In today’s world of alternative facts, we have to be alert to the special dangers posed by ‘false equivalence.’ False equivalence arises when two arguments are presented as being of equal relevance but, in fact, one is solidly fact-based and the other is mere speculation or invention.
As recent events have shown, those dangers are especially present in matters of public importance.
Tony Rakhal-Fraser’s Sunday Guardian column of 25 June, 2017, headlined “Appointing ‘Fit and Proper’ People,” made me wince, despite his usual high standard of writing. My reaction was provoked by what appeared to be an attempt by the Central Bank Governor to promote a new discussion on the Fit and Proper Rules.
Of course, nothing is wrong with public officials making new proposals to deal with serious issues; no reasonable person can find fault with that. My issue is that the Governor, from the statements reported in Rakhal-Fraser’s article, outlined the Central Bank’s intentions to create fit and proper rules to govern our country’s financial institutions. The Governor also reportedly said he did not know whether the extent of interlocking directorates in our country had increased or decreased.
Well, I tell you!
The key statement comes at the start of the second paragraph.
“…This is a responsibility that, among others, the bank (the Central Bank) plans to exercise by instituting international systems and criteria that will ensure that the financial institutions place on their boards people of known training, experience in financial and related matters, along with board members having solid integrity and independence of thought and action…” (emphases are mine)
My two most recent columns examined this issue and identified other prominent persons—beyond Lawrence Duprey and Andre Monteil—who also ought to be subject to adverse findings under those rules.
The entire thrust of the article was the exact opposite of what I believe to be the true position.
Directly contrary to the central assertion in the article, the criteria which appear in the Central Bank’s ‘Fit and Proper Guideline,’ published in May 2005, are those applicable to the CL Financial fiasco. The entire article spoke to the need for rules to ensure conformity with prudent international standards of corporate governance for financial institutions. But that narrative is, to say the least, misdirected since the real story is that these rules have been in place in T&T since May 2005 but have never been implemented.
The big question is why not?
Our Central Bank has refused and/or failed to enforce its own ‘fit and proper guideline’ in relation to the largest and most serious financial collapse to hit our region. Thousands of savers’ and pensioners’ savings have been wiped out across our region and yet our Regulators have not followed their own rules. In my view, the irresponsibility of the Regulators is what we should really be sternly querying.
On 31 January, 2017, I wrote to Central Bank Governor Alvin Hilaire an open letter, co-signed by David Walker and CEO of Disclosure Today Rishi Maharaj. The very first point we raised in our joint letter to Governor Hilaire was the failure and/or refusal of the Central Bank to enforce its own fit and proper rules.
On 21 April, 2017, the Central Bank replied to our letter and flatly refused to answer any of our pertinent and focused questions on the grounds of that institution’s statutory duty of confidentiality.
So you can imagine my surprise to read that the Governor had answered questions on these matters.
Well, I tell you!
Much of my work on the scandalous CLF bailout has been focused on this blatant failure and/or refusal by the Central Bank to follow its own rules. After all, if no one is disqualified from leading our financial institutions after this immense CLF debacle, then what have we learned? As we used to say back in the day, If the priest could play…
The moral authority of the Central Bank has surely been reduced by its inaction on the CLF matter.
Of course, Rakhal-Fraser’s journalism is well-respected so the likely effect of the 25 June column would be to defuse/diffuse much of the work I have been doing on this critical area. Lest this article be perceived as an attempt to portray my work as somehow exempt from criticism, let me reiterate that I have no issue with strong criticism of my positions.
I wish to add a brief note on the issue of interlocking directorates.
The interlocking directorate, very much alive and well, is an integral part of how big business is really conducted so Dr Hilaire’s statement that he does not know about its extent is startling.
One can make a critical observation about the Central Bank’s approach to interlocking directorships. Recall that such interlocking directorships were identified by the very Central Bank (in the person of then Governor Ewart Williams) as one of the principal reasons for the CLICO/CLF failure—the rubric being “Excessive related-party transactions.”
Under the circumstances, the Bank should be required to explain why, upon taking control of CLICO, it continued and expanded that policy.
Despite the Central Bank’s stated concerns, we have seen directors sitting simultaneously on CLF, Angostura, CLICO and MHTL boards. It was not through a lack of power or through weakness of the legal or regulatory regime. In control, the Bank chose to perpetuate interlocking directorships. They can hardly complain. But we need to consider removing the Central Bank from its role as the driver of any exercise to improve regulation of the financial services sector; they cannot be expected to properly analyse or criticise their failings.
Indeed, it seems to me that we would be better served if the Central Bank were totally removed from non-Central Bank roles, except where satisfactory arguments can be made in their favour.
But that is an issue for a later time.