Bank directors’ tenure

The Central Bank regulation on directors of banks – “requiring directors over 70 years of age and those who have served nine years on a board to retire” – is consistent with the ‘principles’ and ‘best practices’ of corporate governance. It could be argued that even the nine years is excessive!

Hence, it is inappropriate for anyone to solicit the status quo (undefined tenure) under any circumstances. It is reported that the status quo is being solicited for individuals said to be “healthy, upright and honest”. Who is to determine whether an individual is “upright and honest”?

It is preposterous to note from the news report that the individual concerned has been a director of a leading commercial bank for 25 years, of which 16 years has been as chairman!

It is also a matter of concern that ‘quoted’ companies are allowed to flout with impunity the rules of the Colombo Stock Exchange governing ‘independent’ directors by the simple expedient of co-directors ‘deeming’ those in excess of nine years on the board as ‘independent’! Is this farce not so even in respect of ‘independent’ directors in group/subsidiary companies?

Do not companies and particularly banks have a policy to transfer even branch managers after a certain period?

In this connection, it is pertinent to reflect on Lord Acton’s well known wisdom: “Power tends to corrupt, and absolute power corrupts absolutely.”

Amrit Muttukumaru

MA Econ. (Madras); MBM (Asian Inst. of Mgmt.)