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Reform Central Bank Governor rules

ANDRE BAGOO Sunday, December 9 2012

FORMER CENTRAL Bank Governor Ewart Williams was cross-examined at the Colman Inquiry last week over the timing of his withdrawal of a $315,000 account at the Clico Investment Bank (CIB). In a sworn witness statement, Williams told the inquiry he “gave instructions by a signed withdrawal slip” for the money to be taken out on December 23, 2008. This date was the same day, according to his own witness statement, when former CL Financial (CLF) director Dr Bhoe Tewarie – who was at the time still principal at The University of the West Indies – came to warn him that there were troubles at CLF.

The date was also some time after Williams was told of troubles at CIB by subordinate staff within the Central Bank, and weeks after he signed a letter calling on the then Director of Public Prosecutions to take action against CIB for not filing annual accounts. That failure was yet another warning sign that the CIB was not being administered properly and posed risk to Clico and the CLF group.

Last week, Williams was given opportunity to explain on the stand. He said there was a “mistake” in his statement to the inquiry (though he did not specify what) and it was his assistant who had dated his withdrawal slip. He said he did not – three years after he was accused in Parliament of using inside information – take “care” to ascertain the proper date. In a statement he gave three years ago, Williams had also identified the date of withdrawal as December 23, 2008. We are left to assume the Central Bank Governor, who regulated billions worth of business, was not careful enough to ascertain the facts in relation to a serious allegation which risked, in his own words, impugning his integrity.

Aside from this we must ask: why was a sitting Central Bank Governor in daily management of his holdings in entities for which he was the regulator?

Williams said he also had a second account at CIB and he left that one in. But that underscores the problem. If he could be accused of saving himself while the public suffered, he could now be accused of bailing out the CLF group to ensure his remaining holdings were secured. In a sense, Williams was doomed whatever he did, even before being called to take the stand last week.

The deeper question here relates to the standards that are applied to the post of Central Bank Governor. Perhaps the time has come to make the post-holder, upon assumption of office, place all of his holdings into a blind trust, like what occurs with Cabinet ministers. This would act as insulation and free the office-holder considerably.

At the same time, the post must be more transparent. For instance, currently, the Bank of England is subject to Freedom of Information (FOI) Act requests in the UK.

That does not apply to this country, where, under the PNM, the Central Bank was exempted from the FOI by Legal Notice 6 of 2004. On the Bank of England’s website, we can read FOI statements about all the gifts received by the current Governor, Sir Mervyn King; see who he dinned with and where; what entertainment he received (he has a penchant for games involving Aston Villa FC) and even when he decides to take a bottle of aged malt, received on the job as a gift, home with him to enjoy. This degree of openness would prevent any Governor from being held hostage to fears of discovery. Will this good will come out of the Governor’s testimony?

Email: abagoo@newsday.

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