The Jwala judgment

TREVOR SUDAMA

THE DECISION by a High Court judge that the revocation in 2015 of former Central Bank governor Jwala Rambarran’s appointment was illegal seemed fair, balanced and sound given the issues upon which the court was required to adjudicate. The judgment, by and large, concentrated on the legality of the revocation. While there is no dispute that the Executive (Cabinet) has the effective power to appoint the person to hold the nationally significant post of Governor of the Central Bank, it does not enjoy the power of arbitrary dismissal without due regard to existing law, principles of natural justice and acceptable industrial relations practices and certainly not the option to approach the matter through any form of stealth or subterfuge.

One therefore has to question whether the relevant minister or the Cabinet sought proper legal advice, assessed the quality of that advice and the possible eventual financial burden imposed on the State and taxpayers for flawed legal opinion. Another issue relates to the role of the President and whether he/she has the authority to question the basis of the recommendation to revoke as to its permissibility by existing laws, conventions or processes or whether the President merely exercises a robotic function of complying with Cabinet’s recommendation without query or question. It is also curious that the compliance of the acting President was sought and not the substantive President.

Having stated the above, it is also of note that the judgment makes no definitive comment on other issues such as the independence of the office, assumptions of acceptable behaviour on the part of the holder and the practical modalities of the relationship between the Executive (minister) and the governor. Discussions of these questions must advert to the context of the history of this relationship, the relevant legal framework and the governance culture of the country.

In the past, difficulties have arisen in situations where there has been a change in administration (government) and the incumbent governor continued in office under the new administration. The situation first arose in 1986 when Euric Bobb, appointed by the PNM government, continued in office under the NAR; when Ainsworth Harewood, installed by a later PNM administration, continued his tenure in 1995 under the UNC; when Winston Dookeran, chosen by the UNC administration, remained in the position when the PNM took government in 2001, and the most recent instance of Jwala Rambarran, appointed by a People’s Partnership administration in 2012, being the incumbent when the PNM assumed power in 2015.

The relationship between the new administration and the incumbent governor has ranged from latent hostility to tension, distrust, wariness, awkwardness and an uneasy acceptance. Such sentiments have not been negated even by the perceived professionalism of some of the incumbents. An incoming administration is normally comfortable with the assurance that the governor is one of its own and favourable to its general policy, perspective, prescriptions and modus operandi.

One possible solution in this conundrum might be the development of a convention whereby an incumbent governor offers his resignation to the new administration (without loss of contractual benefits) and gives the latter the option to renew or terminate. Another possible solution is to establish clear and transparent guidelines for a viable working relationship between the Executive and the governor with respect to the bank’s monetary policy management, its regulatory function and its advisory role.

Independence of the Central Bank is not an absolute concept and must be viewed in the context of the authority to appoint, the provisions of the law and the general expectations of deferral to executive authority. There cannot be absolute independence where the governor is appointed by the Executive, where the parameters of independence are defined by law and where there is a duty to account both to the Executive and the Parliament. In fact, the Central Bank Act provides that: “The Minister (with responsibility for Finance) may, after consultation with the Governor, issue to the Bank such written directives of a general nature as may be necessary to give effect to the monetary and fiscal policies of the Government.”

A governor therefore has to be sensitive to the limits of his freedom of action. To indirectly proclaim his independence by engaging in activities of open challenge to the stance of the Executive or by using language to arouse public emotions or create negative sentiments about the economic prospects of the country is both indiscreet and gratuitously conflictual. On the issue of the performance of the economy, Rambarran could merely have stated that the GDP has experienced two or three consecutive quarters of decline without resorting to the word “recession” and its negative connotations.

With respect to the public disclosure of foreign exchange distributed by the commercial banks and other authorised dealers to allegedly favoured customers on the basis of reports provided by these institutions, a simple statement to deflect criticism of the Central Bank could have been made to the effect that the Central Bank is not involved in final foreign exchange sales to corporations and individuals and that this is done at the discretion of the commercial banks and other authorised dealers to whom queries should be directed about the criteria employed and the quantum of distribution of available foreign exchange.

Disclosure of the names of the major recipients of foreign exchange derived from confidential reports of the commercial banks and other dealers had the following consequences:

(a) It made Rambarran susceptible to the accusation of breach of confidentiality.

(b) He was perceived as assuming the unusual role of the populist public crusader on behalf of the small man denied foreign exchange against the privileged access to such resources by the “one percenters” which may in fact have been the reality.

However, by so doing he authoritatively placed a contentious issue in the public domain and possibly exacerbated class antagonisms. This is a role not for a Central Bank governor but for other advocates of people’s grievances. Surely he could have expressed his concerns directly to the banks through the normal channels of communication.

© He placed himself in a conflictual and uneasy posture with the comptrollers and managers of the commercial banks and other financial institutions with whom he must enjoy a viable, co-operative and respectful working relationship which at times may involve engaging in moral suasion.

Whether the above actions of former governor Rambarran constituted lapses in judgment or deliberate provocation impelled by naivete or bravado and whether they provided reasons for the PNM government to lose confidence in him was immaterial to the court’s conclusion that the revocation of the appointment by the PNM administration was legally invalid.