At its weekly meeting on Wednesday, Cabinet took a decision to request the President to terminate the appointment of former Central Bank Governor, Jwala Rambarran, in accordance with sections 12(e) and 12(g) of the Central Bank Act, Finance Minister Colm Imbert said in a statement on Thursday.
That decision is unprecedented in local history, but is preceded in the Commonwealth, by the Jamaican government’s dismissal of Governor Derick Latibeaudiere in November 2009 (over compensation issues) and the February 2014 dismissal of Nigerian governor Lamido Sanusi (for alleging corruption in oil revenues). Cyprus governor Panicos Demetriades resigned in March 2014 after being pressured by the government there.
The sections of the Central Bank Act cited by the minister allow the President to terminate the appointment of a governor if he “is guilty of misconduct in relation to his duties” and “fails to carry out any of the duties or functions conferred or imposed upon him under this Act.”
It seems evident that the Cabinet formed the opinion—based primarily on legal advice from both internal and external counsel, including senior counsel, according to the minister—“that the disclosure by the former Governor of the names of the largest users of foreign exchange in T&T and the amounts of foreign exchange that they used was a breach of section 56 of the Central Bank Act and section 8 of the Financial Institutions Act.”
Those laws impose a duty of confidentiality on all officers of the Central Bank, which is required to maintain the secrecy of information passed to it by T&T’s commercial banks as the Central Bank serves as banker to the country’s financial institutions and also as regulator and supervisor of the country’s commercial banks.
In other words, in the same way that a bank has an obligation to maintain the confidentiality of a customer’s accounts, the Central Bank must maintain the confidentiality of the information passed to it by commercial banks.
The Financial Institutions Act (FIA), at section 8(1) under the rubric of confidentiality, states: “No director, officer or employee of the Central Bank or person acting under the direction of the Central Bank shall disclose any information regarding the business or affairs of a licensee or any of its affiliates or information regarding a depositor, customer or other person dealing with a licensee, that is obtained in the course of official duties.”
That section makes it clear that Central Bank governors have a duty of confidentiality not to disclose any information obtained in the course of official duties.
On that basis alone, the President could have summarily terminated the appointment of former governor Jwala Rambarran.
In seeking to defend the decision by the former governor to disclose the names of some of the country’s main foreign exchange users, the Central Bank published a statement on its Web site and publicly on December 8.
That statement, which negates the perception that the Government did not allow Rambarran the right to be heard, quoted section 8(6) of the FIA.
That section allows disclosure of information that would be in the best interests of the financial system of T&T or in the best interests of depositors, other customers, creditors or shareholders of such a licensee.
The Central Bank statement, which was drafted no doubt by the former governor, does NOT outline how the breach of confidentiality would be in the best interests of the financial system of T&T or of depositors, customers, creditors or shareholders of those licensees.
Instead, the statement said the use of T&T’s precious foreign exchange reserves “is an issue of public concern and justifies the dissemination of the identity of the main recipients to whom such reserves are distributed.”
The Central Bank Act, it must be noted, allows disclosure of information that is in the best interests of T&T’s financial system or in the “best interests” of licensees. It does not allow disclosure of issues of “public concern” because if it did then the Central Bank would have been obliged to make public the names of those Clico directors who received monies under the first distribution to non-assenting policyholders.
In addition, the former governor’s statement conveniently ignores section 8(7) of the FIA, which states: “Nothing in this section authorises the Central Bank or any person acting under the direction of the Central Bank to disclose information about a particular depositor or creditor of a licensee, except where such disclosure is required by any written law or ordered by the Court.”
It should be noted that contravention of section 8 of the FIA is an offence for which the offender “is liable on summary conviction to a fine of $600,000 and to imprisonment for two years.”
The Central Bank statement of December 8 also seeks to defend the former governor by quoting the Central Bank Act at section 56 (1), which states: “Except in so far as may be necessary for the due performance of its objects, and subject to section 8 of the FIA, every director, officer and employee of the Bank shall preserve and aid in preserving secrecy with regard to all matters relating to the affairs of the Bank, any financial institution…or of any customers thereof that may come to his knowledge in the course of his duties.”
The Rambarran statement underlines and emboldens the first clause of the quote. But the statement fails to enlighten the public on how the breach of the expected confidentiality is necessary for the “due performance of the Central Bank’s objects” or what are the objects of the Central Bank.
If one takes the Oxford dictionary definition of objects as being a goal or purpose, the question then becomes how is the disclosure of some of T&T’s largest users of foreign exchange necessary for the due performance of the Central Bank’s goals or purposes.
The Central Bank’s “objects,” or its goal and purpose,” is encapsulated in its mission statement, which reads: “The Bank shall have as its purpose the promotion of such monetary, credit and exchange policies as would foster monetary and financial stability and public confidence and be favourable to the economy of Trinidad and Tobago."
In short, the goal and purpose of the Central Bank (its objects) is to promote monetary and financial stability, public confidence and a favourable economy for T&T.
The question is this: How does the naming of some of the largest users of foreign exchange promote the country’s financial stability, public confidence and a favourable outcome for T&T?
The December 8 statement by the Central Bank also ignores the Exchange Control Act, which is strange considering the fact that the disclosure involved the use of foreign exchange.
Section 44 of the Exchange Control Act states: “No person who obtains information by virtue of this Act shall disclose that information otherwise than in the discharge of his functions under this Act or for the purpose of any criminal proceedings; but nothing in this subsection shall apply to information lawfully received by a member of the public in the course of an ordinary transaction between such person and the Bank.”