agreement, Article 13, Paragraph 4
41
Authority &
Approval
Row
No.
81.
GOVERNANCE ROLE AND/OR RESPONSIBILITY
LHWC
LHDA to adopt appropriate staff performance and development policies for approval by LHWC
LHWC
LHDA Board LHDA
82.
LHDA to compile Annual Cost Allocation Report
LHDA
83.
LHDA to compile Annual Cost-to-Funding Reconciliation Report to be submitted to the LHWC for approval
84.
LHDA to endeavour to optimise funding sources for the benefit of the Project
LHDA
85.
Treasury function of the Project to be managed with minimum personnel required
LHDA
86.
LHDA to prepare a funding strategy for Phase II to be approved by LHWC
LHWC
87.
Existing funding arrangements between LHDA and TCTA for the Common
Monetary Area facility remains in force as approved by the LHWC. LHDA to
keep two separate bank accounts (for Lesotho and RSA) for monthly
contributions
LHWC
LHWC
Consultation
Notification
Formulate
Compile
Establish
Nomination
Request Prepare
LHDA (Adopt) LHDA
(Compile)
LHDA
(Compile)
LHDA
(Prepare)
Monitoring
Request
Audit Advise GOVERNANCE
INSTRUMENT
Phase II
Agreement,
Article 11, Paragraph 1(c) Phase II Agreement, Article 12, Paragraph 1 Phase II Agreement, Article 12, Paragraph 3 Phase II Agreement, Article 13, Paragraph 1(b) Phase II Agreement, Article 13, Paragraph 1(c) Phase II Agreement, Article 13, Paragraph 2 Phase II Agreement, Article 13, Paragraph 4
41
Authority &
Approval
Row
No.
88.
89.
GOVERNANCE ROLE AND/OR RESPONSIBILITY
LHWC
LHDA to keep all unutilised funds in an interest bearing account
Tax (Article 14) LHWC, in consultation with LHDA (and Lesotho Revenue Authority), adopt procedures to give effect to re-compensatory arrangements
Formulate
Compile
Establish
Nomination Request
LHDA Board LHDA
LHWC
LHDA to comply with all tax provisions in Article 14
91.
LHWC to appoint a Working Group to conduct investigation into non-
compliance, and Additional Tax Arrangements, in terms of this Tax Article
92.
Article 15: Compensation LHDA to effect compensation in terms of Article 7(18) and Article 15 of the Treaty
LHDA
93.
Compensation to be effected in accordance with Phase II Compensation Policy and Procedures Article 16: Anti-Corruption Measures LHWC develop and adopt anti-corruption policy and international best practices for the Project
LHDA
LHDA
LHWC
LHWC
Monitoring
Request
Audit Advise GOVERNANCE
INSTRUMENT
Phase II
Agreement,
Article 13,
Paragraph 6 Phase II Agreement, Article 6, Paragraph 1(a) Phase II Agreement, Article 14, Paragraph 18 Phase II Agreement, Article 14, Paragraph 22; Paragraph 23 Phase II Agreement, Article 15; and see PART IX of LHDA Order re COMPENSATIO N
LHDA
(Consultation)
90.
94.
Consultation
Notification
LHDA
(Develop)
Phase II Agreement,
42
Authority &
Approval
Row
No.
88.
89.
GOVERNANCE ROLE AND/OR RESPONSIBILITY
LHWC
LHDA to keep all unutilised funds in an interest bearing account
Tax (Article 14) LHWC, in consultation with LHDA (and Lesotho Revenue Authority), adopt procedures to give effect to re-compensatory arrangements
Formulate
Compile
Establish
Nomination Request
LHDA Board LHDA
LHWC
LHDA to comply with all tax provisions in Article 14
91.
LHWC to appoint a Working Group to conduct investigation into non-
compliance, and Additional Tax Arrangements, in terms of this Tax Article
92.
Article 15: Compensation LHDA to effect compensation in terms of Article 7(18) and Article 15 of the Treaty
LHDA
93.
Compensation to be effected in accordance with Phase II Compensation Policy and Procedures Article 16: Anti-Corruption Measures LHWC develop and adopt anti-corruption policy and international best practices for the Project
LHDA
LHDA
LHWC
LHWC
Monitoring
Request
Audit Advise GOVERNANCE
INSTRUMENT
Phase II
Agreement,
Article 13,
Paragraph 6 Phase II Agreement, Article 6, Paragraph 1(a) Phase II Agreement, Article 14, Paragraph 18 Phase II Agreement, Article 14, Paragraph 22; Paragraph 23 Phase II Agreement, Article 15; and see PART IX of LHDA Order re COMPENSATIO N
LHDA
(Consultation)
90.
