S.Modeliar

R Bheenick vs Directors of the Board of the Central bank

Personal interests and likings prevailed over the interests of the Central Bank 

— S. MODELIAR 

The long ongoing tug of war on who wields power at the Central Bank has seen a first light of day in the judgment of the Supreme Court issued on 24 March. The decision is a clear rejection of the views of the Directors of the Board of the Central bank who for months have been highly critical of the decisions of the Governor, Mr R. Bheenick.

The Governor was outvoted each time he brought any proposal for decision to the Board. It is no secret that, right since he was appointed, Mr Bheenick incurred the wrath of the Minister of Finance, Rama Sithanen who had the temerity to state under the cover of parliamentary immunity that the Governor needs to change his bedside manners. He even staged an abortive resignation masquerade from the Cabinet. Matters came to a head when after questions were put by Mr Suren Dayal, a backbencher of the ruling Labour Party, the Minister of Finance agreed to the setting up of a Fact Finding Committee on the Governor. No doubt the Minister must have been well briefed by the Board members whom he appoints. Such is or was the power of the Minister that the Prime Minister gave in and the Fact Finding Committee became a reality.

A Fact Finding Committee does not have the same powers as a Commission of Inquiry. It cannot summon or compel witnesses to give evidence. That restriction on the powers of the Fact Finding Committee does not preclude people who make allegations from volunteering to give evidence before such a committee. Mr Bheenick stated:

« Mon seul regret est que la personne qui a commencé cette action, l’honorable Suren Dayal… n’ait pas déposé devant ce comité d’enquête. Je croyais qu’il irait jusqu’au bout de ses actions en demandant à déposer devant ce FFC. D’ailleurs, il aurait dû être le premier témoin de ce FFC à étayer ses dires. Comme tout bon parlementaire et bon citoyen, il aurait dû faire ce que les autres font dans d’autres pays en demandant la levée de son immunité parlementaire. Car c’est plus correct de se livrer à une bataille à armes égales au lieu de se livrer à des attaques contre des individus au sein du Parlement où l’on n’a pas les moyens de répondre. »

How right he is. In fact we have seen many instances of how parliamentary immunity is used to pour calumny on people who cannot have the floor of Parliament to answer back. Of course Mr Dayal never testified before the Fact Finding Committee to back up his statements in Parliament. How sad! Hopefully Mr Dayal will not become the victim of his own tactics one day.

In its judgment on the demarcation between the powers of the Board of the Central Bank and the Governor, the Supreme Court made this observation: “It is unfortunate that matters have been allowed to reach the stage they have. The whole scheme of the legislation is for each party to perform his functions for the smooth running of the Bank in accordance with the provisions of the Act. Accordingly, it is incumbent on all parties to discharge their functions in a manner which does not impact adversely on the Bank.”

This judgment is a castigating humiliation for the Board members not only on the issue who has the right to appoint a legal adviser for the Bank but also on the misconception of the real powers that the Board members have and have the right to exercise and how to exercise them. If the Board members have any decency, they should resign as Mr Bheenick has indirectly suggested. In addition all those who have been hitting at Mr Bheenick below the belt and trying to stab him to death should now make amends if they too have some measure of decency left.

The Supreme Court made a clear distinction between the powers of Board in formulating the general policy of the Central Bank. The Court refers to section 12.1 of the Bank of Mauritius Act on the power of the Board of Directors. The section reads: “The general policy of the affairs and business of the Bank, other than the formulation and determination of monetary policy, shall, subject to this Act, be entrusted to a Board of Directors.”

The Court also refers to section 13.3 of the Bank of Mauritius Act on the powers of the Governor. That section reads: “The Governor shall be the principal representative of the Bank and shall be responsible for the execution of the policy of the Board and the general supervision of the Bank.”

After an analysis of the true purport of these provisions the Supreme Court concludes that the “Board’s statutory remit is to formulate general policy and not to be involved in the day-to-day administration of the Bank. And even with regard to policy, the formulation of monetary policy is removed from the purview of the Board and entrusted to the Monetary Policy Committee under section 55 of the Act.”

The Board will have now to adjust their bellicose attitude towards the Governor. But it would be interesting to see what the attitude of the Board will be if another Governor is appointed provided he is to the liking of the present Minister of Finance. Our advice to the Prime Minister will be not to recommend any new Governor for appointment to the President until after the next general elections because we do not know who the Minister of Finance will be under the next government or who will form the next government for that matter.

The Supreme Court also clearly sets out the powers of the Governor: “The management and administration of the Bank are left in the hands of the Governor and the two Deputy Governors. The Governor is the principal representative of the Bank. It is he who in terms of section 27 of the [Bank of Mauritius Act] is statutorily empowered to execute instruments, contracts and other documents on behalf of the Bank. It is he who is responsible for the execution of the general policy of the affairs and business of the Bank as decided by the Board. Further, it is he who is responsible for the general supervision of the Bank.”

The case went to the Supreme Court as a result of a disagreement on the choice of legal representatives that should appear for the Central Bank in a case. The application was initiated by the counsel appointed by the Board of Directors whereas Mr Bheenick had made another choice. That was yet another example of the defiance of the Board in relation to the powers and authority of the Governor.

The Supreme Court held that a distinction needs to be made between the Bank and the Board. “The word “Bank” in section 25 cannot in our view be assimilated with the Board.” The Supreme Court also did not mince its words when it comes to the power of the Governor to engage a legal adviser or representative. The Court stated that “the decision to “engage” a consultant rests with the Bank, that is, the Governor who by virtue of section 13(3) is the principal representative of the Bank and responsible for the administration and general supervision of the Bank.”

The Fact Finding Committee is bound by the pronouncements of the Supreme Court as to the respective powers of the Governor and the Board of Directors. Its findings will have to take that judgment into consideration. Whether the allegations of abuse are sustainable is another matter.

At the end the main issue in that never ending tug of war was simply that the Board appointed by the Minister of Finance wanted to send a clear signal to the Governor that he was not the choice of the Minister. Let us not kid ourselves. Personal interests and likings prevailed over the interests of the Central Bank and there is one guilty party and that is that famous Board now best known for a public street press conference.

S. MODELIAR