Larry Howai is one of the people in the financial sector who I hold in high regard, having reported on him since his appointment as the CEO of the First Citizens Group in 1997 and during his service as minister of finance and the economy from July 2012 to September 2015.
Having served as the CEO of what is now T&T’s second-largest commercial bank and as a minister of finance, he brings a unique perspective to his new role as governor of the Central Bank of T&T. I can not think of any other Central Bank governor who has his combination of professional experience. Mr Dookeran has served as both Central Bank governor and as minister of finance, but he did not have Mr Howai’s intimate knowledge of the innards of commercial banking.
Mr Howai has also served on diverse boards in T&T including as chairman of the National Gas Company and its subsidiary National Energy Corporation. He serves as a director of ANSA McAL, having been appointed to that board in 2016. He also currently serves as a director of ANSA Merchant Bank, Trinidad and Tobago Insurance (Tatil), Tatil Life Assurance, Allied Hotels and Allied Innkeepers Ltd. ANSA McAL is the parent company of Guardian Media Ltd.
Mr Howai’s background is crucial in understanding his appointment as T&T‘s Central Bank governor, as my impression of him is that he had a clear understanding of the laws that dictated his role as minister of finance in its relationship with the Central Bank. But it is also my impression that he understands chain-of-command issues and if he is given a clear directive by his bosses—current Minister of Finance Davendradath Tancoo and Prime Minister Kamla Persad-Bissessar—he will comply...if the directive is legal.
It is clear to me that in selecting Mr Howai for the position of Central Bank Governor, Mrs Persad-Bissessar is hoping that he accedes to the Government’s request for company-specific information on the top users of foreign exchange.
Recall that at the post-Cabinet news conference on May 15, Prime Minister Kamla Persad-Bissessar mandated that three of her ministers produce a report on foreign exchange distribution and leakage over the past ten years.
That report, according to Mrs Persad-Bissessar, would reveal “where the foreign exchange went, who received the foreign exchange, why they received it, the process used to determine who received foreign exchange, and how that foreign exchange was used or deployed...
“Then this report, as I say, will be made public to identify the main users, the main facilitators of this unfair distribution, and explain to the public how this entire foreign exchange distribution cartel and conspiracy between certain operatives and businesses was functioning,” said the T&T Prime Minister.
As pointed out in this space previously, the only possible reason for the exposure of what T&T’s prime minister describes as “this unfair distribution” of foreign exchange by the “the foreign exchange distribution cartel” is to establish grounds to reverse what she said is the “conspiracy between certain operatives and businesses.” This would obviously mean reducing the amount of foreign exchange sold to the largest users of foreign exchange and increasing the amount sold to everybody else.
Beyond a certain percentage, perhaps 20 per cent, reducing the amount of foreign exchange sold to T&T’s largest users of foreign exchange is going to hurt T&T’s big non-energy earners of foreign exchange. That is because T&T’s largest non-energy purchasers of foreign exchange are either among the country’s top non-energy exporters or among the top importers of essential foods and pharmaceuticals.
In my view, confirmation of the prime minister’s intention, announced on May 15, came a little over one month later on June 18, when Mr Tancoo, outlined the establishment of a Foreign Exchange Allocation Committee and other measures to address persistent foreign exchange shortages in his contribution to the Mid-Term Budget Review debate:
“We will collaborate with the necessary stakeholders to establish a Foreign Exchange Allocation Committee to bring greater transparency, equity, and strategy to the allocation of scarce foreign exchange resources;
“We will be implementing reporting obligations for high-volume importers to ensure that foreign currency inflows and outflows are better monitored and aligned with the country’s national strategic economic priorities;
“We will ensure enhanced investor confidence through the development of profit repatriation protocols, dividend safeguards, and investment protection frameworks drawing on the best practices such as those that have been implemented in Barbados; and
“We’ll explore foreign currency tax exemptions and investment tax credits as tools to encourage retention and reinvestment of foreign exchange within the local economy.”
The establishment of the Foreign Exchange Allocation Committee invites questions:
* Who are the necessary stakeholders that the Government intends to collaborate with in setting up the Foreign Exchange Allocation Committee?
* Would that collaboration include the T&T Chamber of Industry and Commerce, the Trinidad and Tobago Manufacturers Association, the American Chamber of T&T and the Bankers Association of T&T?
* Would members of those private sector bodies be invited to participate in the committee?
* Does the Government need a committee to know that companies that are earning foreign exchange should be given higher priority than those companies that want to buy foreign exchange simply to sell foreign goods on the domestic market?
* Is the Government not aware that the only way to ensure greater transparency and equity in the allocation of foreign exchange is by allowing the exchange rate to float in a managed way and that “removing all restrictions on current international transactions and greater exchange rate flexibility over the medium term would help meet the demand for foreign exchange,” according to the International Monetary Fund’s Article IV consultation mainly with the T&T’s Central Bank and Ministry of Finance?
Will Mr Howai comply?
As stated above, my impression of Mr Howai is that he is not a lawbreaker or a lawbender.
The code of central bankers, generally, is secrecy. The Central Bank Act is clear that, for T&T, the requirement is that all employees of the Central Bank maintain secrecy.
This is spelt out in section 56, which states:
“ (1) Except in so far as may be necessary for the due performance of its objects, and subject to section 8 of the Financial Institutions Act, every director, officer and employee of the Bank shall preserve and aid in preserving secrecy with regard to all matters relating to the affairs of the Bank, any financial institution or person registered under the Insurance Act or of any customers thereof that may come to his knowledge in the course
of his duties.
(2) Any such director, officer or employee who communicates any such matter to any person other than the Board or an officer of the Bank authorised in that behalf by the Governor or suffers or permits any unauthorised person to have access to any books, papers or records relating to the Bank, any financial institution, or person registered under the Insurance Act, is liable on summary conviction thereof to a fine of $6,000 and to imprisonment for two years.
(3) No director, officer or employee of the Bank shall be required to produce in any Court any book or document or to divulge or communicate to any Court any matter or thing coming under his notice in the performance of his duties under this Act except on the direction of the Court or in so far as may be necessary for the purpose of carrying into effect the provisions of this Act, or for the purposes of any criminal proceedings.
(4) Where the Attorney General or the Director of Public Prosecutions applies to a Court, including the Special Tribunal, and the application is supported by a certificate signed by the Governor that evidence prejudicial to the financial system or to the security of the Bank may be adduced in the course of a hearing before the Court, the Court may order that the hearing or any part thereof be held in camera....”
In short, Mr Howai faces prison time if he divulges the top users of foreign exchange in a company-specific way, which is clearly what Prime Minister wants.
The only way to compel a Central Bank governor to divulge the top users of foreign exchange would be to amend the Central Bank Act. Will they?