94.
Consultation
Notification
LHDA
(Develop)
Phase II Agreement,
42
Authority &
Approval
Row
No.
95.
GOVERNANCE ROLE AND/OR RESPONSIBILITY
LHWC
LHWC shall request LHDA to provide information or a report about any such matter under investigation (14 days)
LHWC
96.
Any dispute to be resolved amicably, in the spirit of reconciliation, shall not impair implementation, operation and maintenance of the Project
97.
An expert group may also be appointed by LHWC to resolve an Operational Dispute. LHWC to prepare terms of reference
98.
During a dispute the LHDA shall be entitled to institute, within its sphere of responsibility, after notification of the LHWC, minimum action required to safeguard the integrity of the Project
Consultation
Notification
LHDA Board
LHDA (Prepare) Mutual Dispute Resolution
LHWC
LHWC
(Prepare) LHDA
Monitoring
Request
Audit Advise
Formulate
Compile
Establish
Nomination Request
LHWC
(Notification)
Article 16,
Paragraph 1
GOVERNANCE
INSTRUMENT
Phase II
Agreement,
Article 17,
Paragraph 2 Phase II Agreement, Article 17, Para 5 Phase II Agreement, Article 17, Paragraph 6 & 7 Phase II Agreement, Article 17, Para 9; and Article 18, Paragraph 3
43
Authority &
Approval
Row
No.
95.
GOVERNANCE ROLE AND/OR RESPONSIBILITY
LHWC
LHWC shall request LHDA to provide information or a report about any such matter under investigation (14 days)
LHWC
96.
Any dispute to be resolved amicably, in the spirit of reconciliation, shall not impair implementation, operation and maintenance of the Project
97.
An expert group may also be appointed by LHWC to resolve an Operational Dispute. LHWC to prepare terms of reference
98.
During a dispute the LHDA shall be entitled to institute, within its sphere of responsibility, after notification of the LHWC, minimum action required to safeguard the integrity of the Project
Consultation
Notification
LHDA Board
LHDA (Prepare) Mutual Dispute Resolution
LHWC
LHWC
(Prepare) LHDA
Monitoring
Request
Audit Advise
Formulate
Compile
Establish
Nomination Request
LHWC
(Notification)
Article 16,
Paragraph 1
GOVERNANCE
INSTRUMENT
Phase II
Agreement,
Article 17,
Paragraph 2 Phase II Agreement, Article 17, Para 5 Phase II Agreement, Article 17, Paragraph 6 & 7 Phase II Agreement, Article 17, Para 9; and Article 18, Paragraph 3
43
PART IV STRATEGIC OVERALL POLICIES AND OPERATIONAL POLICIES
44
Paragraph 11(a) of Article 9 to the Treaty (as amended)
45
4.5
Table 3: Strategic Overall Policies, and Other Policies Requiring LHWC Approval is recorded below.
87
Policies denoted as “To be Developed” must either be developed in entirety, or revised appropriately
46
PART V EXPENDITURE LIMITS
47
Section 9(8) of the LHDA Order (as amended) gives the Board the authority and discretion to delegate any of its powers to the Chief Executive or any staff member
48
5.7
89 90
Additional provisions relating to the approval of expenditure limits, with particular reference to deviations, are contained hereunder in Table 4: Expenditure Limits. Table 4 must be read in conjunction with the provisions in the entire Governance Manual. Particular attention must be paid, when applying the provisions in Table 4, to the content of paragraphs 2.30 to 2.42 of Part II, and the content of Parts III and IV of the Governance Manual.
Reference to deviation relates to deviations from items recorded in individual projects within the LHWP and not the LHWP as whole
All unbudgeted expenditure and deviations referred to herein relate to the budget line item contained in the Operating Budget. Deviations from the sum total of the Operating Budget must be approved by the Commission.
49
PART VI
ROLE OF THE SECRETARIATS, INTERPRETATION, AND REVIEW OF THE GOVERNANCE MANUAL
50
51
LESOTHO HIGHLANDS DEVELOPMENT AUTHORITY P.O Box 7332 Maseru 100 Lesotho Telephone : (+266) 2224 6000 Fax: (+266) 22310665 Email :
[email protected] Website : www.lhda.org.ls