Monday, October 5, 2015

“When Idiots clash, idiocy overflows” The Central Bank Saga - Time for Change

It is an incredible amazing IRONY that the Central Bank of Sri Lanka, an institution steeped in respect and tradition, that had a long period of relative independence is now a shadow of its former self, manned and lead by village idiots, who think they are PRIMADONNAS!

It is a matter of historic fact that the rot started with the Mahinda Rajapakse Government, where with the political appointment of Nivard Cabral, a level of political interference not seen before took place, where advancement, promotion, corruption, and favoritism were all intermingled words, and the stature and the respect of the Institution fell, and along with it the competence, dependability and independence of its staff.

Put simply, when a paper was presented to estimate the inward remittances outside of the Banking System, it was promptly swept under the carpet as unnecessary, purely because the rampant corruption, where funds came in and out, outside of the normal financial systems would come to light, and the culprits caught! By the way the Central Bank has yet to estimate this! Currently estimated at an annual US$3Billion.

To reiterate this point, the Ghadaffi US$ billions fall into this category, as the money was waylaid on its way to SL, and instead deposited in a personal bank account in Dubai, before it even reached our shores.

I have still not been able to ascertain if this was a bank draft for cash, which the holder could deposit anywhere, or cash! But it certainly was real dollars, and when Ghadaffi fell, there was no need to account to anyone from where it came and to where it finally went! The US Govt. knows whose money it was and in whose name it is currently in, if they so choose to instigate any proceedings to confiscate this!

I digress, but with the new Government coming in January 8th 2015, promising to clean up the system, and install Good Governance practices, the appointment of the Governor itself started on a bad footing, as I reported in this blog on 11th January 2015.

We know what happened when the Prime Minister did not heed this warning, namely the “Bond Scandal”. That is the point at which the rot started.

Cabral had a way of just handing out the new capital raising to the few players in the market, who knew they could profit handsomely later, and so there was NO transparency in the way government securities were issued.

In comes Mahendran, who says, quite sensibly, that like in most Countries, the Securities that the Govt. is selling MUST be auctioned off to get the best price at the time for the Govt. to minimize its borrowing cost! All quite kosher and above board, until it was the Company owned by the Governors son in law that bid for most of the securities, and who had the capital to do so, along with the borrowing facilities, that the shit hit the fan, and as they say, the rest is history.

The Primadonnas at the CB cried foul, and the Governor felt it was borne out of jealousy, as they could not make the huge cuts they did before, in leaking the information on interest rate movements and expectations for a shit load of money (BRIBE) and there was an internal revolt, with finger pointing.

The Governor being a holistic type, not particularly adept at HR management, promoted some of the Cabral donkeys to higher positions including some of the rogues who had the worst reputation as his sycophants, further alienating himself from the remaining honest, capable, and knowledgeable senior staffers. (as in those who had got the relevant qualifications, and PhDs but still unable to think outside the box)

Then came some more transfers at the Director levels, presumably to show that the Governor was in control, so people who did not know one end of a bank from another were given Banking Supervision posts, whilst those who knew their bank were thought better to run the Restaurant! This created consternation, as the Bank Primadonnas were put in their place, as part of the routine transfers that take place in such institutions, supposedly both for the job variations needed for senior staffers, and instituted originally by Cabral to instill fear and also control for his personal fiefdom.

The beleaguered senior staffers called a meeting unbeknownst to the Governor to discuss the way forward, not necessarily to have a go at the Governor but to try and regain some order in the disorder, as they felt that this huge gap in trust was NOT good for the proper functioning of the CB.

Whilst the meeting was on, the Governor had been informed, and stormed the meeting with a photographer. In the ensuing discussions with the staffers, which were cordial, the Governor answered the questions posed him, professionally but without any hint or commitment on his part to admit fault, on the advice he was getting from the likes of Kumudini Saravanamuttu, who was feeding him disinformation, which showed in the actions he was taking.
To cut a long story short, he changed the rules, (very childish I might add) to make sure that all rooms are booked only through his office! Surely the staffers would be better off meeting inside the CB rather than outside, which is now the only way to have such meetings in future! This presumably in order that he knows what meetings are held in the CB and on what subject they are held!

As soon as this meeting was over, the supposed mutiny  was all over the news, and then the 200 lesser staff transfers were announced. The Governor’s office said they were routine transfers, that had been delayed due to Elections, and Ravi Karunanayake contradicted, saying it was on disciplinary grounds. I don’t know for the life of me why the Finance Minister felt he had to give his two cents. The CB IS NOT under him, but under the PM.

In simple English Ravi K was completely out of line in making this comment, making the Governor look like a pathetic revenge taker!

Anyway the damage has been done, there is NO turning back, the CB is in turmoil, it is time to revamp the whole institution. Remove the bad apples, put a new Governor who commands the respect of the remaining staffers, with a job to do. Too much water has passed under the bridge for the present Governor to continue, and it is time about 15 senior staffers who have profited from their roles are also forced to retire, and the young, capable, not still infested with personal glory, remain to take Monetary policy into a new dynamic.

Many of the old rules of Economics don’t apply anymore. There is hardly anyone senior in the Bank who really understands how SL should go forward, and the Country needs just two or three simple policy turns, consistently applied to get back in even keel, and frankly the current lot are incapable of doing that.

A good decision has been made to take the EPF and ETF out of the Bank, as they can’t make policy and then manage a portfolio at the same time.

Now it is just a few decisions on managing the External Reserves, Exchange Rates, Interest Rates, printing just enough money not to result in inflation that exceeds say 3%, control the increase in credit in the Private Sector, to productive investments and away from Imported consumables, and most of all reduce the huge margins that banks have between borrowing and lending rates, the biggest hindrance to growth of the SL economy, none of which the current jokers at the top at the Central Bank can manage!

So lets get rid of the PERSONAL agendas, change the PERSONNEL, and get back to running the Economy as it should, PLEASE.

1 comment:


    The Above link on 5th October in shows that over US$1B came from Ghadafi which more than independently verifies your assertion!