Can a foreign national lawfully perform CB Governor’s duties?
Posted on May 28th, 2015

by Professor G.L. Peiris  Courtesy Island

The Central Bank is an institution which controls the commanding heights of Sri Lanka’s economy.

The Governor of the Central Bank is the Chairman of the Monetary Board and Chief Executive Officer of the Central Bank. He is, ex-officio, the principal representative of the Bank and the Monetary Board “and has the authority to represent the Central Bank and the Monetary Board in all its relations with other persons, including the Government and any body of persons, corporate or unincorporate, whether public or private, domestic, foreign or international- and to represent the Central Bank and the Board in any legal proceedings” (section 20 of the Monetary Law). The Governor has crucial functions to perform, inter alia, with regard to deciding and changing the par value of the rupee, the determination of monetary policy, the preservation of monetary stability, the management of the country’s foreign reserves and determination of the rates at which foreign exchange is bought and sold by the Central Bank.

Nevertheless, almost defying belief, the current Governor of the Central Bank is a person who has taken the following oath/affirmation prescribed by the Second Schedule to the Constitution of Singapore: “I absolutely and entirely renounce all loyalty to any foreign sovereign or State or country, and I do solemnly swear (or affirm) that I will be faithful and bear true allegiance to the Republic of Singapore”.

It is my strong contention that the appointment of a person who has taken an oath or affirmation to a foreign State in these terms, to the Office of Governor of the Central Bank of Sri Lanka, is not just morally or ethically wrong and indeed preposterous, but that the appointment is illegal because he cannot lawfully perform the functions of his Office.

An examination of the constitutional and statutory provisions in Sri Lanka, having a bearing on this issue, supports this proposition amply.

Section 12(1) of Sri Lanka’s Monetary Law declares that “The Governor of the Central Bank shall be appointed by the President on the recommendation of the Minister in charge of the subject of Finance”.

There is further provision that the Governor is entitled to a salary fixed by the President. This is the effect of provision contained in Section 12(3) of the Monetary Law to the effect that “The Governor shall receive such salary as may be fixed by the President on the recommendation of the Minister in charge of the subject of Finance.”

These two provisions, read together, have a vital bearing on the definition of the term “public officer” set out in the Constitution of Sri Lanka.

Article 170 of the Constitution states that “public officer” means a person who holds any paid office under the Republic other than a judicial officer, but does not include the President, the Prime Minister, the Speaker, a Minister, a Deputy Minister, a Member of Parliament, a Member of the Constitutional Council, a member of any of twelve Commissions spelt out in the Article, the Secretary-General of Parliament, a member of his staff, or the Auditor-General.

Since the Governor does not fall within the ambit of any of the exceptions stipulated in this Article, it is abundantly clear that the Governor of the Central Bank is a public officer within the meaning of the Constitution.

Article 61D of the Constitution provides that “A person appointed to any office referred to in this Chapter shall not enter upon the duties of his office until he takes and subscribes the oath or makes and subscribes the affirmation set out in the Fourth Schedule to the Constitution.”

The Chapter in which Article 61D appears, has its setting in Chapter IX dealing with the public service. Consequently, all public officers (that is to say, officers of the Republic, other than those excluded by the definition contained in Article 170) are expressly prohibited from assuming office unless they have taken the oath or made the affirmation set out in the Fourth Schedule.

The gist of this oath or affirmation consists of the assertion by the affirmant/declarant who has an imperative duty to declare that he will be faithful to the Republic of Sri Lanka and that he will uphold and defend the Constitution of the Republic.

It is obvious that a citizen of any other country cannot be faithful to the Republic of Sri Lanka if there is a conflict between the interests of the country to which he has sworn or affirmed allegiance, and the interests of the Republic of Sri Lanka, especially when he has renounced all loyalty to Sri Lanka.

The resulting position, then, is crystal clear. Even if Mr. Mahendran has taken the oath prescribed in the Fourth Schedule, such an oath will have no semblance of validity because he is a citizen of another country and, indeed, for good measure, has “absolutely and entirely renounced all loyalty” to Sri Lanka. It would, therefore, be patently absurd for Mr. Mahendran, to purport to swear his allegiance to the Republic of Sri Lanka. He cannot renounce and affirm at the same time. On the other hand, if he has not taken the oath prescribed in the Fourth Schedule, a fortiori, he is precluded from discharging the responsibilities of the Office of Governor for the reason that he has failed to fulfil a threshold requirement.

