Friday April 25, 2014 - 5:53 am | Login

Concern over RBV reputation

There are concerns among Vanuatu leaders as well as ni-Vanuatu professionals that included economists, that the issue of conflict of interest may have a negative impact on the reputation of the Reserve Bank of Vanuatu (RBV).

These concerns were raised based on several issues that included the reappointment of Mr Tom Bayer as a Board Member of RBV, proposed changes to the Reserve Bank of Vanuatu Act, the issues behind the recent appointment of Mr Simeon Athy as the new Governor and issues behind a claim reportedly filed in court by Mr Odo Tevi following his termination as governor.

Early this year around March, the then Minister of Finance, Mr Charlot Salwai, terminated Mr Bayer as a Board Member of the Reserve Bank, claiming that Bayer was an agent for the European Bank.

Mr Bayer was initially appointed at that time by former finance minister and currently Prime Minister, Moana Carcasses.
Salwai cited “conflict of interest” in Bayer’s termination based on his association with the European Bank.

At that time the then minister of finance based his decision on Section 8 (10) (b) of the Reserve Bank of Vanuatu Act.

This part of the law that governs the Reserve Bank of Vanuatu states: “A person shall be disqualified from being appointed or for continuing, as member of the Board…if he becomes a director, officer, or employee of a company other than the Reserve Bank, engaged wholly or mainly in banking business.”
Salwai also based his decision on Section 12 (1) of the law governing Vanuatu’s reserve bank that states: “No member of the Board shall act as a delegate of any commercial, financial, agricultural, industrial or other interest or receive or accept directions therefrom in respect of duties to be performed under this Act”.

But later that same month in March this year Mr Bayer, who in 2011 announced his retirement as head of the Pacific International Trust Company Limited (PITCO), vehemently denied being an employee of the European Bank and said such allegations were false.

He insisted at that time that the law is quite clear in the matter and the minister had been misled by his adviser(s) to believe something which is totally false and fabricated.

Bayer also reportedly announced in 2011 that he was also retiring from actively being involved in the company that carried his name, Bayer Group.
The Bayer Group was reported to be involved in “trust companies, banking, insurance, funds management and ship registration”.

When Salwai publicly announced Bayer’s termination in March this year, Mr Benjamin Shing was appointed to the Board of Directors of the Reserve Bank but his appointment reportedly lasted only for a short time as Bayer was later reappointed and remains a member of the board currently.

Meanwhile, concerns behind the reputation of the Reserve Bank of Vanuatu resurfaced when two events happened simultaneously, the appointment of a new Governor and announcement by prime minister Moana Carcasses on the planned changes to the Reserve Bank of Vanuatu Act.

Daily Post was reliably informed that the three candidates recommended by the selection panel for the top Reserve Bank post were, Mr Simeon Athy who was Director General to the Prime Minister’s Office, Mr Andrew Kausiama who is a former governor and Mr Michael Hililan, a Reserve Bank staff and a masters holder who recently completed his PhD studies.

While all three candidates stood out in the criteria provided, Athy led by a few points in the panelists’ scoreboard of the preferred candidate.
During this process an issue of integrity reportedly went before the minister responsible for making recommendations, Minister of Finance, Maki Simelum, regarding Mr Athy’s past involvement with a staff of the Reserve Bank of Vanuatu.

But this was not considered in the process of recommending a new governor for reasons that only the minister may explain and the selection panel’s decision was taken into consideration.

Athy himself an Economics graduate from the University of Papua New Guinea, is a former staff of the Reserve Bank and former Director General of Finance.
On the period of the recommendation, Mr Simelum being the minister that makes recommendations to the prime minister who makes the appointment, had to go on an overseas trip representing the Government of Vanuatu.

In Minister Simelum’s absence, prime minister Carcasses became Acting Finance Minister, which effectively made him to be both the recommender and appointer.

Under the Reserve Bank Act, the minister of finance makes the recommendation to the prime minister who makes the appointment.
Then on Friday, October 11 prime minister Moana Carcasses appointed Mr Athy as the new governor.

PM Carcasses had attached to his speech at that time the points on the changes needed at the Reserve Bank of Vanuatu and the legislation governing it “to refocus it to be more responsive to the market place and to install good governance for its operation”.

These include on the “good governance” side extending the period of a governor to 10 years; removing the governor as chairman of the Board; governor will report to the Board and not run it as well as being a non voting member; powers will be removed from the govermor as the sole person to call a board meeting and any two directors are allowed to call meetings (which means Mr Bayer as a board of director would be able to call meetings); banking expertise will be added to the board; auditors of the bank will be reconsidered; accounting systems reviewed.

The changes will also see the bank will be “precluded” (stopped) from making loans to its staff members; regulation of insurance industry returning to the Financial Service Commission; chairman of the Bankers Association of Vanuatu would be a member of the board of directors of the RBV “to bring commercial banking expertise to the board”; limiting accounts it opens to the government and financial institutions doing business in Vanuatu and to reserve banks overseas; managerial entitlements of staff reviewed as “fuel, phone and entertainment is being abused”; and foreign exchange and financial services like ‘Goodies’ “are today restricted by the local to performed (sic) their business and provide competition in the local market”.

All these developments affecting the bank were going on as former governor, Odo Tevi, has a case pending in court over a claim for his dismissal.

While the case is yet to be determined in court Daily Post has been reliably informed that the claim stands at between Vt80 to Vt100 million.

Mr Tevi was reportedly terminated effective April 27 by the government of Vanuatu under prime minister Moana Carcasses with Mr Simeon Athy as Director General of the prime minister’s office.

Now that the former Director General to the PM, Mr Athy, has been appointed as Governor of the Reserve Bank of Vanuatu, it remains to be seen; if Mr Tevi is successful in his claim; which institution will settle the amount- the Government through ministry of finance or the Reserve Bank.

Former Governor Odo Tevi was terminated by the government and not the Board of the Reserve Bank as an independent institution.

Either way, observers alleged the government of prime minister Carcasses already has a person in place, the newly appointed governor Mr Athy, to cushion any pending damage, should any come out of this court case.