Late last month, the Ministry of Finance sent to the Central Bank the legal documentation as it relates to nine appointments to the board of the Central Bank. The official date on the appointments of the seven who chose to accept those appointments was May 18. The appointments were made by the President of the Republic, in accordance with the stipulations in the Central Bank Act. The names of the new Central Bank directors are as follows: Inshan Ramsaroop; Joseph George; Neil Mohammed; Steve Seetahal; Wayne Tikah; Mahindra Sunil Maharaj and Beverly Khan. The seven new directors joined a Central Bank board that already had nine directors: three executive directors, comprising the Governor, Ewart Williams, the two deputy Governors, Joan John and Dr Shelton Nicholls and six non-executive directors.
The pre-existing non-executive directors were:
• Barbara Chatoor, appointed on July 19, 2009;
• Carlyle Greaves, appointed on April 11, 2009;
• Amelia Carrington, appointed on April 11, 2009;
• Prof Selwyn Cudjoe, appointed on April 11, 2009;
• Dr Roger Hosein, appointed on November 19, 2010; and
• Larry Lalla, appointed on November 19, 2010.
The fact that the Central Bank, with the addition of seven new directors, now has 16 directors raises some interesting issues. The most interesting issue is the stipulation in the Central Bank Act, which can be found at Section 7, on the length of appointments of the directors of the Central Bank. The Governor of the Central Bank shall be appointed for a term of five years and the deputy Governors are appointed "for such period as the President may fix in the instrument of appointment." The ordinary (non-executive) directors of the Central Bank are appointed for three-year terms. This means that the three-year term of the following directors ends next year: Barbara Chatoor (in July 2012) and Carlyle Greaves, Selwyn Cudjoe and Amelia Carrington (in April 2012).
The five-year term of the Central Bank Governor is also due to end in July 2012-Mr Williams having been appointed to a second five-year term in July 2007. What this means is that in less than one year's time, the Minister of Finance will be able to advise the President to appoint a new Governor of the Central Bank to replace Mr Williams as well as four new non-executive directors to replace Barbara Chatoor, Carlyle Greaves, Amelia Carrington and Prof Selwyn Cudjoe. The five replacements will be added to the nine appointments to the Central Bank board that the ruling People's Partnership administration has made since November last year. Thus, in less than a year's time, the Minister of Finance, whoever he or she is, will have the opportunity to hand-pick a new Governor as well as new directors to sit on the Central Bank board.
If the People's Partnership Cabinet is committed to maintaining some semblance of independence for the Central Bank, it would be able to send a signal by its selection of the future Governor and the four new directors. If, on the other hand, the Cabinet wants to be able to determine the country's monetary policy-that is issues relating to the supply of money and the cost of credit-it will be in a position to appoint, legally and constitutionally, a Governor and directors who are sympathetic or reflect the views of the Cabinet. More to the point, since the Central Bank is also in charge of the regulation of financial institutions such as commercial banks and insurance companies, the fact that the terms of office of five Central Bank directors, including the Governor, expire within a year is significant.
There would be consequences for the EFPA policyholders if that is still an issue in a year's time.
Does the fact that People's Partnership appointees to the board of the Central Bank now constitute the majority-nine out of 16-impact on the independence of the incumbent Governor? My reading of the Central Bank Act is that this majority does not necessarily impinge on the Governor's independence because the Governor is both the chairman of the Central Bank board and the Chief Executive Officer of the Bank as a result of which he is responsible for the "day-to-day management, administration, direction and control of the business of the Bank with authority to act in all matters which are not specifically reserved for the Board." One would expect that responsibility for the day-to-day "management, administration, direction and control of the business of the Bank" gives Governor Williams some latitude.
However, Section 15 (6) of the Central Bank Act states: "The decisions of the Board shall be adopted by a majority of the votes and in addition to an original vote, in any case in which the voting is equal, the chairman presiding at the meeting shall have a casting vote." The other issue that arise is what does the appointment of nine new Central Bank directors by the People's Partnership administration mean?
Is it the intention of the Government to be able to overrule the Central Bank Governor and his two deputies as a result of the majority of People's Partnership appointees? Is there any awkwardness at Central Bank board meetings given the fact that the T&T Central Bank, with 16 directors, probably now has the distinction of having one of the largest boards among central banks in the world? My (limited) research on this issue reveals that the US Federal Reserve has five directors and the Bank of England has 11.
In the region, the Bank of Jamaica has eight directors, the Bank of Guyana has seven, the Central Bank of Barbados has eight (including its corporate secretary) while the Eastern Caribbean Central Bank has ten directors-eight representing each member country of the Organisation of Eastern Caribbean States plus the Governor and the deputy Governor. Do we need 16 directors to properly manage the business of the Central Bank? Is having 16 directors cost effective or efficient? Does the Government feel that it needs a majority in order to get its way with respect to some of the topical policy issues that concern the Central Bank-such as the resolution of the Clico Executive Flexible Premium Annuity issue? Given the fact that there has been no official statement or comment from either the Central Bank or the Ministry of Finance, is the size of the Central Bank's board, which has the potential to make T&T a laughing stock-even of concern to them? And who in the Government is behind this move anyway?