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Commentary>Salary or policy: Lattie's departure poor timingWilberne Persaud - Financial Gleaner Columnist |
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Last Friday evening, I got a call from a friend who began by saying simply: "Bwoy, Lattie gone."
It took me a moment to focus. But before I did, he said: "The governor, man, the governor."
I then realised he was speaking about Bank of Jamaica (BOJ) Governor Derick Latibeaudiere.
Has he died? Then the explana-tion: 'No, no, no, he hadn't died', merely resigned from the bank.
I must say, I was a bit surprised, but not fabulously so. Although there were reports of some tension, the timing - amid critical negotiations with the International Monetary Fund (IMF) - was unbelievable.
Of course, I consulted all the online sources - even the Taiwan Times - as soon as possible, subsequently reading everything on the issue in the Jamaican daily papers. As is usual in these matters, there was little real explanation of the facts. Conflict over fiscal and monetary policy, $51-million mortgage loan, absurd compensation package of J$38 million plus miscellaneous major perks, mutual agreement, the governor's reputed arrogance over the recent resignation of a board member - none of these provides a plausible and coherent explanation of events.
I tried to turn over in my mind what I knew. I remembered informal chats with bank managers who complained that the governor was indeed, in their view, always exhibiting arrogance in conversations with them, both as a group in 'moral-suasion' talks and individual discussions.
He liked lecturing them as if addressing errant children. They baulked at this. How could this man, with absolutely no experi-ence of the cut and thrust of business, merely because of his constitutionally determined administrative role, be taking these kinds of positions?
I went further back seeking an explanation.
Personality, psychology? Who knows? I got to know Derick as a postgraduate student at UWI, Mona, in the 1970s.
Was he a bright student? Yes, he was.
Some argue that Finance Minister Shaw is not up to the task. Could it be that the former governor transposed his alleged arro-gance to his dealings with the minister? Some claim Latibeaudiere must get a failing grade for his management of monetary policy. High interest rates and fixation on inflation have stymied chances of economic growth. It is also claimed that this is the real area of conflict between the finance minister and the former governor.
Latibeaudiere joined the Bank of Jamaica staff early, spending his entire life in the public sector. He learnt what was absolutely necessary - how to prevail in the 'internal politics' of organisations.
Prof Alfred Francis, former board member of the BOJ, one of Jamaica's as yet nationally unrecognised powerhouses of economics, statistics and national accounting issues, resigned some years ago from the BOJ Board over matters of propriety, among other things. I say no more, because I would have to, as a commentator, have Al's permission to speak of our private and personal conversations.
A great negotiator
Francis also researched and published a paper during the tenure of Governor Latibeaudiere, which suggested, rather demonstrated, that the strategy of subordinating all policy to maintenance of a particular exchange rate was effectively drowning Jamaica in debt without significant positive impacts on the economy's growth prospects.
The former governor, it has to be admitted, knows how to watch his back.
He also is a great negotiator - as witnessed by his controversial compensation package. But the exorbitant salary explanation for his resignation - whether mutually agreed or a firing - doesn't hold water unless one views government as entirely irrational.
What are the consequences to follow? Predictably, the timing has led to Standard and Poor's CCC downgrade with negative outlook. Mind you, rating agencies after US subprime melt have lost face. But this offers no respite to Jamaica - borrowing on international capital markets will cost more. Also with two plus years to run on the contract, the cost to taxpayers of this firing will be enormous.
If this is the bone of contention, surely a rational strategy would have been to tackle it from day one.
So, the compensation package seems preposterous. Yet, it obviously would not be out of line with those of chief executive officers in the private sector whose jobs carry the effort and responsibility our central bank governor must live up to.
A bone of contention
This is a bone of contention for the country as a whole, particularly in a period of required austerity.
As early as 1970, published research demonstrated Jamaica had one of the worst distributions of income numbers in the world.
Some may say the study was unnecessary; all one had to do was walk with eyes partially open from Grants Pen to Jacks Hill!
So, at the end of the day, what do we gather from this whole episode? To be honest, I'm not clear myself. Is it that government is unwilling to say there are policy differences because the IMF frowns upon attempts by the political arm of government to control the technical, making monetary policy part of a politically determined agenda?
Is it really the salary question? If that is the case, given the timing, consequences and cost, there obviously should be firings other than Governor Latibeaudiere.
Wilberne Persaud
Financial Gleaner Columnist
wilbe65@yahoo.com