Following months of intensified protests, Prime Minister Ranil Wickremesinghe finally crumbled under pressure and has assured that controversial Central Bank Governor Arjuna Mahendran, will not be appointed for a second term, until investigations against him are concluded.
According to a spokesman of the Purawasi Balaya, Saman Ratnapriya, Wickremesinghe has assured the civil society organization that Mahendran will not be re-appointed until the investigation against him by the Committee on Public Enterprises (COPE) is concluded.
However, amidst reports that until the investigations conclude, an acting governor will be appointed to oversee the functions of the bank, has resulted in a fresh issue, as the Monetary Law Act (MLA) does not permit an Acting Governor to oversee functions of the bank, unlike for other public bodies.
According to a senior economic expert, a new Governor must be appointed for a full six year term, at the conclusion of Mahendran’s term which will come to an end later this month.
“If someone is not appointed from outside, the provision in the MLA is that the Monetary Board will designate the Deputy Governor as Senior Deputy Governor and he will function as CEO of the Central Bank; in the current set up, that would be P Samarasiri who has been permanently designated as Senior Deputy Governor,” the expert noted.
However, Samarasiri is alleged to have had a hand in the bond scams, which will put the government including President Maithripala Sirisena in a bigger fix, if such a person is allowed to head the Central Bank.
According to the MLA, “In the event of the temporary absence from duty of the Governor or of the temporary inability of the Governor to perform his functions and duties, the Deputy Governor designated as senior by the board shall act as the chief executive officer of the Central Bank and shall have authority to execute the powers and perform the functions and duties of the Governor under this Act.”
The expert also disclosed a new dimension, in relation to Section 24 in the MLA, which states that if there is a Governor who is unable to perform his duties; it is not applicable when the Governor’s term is over and either him or another person has not been appointed. “In that case, Governor’s position falls vacant and the Monetary Board cannot designate the Deputy Governor as SDG. Hence, the President has no choice but to appoint the incumbent Governor or someone else as Governor in terms of the law,” the expert noted.
Hence, he noted that taking the current situation into account, and in the interest of good governance, the President must appoint someone else as Governor for the full 6 year term and appoint a special commission of inquiry into the allegations leveled against the incumbent Governor and certain officers of CB. “It is widely believed in the market that some officers at EPF and Public Debt have become corrupt and are collaborating with Perpetual Treasuries in the questionable bond transactions,” he added.
John Exter, the founder and architect of Central Bank of Ceylon has emphasized upon the need to ensure that the Governor of Central Bank should be an individual with ‘unquestionable integrity.’ In page 20 of the Report on the Establishment of a Central Bank for Ceylon, Exter who details the qualifications of the person to be appointed as Governor in his commentary for guidance of the appointing authority; has said, among others, the person to be appointed should be of ‘unquestionable integrity’.