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Governor lived large
Contract 'unacceptable, and repugnant', says PM
BY ALICIA DUNKLEY Observer staff reporter dunkleya@jamaicaobserver.com
Wednesday, November 04, 2009
Prime Minister Bruce Golding yesterday rubbished claims that the Government had dismissed Central Bank Governor Derick Latibeaudiere because of differences in policy, stating instead that he had been let go because of an 'absurd' contractual salary arrangement which morphed from $11.2 million in 2006 to $38 million in 2009.
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| Latibeaudiere... dismissed last Friday |
Addressing Parliament, Golding said the Government last Friday took the decision to terminate Latibeaudiere's services as it found "unacceptable, embarrassing and repugnant the interpretation and application of certain provisions of the governor's contract of employment".
"The contract was approved and signed by the former minister of finance Dr Omar Davies on May 28, 2007 with retroactive effect from August 1, 2006 to run. to July 31, 2011. It was a strange contract, the likes of which has not up to now been found elsewhere," Golding told the House, adding that Latibeaudiere was being paid more than the chairman of the Federal Reserve Board of the United States.
The contract provided for the basic salary of $11.2 million to be increased annually by the percentage increase granted to public sector workers in addition to further increases determined by incremental adjustments. In addition, the dismissed governor was entitled to a fully maintained motor car, reimbursement for entertainment expenses for official purposes, group medical and life insurance coverage, all benefits under the bank's pension scheme and all benefits enjoyed by permanent employees of the bank.
"The governor thus enjoyed the generous terms of a specific contract while retaining all the benefits and privileges of a non-contracted service worker," Golding said.
He also said the contract provision, as it related to housing for the governor, was the most absurd as it set no limit on the amount that can be paid for either rent or maintenance in the event the governor did not occupy the official residence, which was also fully furnished and fully maintained by the bank.
"If it was capped it would be alright, but in the contract the member signed there was no limit, and for all intents and purposes the governor of the bank could go and live in the most expensive house in Jamaica and the bank would have been obliged by contract to value it, pay the rent for it and pay him the maintenance cost," said Golding.
"A governor of the Bank of Jamaica, under that contract, could have gone and purchased a hotel and live in it and the Bank of Jamaica would have been required to maintain the hotel and pay the valued rent," Golding said.
According to the prime minister, blame must be "laid squarely at the feet of the former government and the former minister of finance".
Golding pointed out that it was Dr Omar Davies, the former finance minister, who authorised and signed the contract. "It is a matter of much significance that there is no record in the Cabinet Office to suggest that this or any preceding contract with the former governor was ever approved by or even brought to the attention of the Cabinet," Golding told Parliamentarians.
"I challenge any member of this House to get up on any platform and defend an arrangement where anybody in Jamaica, I don't care how valuable that person is, is to be paid $38 million per year plus free car and benefits of all kind. I want somebody get up and justify that," Golding said further.
The prime minister said a completely new contract of employment with more appropriate terms will be designed for the engagement of the new governor of the bank. He also said the minister of finance will be issuing a policy directive to the BOJ board that an appropriate official residence must be acquired for the governor to eliminate the need for any payment in lieu of housing.
Meanwhile, he said Cabinet on Monday gave instructions that all contracts of employment which involve a compensation package of more than $10 million at the Central Bank, including that of all the deputy governors, must be immediately reviewed.
"We need to determine whether there are other contracts which are improperly designed and structured so we can seek to have those brought in line with what is reasonable and acceptable to the people of Jamaica and this country," Golding said.
"To the extent that the governor of the bank and the deputies are the only employees of the bank appointed by the minister, I am prepared to accept that their contracts are equally absurd. It is not normal for somebody in a service to be given a special kind of contract with special benefits and still enjoy the benefits of the normal service workers," he continued.
Golding also said it was time for the Government to re-examine the governance structure of the bank.
"We are committed to the independence of the Central Bank and the clear separation of responsibility for monetary policy from fiscal policy, but it is also important that the governor of the bank be held accountable and that the bank itself be held accountable," he told Parliamentarians.
He said the report of the 1994 Daisy Coke Committee which was presented to the House remained relevant and would serve to inform the re-examination which will be pursued as a matter of priority.
"The minister of finance will engage the House in determining what changes are to be instituted," he said.
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