Dheerasinghe and Dr. Jayamaha not independent directors - Letter to the Editor

The current controversy of the Government replacing private sector professionals with retired Central Bankers even without a cooling-off period does not augur well for good corporate governance.

The question that arises by appointing retiring Central Bankers to boards is that these former public servants continue to get a Government pension and hence there lies a serious conflict of interest; i.e. receiving benefits from a Government institution and a private sector institutions. That disqualifies them from being recognised as independent directors under the Banking Act.

The other point that stems out of this is that to be appointed as a chairman of a bank, a director ideally needs to be recognised independent under the Act. Therefore, since not much can be expected from the regulator since it is their ex colleagues who are under the spotlight, it is advisable for good governance activist like Vignarajah to initiate legal action to get the court to direct the regulator and provide guidance to stop the abuse of public funds and the banking system.

Any legal action should seek direction:

a. As to whether retiring public servants should have an enforced cooling off period before accepting appointments in places where they have regulated prior to their retirement, like in Europe.

b. Weather public servants drawing a government pension could be recognised under the law as ‘independent’ and therefore a hold a position of chairman.

c. All appointments made to private sector boards by the Government to represent the Government should go through the normal process of appointments applicable in the public sector

R. Fernando

Attorney-at-Law

Colombo 4