Chandra J writes to IMF Rep. on independent regulatory governance

Business leader Chandra Jayaratne has written a letter to the IMF Country Director Koshi Mathai on the issue of an independent key regulatory governance institution in Sri Lanka. The letter is reproduced below :31 March 2011.

Mr. Koshi Mathai,

Country Director IMF,

Resident Mission Office – Colombo,

Central Bank of Sri Lanka,

Janadhipathi Mawatha,

Colombo 7.



Dear Sir,

A Sri Lankan Citizen’s Good Governance Expectations from the IMF Resident Mission Office in Colombo

I write this note as a Sri Lankan citizen committed to support a process of transparency and good governance leading to peace and harmony, democracy, equity and rule of law, where stable and sustainable socioeconomic development delivers to all citizens equal opportunities for growth and prosperity.

I appeal to you, bearing in mind the;

=objectives of the IMF and the goals of the Resident Mission Office of the IMF in Sri Lanka, and

=macro -economic challenges of Sri Lanka in the medium to long term and the necessary risk mitigation structures that need to be effectively in place, and

=role the private sector financial institutions have to play in the sustainable socio - economic development of Sri Lanka

=the required transparency, independence, good governance and international best practices that should govern the management and operations of key financial institutions

to review the perceived actions, reported in the media, recently adopted by an Independent Key Regulatory Governance Institution and its leadership, interfering in the operational independence of private sector financial institutions violating all expectations of good governance norms and practices that should be associated with such regulatory institutions.

I trust that in specific the reported actions of the “Independent Key Regulatory Governance Institution and its leadership” in regard to the following will receive your due attention;

1.The level of direct involvement, coercion and interference by the “Independent Key Regulatory Governance Institution and its leadership” in the management and operations of financial institutions coming directly under its supervision? If such actions are a norm in Sri Lankan governance and administration currently and in the future, what negative impacts and consequences will arise?

2.The active role, coercion and direct interference by the “Independent Key Regulatory Governance Institution and its leadership “in the appointment and re-election process of directors of a key private sector financial institution and consequential impact on good governance and international ratings of Sri Lanka?

3.Whether such perceived acts of direct involvement, coercion and interference by an “Independent Key Regulatory Governance Institution and its leadership” is totally out of line with the objectives and accountability of such regulatory agencies? And whether such exceptions are serious violation of the good governance expectations of multi-lateral funding agencies engaged in supporting Sri Lanka? And even borders on violations of conditions and warranties given to such multi-lateral agencies and international investors under international conventions and agreements?

4.The obvious active directive role and thus direct interference by the “Independent Key Regulatory Governance Institution and its leadership” in the decision making of the three state institutions involved in withdrawing proxies previously filed and re-filing same as directed and thus interfering in regard to the voting preferences on the re-election of directors of a private sector key financial institution and consequential impact on good governance and international ratings of Sri Lanka?

5.Whether the coerced decision making by three state institutions as directed violates their fiduciary accountability and responsibility to their primary stakeholders and whether the perceived directive role played by the “Independent Key Regulatory Governance Institution and its leadership” violates its own fiduciary role and responsibility to the stakeholders of the three state institutions?

6.Whether the direct involvement, coercion and interference by the “Independent Key Regulatory Governance Institution and its leadership” in the management and operations of private sector financial institutions coming directly under its supervision was in line with the expectations and regulatory governance role to be performed in the interest of other stakeholders of the key private sector financial institution, including other shareholders especially minority shareholders, depositors, employees, creditors and long term financial institutions, network partners, and public at large

7.Whether the direct involvement, coercion and interference by the “Independent Key Regulatory Governance Institution and its leadership” in the management and operations of private sector financial institutions coming directly under its supervision will negatively impact and deter foreign investors investing in the local stock markets and what consequential negative impact on planned socio- economic development goals of Sri Lanka?

8.Whether the direct involvement, coercion and interference by the “Independent Key Regulatory Governance Institution and its leadership” in the management and operations of private sector financial institutions coming directly under its supervision will negatively impact and deter much needed foreign direct investments and private public partnerships, a key strategy in the future socio economic development of Sri Lanka and a key resource in the context of the investments gap in meeting the desired objectives of making Sri Lanka the Miracle of Asia?

I trust that following the above review you will kindly discharge your governance role and accountability as the Head of the Sri Lanka Mission office of the IMF meeting the Sri Lankan Citizens Good Governance Expectations from the IMF Resident Mission Office in Colombo.

With warm regards,

Yours sincerely,

Chandra Jayaratne