Regulatory capture happens when regulators become too chummy with those they are bound by law to oversee or when the industries exercise improper influence on the watchdogs. This can happen directly or indirectly, including by pulling strings within the corridors of power.
Regulators serve a very useful purpose, if run and are allowed to operate as they should: supervising and regulating industries and certain sectors of society.
In order to function effectively, the watchdogs set up by law in this country need to have a good degree of ‘independence’ and ‘autonomy’. That frees them from political interference and industry influence. This would, in turn, ensure the decisions they make are in the public interest and not in line with some political or corporate agenda.
The recent interview that Mark Gauci, the outgoing chief executive officer of the Occupational Health and Safety Authority (OHSA), gave to Times of Malta confirms what many have long suspected and, indeed, concluded. The regulators are at the mercy of the government or, rather, the political party in power.
The Occupational Health and Safety Authority Act empowers the minister responsible for health and safety to appoint all the board members, including the chairman, bar the deputy chairman, who is, ex officio, the director of industrial and employment relation, a government functionary.
The minister also appoints the chief executive officer, “in consultation with the Authority”, and the board secretary.
The minister can issue directions to the OHSA, provided these are “not inconsistent with” the law.
The situation on the ground indicates that the multitude of quangos in this country – some 25 ‘authorities’ are listed on the official government website and that excludes other entities like boards, commissions, committees, agencies, foundations – totally depend on politicians.
The public inquiry into the tragic death of young Jean Paul Sofia at a construction site has already heard of OHSA inspectors being threatened of being reported to ‘the minister’.
It has now emerged that a prime minister, while noticing the OHSA’s active operations, had told – warned would perhaps be a better term – the CEO: “‘You’re going to help to lose the election.” Very unfairly, that prime minister remains unnamed; unfair because every prime minister over the past 20 years is now a suspect in the public eye.
Gauci is more than justified to conclude that the health and safety watchdog has “been left alone for 22 years”. It could not become what the law actually wanted it to be because, as he put it, “some people objected to a strong and well-resourced OHSA because it wasn’t in their interest”.
As a result of regulatory capture, most of the quangos continue to misuse public funds, as they increasingly become sheer extensions of ministries, succumbing to the ‘desires’ of power-abusing politicians, their cronies and greedy businessmen. The Planning Authority and its branches are a vivid example of this sad state of affairs.
Things must change if the aims of the laws setting up regulators are to be met. Just days ago, former Labour minister Evarist Bartolo highlighted the need to assist all regulatory bodies to “function with the required independence from external influences” by putting them under the office of the president.
Giving stakeholders the right to appoint members themselves and including provisions in the law guaranteeing constant transparency and accountability can also contribute to ease the degree of capture that now stifles the expensive quangos.