Nivard Cabraal and his tenure at Central Bank

Wednesday, 8 July 2015 00:00 - - {{hitsCtrl.values.hits}}

The former Central Bank (CB) Governor has used the controversial 30-year Treasury bond issue as a blanket to cover his past misdeeds. He has argued in your newspaper that this bond issue has damaged the credibility of the CB. Oh my goodness! Look at who is talking about the credibility of the CB? When Cabraal speaks about the threats to the credibility of the CB, I don’t know whether one should laugh or cry.

Has Cabraal woken up from a deep slumber? The CB was a revered and respected institute before Cabraal became its Governor. However, he tarnished its reputation and CB became a laughing stock during his period as its Governor. This sentiment was echoed by none other than the Daily FT c

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olumnist W.A. Wijewardena in his regular weekly column to the Daily FT on 19 January 2015. It must be noted that Wijewardena was the Deputy Governor of the CB, until his retirement when Cabraal was at the helm.

In this particular column Wijewardena pointed out that CB lost its credibility and became a branch office of the ruling party during the reign of Rajapaksa regime. He had pointed out how the CB used to defend each and every policy action of the Government without being an objective and constructive observer of the government’s policies. He illustrated how the CB praised the Mattala Airport through its publications. But Mattala Airport was an utter waste of public funds that was carried out to bolster the legacy of Mahinda Rajapaksa.

Even in my earlier responses too, I pointed out how he sanctioned the appointment of Lakshman Hulugalle, a convicted criminal, to the directorate of the largest private commercial bank in this country in violation of the banking laws, thereby making a mockery of the financial system. Was it the way Cabraal displayed the credibility of the CB as its governor?

The CB’s acute politicisation under Cabraal was evident by the resignations of eminent economists in the calibre of H.N. Thenuwara and Dr. Anila Dias Bandaranaike from the CB during the era of Cabraal. This was a case where career central bankers had to prematurely leave the CB due to the actions of a political appointee.

It must be pointed out that Cabraal’s sister, Shiromi Wickramasinghe, became the Chairman of HDFC Bank during his period as the Governor. Those who are now questioning about the conflict of interest in Arjuna Mahendran’s son-in-law being a director of a primary dealer never bothered to question about Cabraal’s own blood sister becoming a chairperson of a licensed specialised bank during that time.

It will be in the best interest of Cabraal if he responds to these allegations before pointing fingers at others. One must certainly not throw stones from glass houses.

Ashoka Mihindu