Stuffing political henchmen to Sri Lanka private banks could end
ECONOMYNEXT – The stuffing of political appointees to private banks using voting rights of stocks bought by state-controlled funds will end if end independent wealth management trusts are set up, Deputy Economic Policy Minister Harsha de Silva said.
The United National Party is proposing independent trusts to manage Sri Lanka’s Employees Provident Fund and Employees Trust Fund, where trustees will be appointed by a proposed constitutional council if they come to power after August polls.
The constitutional council, which will appoint a series of independent commissions is also expected to free the entire public service from political interference, hopefully recreating conditions that existed when a civil service commission appointed permanent secretaries to ministries according to analysts.
However the original plan to appoint a majority of non-politicians were thwarted by sections of the opposition.
De Silva told an economic policy forum held by Ceylon Chamber of Commerce, the island’s largest trade chamber said the independent trusts will ensure that politicization will be reduced.
He was responding to a question on recent appointments of directors to private banks by the new administration which created controversy.
The ousted Rajapaksa administration appointed controversial characters including one charged with mis-appropriating state property.
There was also concern that others became virtual chief executives who tried to micro-manage private lenders using shares purchased by the Employment Provident Fund and other state agencies.
In the past the appointment of Treasury officials as well as well-respected senior private sector executives had not been controversial.
De Silva who had objected to in the past to EPF buying shares as it was managed by the Central Bank which was the regulator of the banks said once an independent trust was set up to manage the retirement funds, the question of political appointees would not arise.
At the moment there were severe conflicts of interest in the Central Bank where it was supposed to get high returns for the EPF beneficiaries while also raising debt for the Treasury at the lowest rates.