In recent times there have been various publications and articles regarding the performance of the Tema Oil

Refinery (TOR), the nations only crude oil refinery and authorized to process crude oil and market petroleum products. From the current shortage of liquefied petroleum gas (LPG) to the shutdown of some of its processing plants and the potential brain drain it faces, the survival and management of TOR has undoubtedly been overruled. On an average, anybody would ask that one question what is the cause? With varying views, some have blamed it on inability in accessing adequate funds, political interferences, and governments bureaucratic structure among others. In an issue of the Daily Graphic dated Friday, September 23, 2011 on page 19, an article by Della Russell Ocloo titled Tema Oil Refinery, The road to recovery enumerated certain points that in her view were the prime causes to TOR`s inability to run as a commercial entity aside executing its profitability agenda. Such issues the writer raised include unnecessary and overemphasized bureaucracy, conflicts of interest between the organization and some members of its management, over staffing, transparency and openness in its operations, accountability and corruption. From an academic point of view, any such issues relating to those stipulated above will be linked to the corporate governance structure of the organization. We believe this article is a corporate governance issue due to the issues raised that are believed to be the causes of TORs diverse setbacks in its operations ranging from crude oil purchase, intermittent shut downs and start ups of two major plants. To make an understanding of this, it will be necessary to clarify the concept and principles of corporate governance.

In everyday language, corporate governance has been referred to the rules, processes or laws by which businesses are operated, regulated and controlled. As one of the strong forces of Corporate Governance, the Organization for Economic Cooperation and Development (OECD) defined corporate governance as a set of relationships between a company`s management, its shareholders and other stakeholders. Furthermore, it provides the structures through which the objectives of the company are set, and the means of attaining those objectives and monitoring performance. Good corporate governance should provide proper incentives for the board and management to pursue objectives that are in the interest of the company and shareholders and should facilitate effective monitoring, thereby encouraging firms to use resources more efficiently. The term however, also refers to the internal factors defined by the officers, stockholders or constitution of a corporation as well as consumer groups and government regulations. It is these factors that are to assist and guide in the management of the organization. It provides a structure at least in theory, works for the benefit of everyone concerned by ensuring that the enterprise adheres to accepted ethical standards and best practices as well as to formal laws. An important theme of corporate governance is the nature and extent of accountability and mechanisms that try to reduce or eliminate the principal-agent problem. In recent years, corporate governance has received increased attention because of high profile scandals involving abuse of corporate power and some cases alleged criminal activity by corporate officers.

Currently, TOR faces certain problems which have proved to be as a result of gaps and lapses in the governance structure. Some of these problems as stated in Ocloo R Della`s article include among others the following.

UNNECESSARY AND OVER EMPHASIZED BUREAUCRACY

The first issue raised was the views or opinions of many industry players. It is believed that TORs inability to run as a commercial entity is due to the unnecessary bureaucracy that has been incorporated into its core operating structure and laced with enormous political interference. An organization is said to over emphasize bureaucracy if it stringently applies organization principles such as hierarchy, rules, impersonality, organizing into functional units, an in-focused (or up-focused) mission, hiring based on technical qualifications, the more striking the evidence of bureaucracy. Corporate governance covers processes and structures that affect the way a corporation is directed, administered or controlled. It is for this reason that the case of TOR can be classified as an issue of corporate governance. The unnecessary bureaucratic processes may have indeed contributed to the companys ineffectiveness though they were introduced to ensure effectiveness and efficiency. It is imperative therefore, for management to re-examine their bureaucratic structure to enable the company to attain its objectives.

CONFLICT OF INTEREST

The second issue has to do with some allegations leveled against some officers of the company. According to the source, some top officials were engaging in some underhand dealings that aided Bulk Distribution Companies (BDCs) to import finished petroleum products that eventually earned them between GH20,000 to GH50,000 in kickbacks. These officers were also accused of not being interested in TORs ability to access crude oil as well as the growth of the company. We believe this to be a corporate governance issue since conflict of interest of officers of a company falls within the scope of corporate governance. Corporate governance seeks to lay the principle of fairness, ethics and responsibility to ensure that officers of corporations act in the best interest of the corporation as its agent. This issue can be viewed under the agency theory of corporate governance which views agents or officers of corporations as thieves who hide secret profits. This is the reason why corporate governance seeks to build mechanisms and codes of ethics that will try to reduce or eliminate the principal-agency problem.

TRANSPARENCY AND OPENESS

The refinery workers also accused some of the officers for not being interested in the growth of the company but also they allegedly continue to peddle untruths about the state of TOR to the President. This is a corporate governance issue since one of the principles of corporate governance is transparency and openness. It is the responsibility of agents to be truthful to the principal as well as to other stakeholders of the company. Disclosure of material facts concerning a company should be timely and balance to ensure that all investors have access to clear factual information.

