disputes and takeover

Figure 3.2 depicts a modality for a framework. The National Treasury is the natural focal point to oversee issues on public assets; it may establish an interministerial Asset and Liability Supreme Committee (ALSC), a higher supervisory and decision body for closing the disputed cases if negotiations between a county and a national entity fail to reach conclusion. The ALSC should include representatives of respective bodies of the national government entities—Office of the Auditor General (OAG), land and sectoral ministries, Intergovernmental Budget and Economic Council, and Intergovernmental Relations Technical Committee—and be chaired by a person with a distinguished high position.

ALSC or the National Treasury should issue rules, procedures, and policy guidance for dispute resolution and takeover of disputed financial assets and liabilities. The policy may include but not be limited to the following items:

• A strong instruction that the negotiating entities should seek solutions and the default result should be a mutually accepted and enforceable agreement, not court procedure. • Failed cases should be submitted to ALSC (this is mandatory and not just an appeal option) for final assessment and verdict. • The verdict of ALSC must be obeyed by all parties with corrective actions to be made in a timely fashion. • Policy guidance may include a provision that the counties should use the proceeds from the negotiated and agreed workout of financial assets for funding the workout of inherited financial liabilities vis-à-vis public entities (for example, swap statutory deductions).

FIGURE 3.2

Institutional framework and procedures to resolve asset and liability disputes and takeover

National Treasury ALSC

ALSC verdict Failed cases reported

Committees in ministries Committees in ministries Committees in ministries

Negotiations

Committees in municipalities for dispute resolution and appeals

Source: World Bank. Note: ALSC = Asset and Liability Supreme Committee. Green arrows indicate negotiations; orange arrows indicate submission of failed cases to ALSC; red arrows indicate verdicts.