Legality of appointment of regulators

Monday, 16 August 2021 00:00 - - {{hitsCtrl.values.hits}}

The country’s image as a clean and vibrant financial centre was shattered when a few years ago an expatriate was appointed as the Governor of the Central Bank and soon became a prime suspect in the manipulation of treasury bonds.

A ‘red notice’ alert from Interpol for his arrest still remains unexecuted. Though currently a Governor is in place, another ex-Governor seems to be very much the de facto Governor, going by media statements, thus undermining the role of the Governor and the Monetary Board. Shortly after the appointment of a distinguished economist and an ex-banker to the Monetary Board, they were forced to resign without any reasons given.

With the enactment of the Colombo Port City Commission Act there was much interest in the country becoming another Singapore as a leading financial centre.

The Act provides for the appointment of Commission members and for the appointment of an independent executive Director-General. However, much to the surprise of investors, a member of the Commission has been appointed as the acting Director-General. This is ultra vires and immediately brings into sharp focus the issue of conflict of interest and accountability. The authorities seem to be oblivious to the ultra vires rule, which is a fundamental concept in all reputed jurisdictions.

In another important regulatory body, the Securities and Exchange Commission, the Act provides for the appointment of only private sector persons as members of the Commission but notwithstanding this statutory provision an officer from the Attorney-General’s Department was appointed as the Chairman. Despite the illegality of the appointment, he continues to remain in office, whilst the AG is the official legal adviser to the Commission.

At a time when the country is seemingly in trouble to meet foreign debt obligations with intentional rating agencies forced to ring alarm bells, it is necessary for authorities to strictly comply with the substantive and procedural requirements of the laws of the country. Foreign investors have great expectations that the laws of the country will not be blatantly violated.

A concerned investor