Officers of companies are to recognize that they have legal, contractual, social and market driven obligations to shareholders as well as non-shareholders including other employees, investors, creditors, suppliers, local communities, customers and policy makers. OVERSTAFFING

The writer also points out to the fact that there was a lot of waste in the refinerys set up. According to the writer, the refinerys work which focuses mainly on engineering and technical abilities has its administrative staff outnumbering those at the technical department. This is also a corporate governance issue since it is the responsibility of management and consequently the board to ensure that the company is well resourced. The board is responsible for checking on the executives of the company to ensure that necessary resources are acquired and utilized effectively. Availability of required competent human resources enables companies to achieve their goals. In the same vein, overstaffing of employees with no job specification increases production cost and can render companies ineffective. ACCOUNTABILITY

The company defaulted in repaying the credit facility provided by Samsung and Vitol SA and also an amount of $60 million in 1996 as part of revamping processes which was aimed at making the refinery commercial but this was however misdirected for donor partners to profit heavily from the grant sponsorship. Also accumulated subsidies which could have been redeemed to save TORs image and while debts owed by the Oil Marketing Company has both not been redeemed without it being accounted.

It will however be ideal to note that many corporate organizations have faced such problems at a point in time in its growth period leading to a decline in its activities and in some cases a shutdown. Out of the many, some have been able to overcome such tough times using certain approaches as those suggested in this document.

RECOMMENDATIONS TO PREVENT FUTURE OCCURANCES Bureaucracy- This as generally known, has to do with the administrative structure of an organisation.This is also used to suggest waste, inefficiency and red tape. However, bureaucracy can also be used to mitigate too much paper works. Such a way is possible when the independent board regularly can review processes and procedures to ensure the effectiveness of its internal systems of control so that its decision-making is maintained at a high level at all times. This can be done by using modern technologies such as emails, teleconference and such. These innovations would tend to transform the traditional systems and make communication and decision making faster and effective.

Conflict of interest the board of TOR should anticipate and deal proactively with conflicts of interest. It should have in place a conflict management policy appropriate to their business model, including size and organisational structure, the expertise of clients, the nature of the services or products sold or administered and the type of activities engaged in.

The board has a key role in setting the cultural standards of their organisation. The culture of TOR can be a key mitigating tool for the proper management of conflicts of interest. But the values and ethics of individuals who work in the firm in capacities other than the board or senior management should also be given appropriate weight as a corrective to potential institutional malpractice. Corporate governance should be structured in such a way that conflicts are highlighted and resolved.

Disclosure plays an important role in minimising the risk of conflicts of interest and should be full and accurate. Disclosure alone, however, is not enough and subsequent management of a conflict has equal importance. Particular attention should be paid to remuneration and bonus structures, gifts and hospitality. Transparency and openness- the board of TOR must supervise management to ensure that they provide all the necessary information which may be meaningful to outsiders to make to analyze the company and its actions or activities Overstaffing- the board should ensure that financial auditing as well as management auditing are carried out effectively to eliminate unnecessary wastes. Accountability and Elimination of Corruption- There are basic factors that lead to employee corruption. These are often caused by a combination of greed and lax control mechanisms which provide the motive and the opportunity. If there is no opportunity, there can be no corruption. The attractiveness of an opportunity is strongly influenced by an individuals perception of how likely he or she is likely to get caught, how severe will be the punishment and how big will be the payoff from indulgence in corruption. Yet in

order to overcome this conduct, the management must motivate and influence employees to sojourn the act of fraud, being unaccountable or indeed any dishonest act.

MECHANISMS, PROCESSES AND STRUCTURE The board of TOR should be independent to make decisions on their own rather than the government taking charge of all the decisions in TOR. There must be a two-tier board which consists of a management board and a supervisory board.

The constitutions and structuring of the board should be based on the boards suitability, character and quality of the individuals. Political attachment should not be the criteria for choosing members of the board. The individual members to be selected as board members should possess skills, knowledge and experience which is suitable for the behavior of the organization. The board should establish a strategic plan which cannot be interfered with by any change in government and also ensure adequate resources and tools are given to management and staff to be successful.

Finally, the government should direct the company to publish their financial statement and all other financial issues for citizens to know the performance of the company each period. It will ensure transparency and accountability in the company.

REFERENCE Ocloo, D. R., (2011). Tema Oil Refinery: The road to recovery. Daily Graphic, 19. Puni A., Corporate Governance.