The former governor of Central Bank of Sri Lanka (CB), Ajith Nivard Cabraal on Friday slammed the statement made by the incumbent Governor, Arjuna Mahendran on the absence of a Legal and Compliance Department at the Central Bank as false, misleading and even mischievous. Responding to the claim made by Mahendran in a televised interview that it was ‘shocking’ for him to observe that this Unit had not been established during the past few years given the complexity of the transactions today, Cabraal noted that Central Bank (CB), during the period he served as the Governor, “had an excellent legal team and they had defended the CB and provided very good advice to the CB management and the Monetary Board” in sharp contrast to the insinuation by Mahendran that the CB lacked proper legal expertise and guidance during the past decade.
“Further, the CB had retained the services of top quality legal persons from the Attorney General’s Department for certain specialized areas on a continuing basis, and sometimes on a “need” basis,” Cabraal said.
Elaborating further he noted that as per the then-existing structure, Attorneys at Law in the CB cadre had been assigned to the key departments on a full time basis so that they could provide legal advice and services to those departments without any delays. In addition, a smaller team of Attorneys at Law were based at the Secretariat of the CB to provide legal services and guidance to the departments other than those which had Attorneys directly attached, the CB management and the Monetary Board.
“The administrative structures were established by the Monetary Board after considering the studied views and advice of qualified, experienced and knowledgeable officials of the CB. Hence it is false, misleading and even mischievous to claim that the CB lacked proper legal expertise and guidance during the past decade. The CB also has a comprehensive Compliance Mechanism which was instituted within its systems and procedures and headed by no less a person than a Deputy Governor. Therefore, there was a well established system to ensure compliance with all laws, rules and regulations, as well,” former Governor Cabraal pointed out.
Meanwhile, the CB on Thursday announced the establishment of the new Legal and Compliance Department where the department is expected to deal with a wide array of issues that will help the bank to have a ‘compliance culture’.
“The establishment of the Legal and Compliance Department would play a complementary role in the co-ordination with government departments and other regulatory authorities in relation to the understanding of legal and implementation issues pertaining to financial system stability, financial market operations and payment systems and for the enforcement of laws applicable to the financial system of the country,” the Central Bank said in a press release.