ISLAMABAD: Prime
Minister Raja Pervaiz Ashraf has appointed a first cousin of Finance Minister
Saleem Mandviwalla to the Central Board of Directors of the State Bank of
Pakistan (SBP) apparently in violation of the law.
Mehmood
Mandviwalla is a practicing lawyer, a profession that disqualifies him from
holding the position. He is also a partner at Mandviwalla and Zafar – advocates
and legal consultants.
The State
Bank of Pakistan Act 1956 states: “The Directors shall be
eminent professionals from the fields of economics, finance, banking and
accountancy, to be appointed by the federal government. Those appointed to the
board shall have no conflict of interest with the business of the bank.”
The
clause, which was inserted in the act in March last year, was aimed at
depoliticising the board and ensuring that relevant people sit on the board,
which is entrusted with vast powers in the SBP policymaking.
Mehmood
was among the five directors who were appointed by Premier Ashraf on February
27 on the advice of the finance minister.
When
contacted, Finance Minister Saleem Mandviwalla defended the move and insisted
that the law provides that a lawyer can be appointed as director of the SBP.
When
the relevant clause of the law was quoted, he said, “The SBP governor (Yaseen
Anwar) wanted a lawyer on the board.” He added that the governor wanted someone
with working knowledge of the SBP to be appointed as a director.
The SBP Act empowers the board to determine and enforce the limit of credit to be extended by the bank to the federal and provincial governments – powers that bring it head-to-head with the existing policies of the federal government.
The SBP Act empowers the board to determine and enforce the limit of credit to be extended by the bank to the federal and provincial governments – powers that bring it head-to-head with the existing policies of the federal government.
According
to the law, the SBP board provides general supervision and direction in
monetary affairs for the smooth functioning of the economy. It formulates and
monitors monetary and credit policy and determines the expansion of liquidity
while taking into account the federal government’s targets for growth and
inflation.
The
Express Tribune also contacted the Prime Minister Secretariat and the
SBP for their comments. Their spokespersons advised reporters to speak to the
finance ministry that moved the summary for appointments.
Asad
Umar, former president of Engro Corporation, who has also served on the SBP
Board, said the law should be followed in letter and spirit. He said that since
Mehmood was a close relative of the finance minister, the government should not
have appointed him as a director. But Umar was of the view that Mehmood could help
in banking supervision as he can add value to the board’s work.
Umar
went on to say that after the new appointments, there was structural weakness
in the board since there was no economist.
The
other four newly appointed members are Iskandar Khan, former president of
Pakistan Sugar Mills Association, Iqbal Hasan, a former banker, Nawaz Tiwana,
former managing director of the Pakistan International Airlines and Shahid
Ahmad Khan.
The
question has also been raised over appointment of Iskandar Khan whose appointment
is also in violation of law. While talking to The Express Tribune, Khan said he
had done accountancy courses but did not hold a Master’s in Business
Administration.
Khan’s
appointment is seen as a move to protect interests of the sugar lobby. The sugar
industry has exposure to the banking sector and the central bank also regulates
loans extended to the industry.
[The
Express Tribune, March 2, 2013]
No comments:
Post a Comment