In either case, then, Mr. Mahendran cannot validly and lawfully embark upon the duties attaching to the Office of Governor of the Central Bank because of his failure to comply with a mandatory condition precedent.

There is another, quite independent, reason why Mr. Mahendran cannot perform his duties with any degree of acceptance in the eyes of the law.

Even if its is contended (implausibly, and without any justification) that the Governor of the Central Bank is not a public officer within the meaning of the Constitution, he is nevertheless obliged to take the oath prescribed in the Fourth Schedule, in his capacity as a member of the Monetary Board.

Article 165 (1) of the Constitution requires every person in the service of every public corporation to make and subscribe the oath referred to in the Fourth Schedule.

This Article is reproduced in extenso because of its importance: “Every public officer, judicial officer and every other person as is required by the Constitution to take an oath or make an affirmation on entering upon the duties of his office, every holder of an office required under the existing law to take an official oath or affirmation and every person in the service of every local authority and of every public corporation shall take and subscribe the oath or make and subscribe the affirmation set out in the Fourth Schedule. Any such public officer, judicial officer, person or holder of an office failing to take and subscribe such oath or make and subscribe such affirmation after the commencement of the Constitution on or before such date as may be prescribed by the Prime Minister by Order published in the Gazette shall cease to be in service or hold office.”

The term “public corporation” receives explicit definition in the Constitution. Article 170 declares that “public corporation” means any corporation, board or other body which was or is established by or under any written law other than the Companies Ordinance, with funds or capital wholly or partly provided by the Government by way of grant, loan or otherwise.

The Governor of the Central Bank is in the service of the Monetary Board of the Central Bank, which is a body corporate with perpetual succession and a common seal, which can sue and be sued in its corporate name. This is the plain effect of Section 9(1) of the Monetary Law.

Section 6 of the Monetary Law declares conclusively that the Central Bank was established with funds appropriated to the Bank from surplus assets of the Board of Commissioners of Currency. It is, therefore, beyond any shadow of doubt that the Central Bank was established with funds of the Government of Sri Lanka. In these circumstances, the Monetary Board is manifestly a public corporation within the meaning of the Constitution.

Accordingly, in terms of Article 165, the Governor of the Central Bank who is in the service of the Monetary Board, is required to take and subscribe the oath set out in the Fourth Schedule.

Moreover, Article 157A(7) of the Constitution requires every person who has to take the oath prescribed in the Fourth Schedule to also take the oath prescribed in the Seventh Schedule. Mr. Mahendran, therefore, is compulsorily required to take both oaths.

It is, therefore, irrefutable that, both as a public officer and as a member of the Monetary Board, Mr. Mahendran is required to take the oath under the Fourth Schedule before he can lawfully embark on the duties of the Office of Governor of the Central Bank. However, since he is a citizen of Singapore, he cannot validly take this oath or make the affirmation in the terms prescribed by Sri Lanka’s laws, inasmuch as, under the Second Schedule to the Constitution of Singapore, he has “absolutely and entirely renounced all loyalty” to Sri Lanka and he has, therefore, voluntarily and deliberately placed himself in a position in which he is precluded from upholding the Constitution of Sri Lanka.

10 Responses to “Can a foreign national lawfully perform CB Governor’s duties?”

  1. Lorenzo Says:

    The EXECUTIVE, LEGISLATIVE, JUDICIAL, MEDIA branches of govt. are ALL corrupt and TRAITORS. Everything has to be OVERHAULED. Elections CANNOT do it.

    Who can we TRUST to do this overhaul?

    The RANAVIRUs who sacrificed their life and limb to save SL.

    When I brought this up about a year ago MOST people were against it. Now one by one they see the REALITY.

    Who the hell says DEMOCRACY can solve all MAJOR problems of SL? This is a system introduced by the COLONIAL BRITS to us. We had BETTER governance by kings before that. Didn’t we?

    We need democracy in the long run but in the short run to OVERHAUL the system, we need a MILITARY TAKEOVER.

    Now who is with me?

  2. douglas Says:

    Who is the Governor of the UK Central Bank? Is he a Canadian? As regards this appointment of Mr. Mahendran to the Central Bank of Sri Lanka is “Bad, in that, the “Appointing Authorities” should have known his inability to hold a “Dual Citizenship” while being a citizen of Singapore; a back ground check would have revealed that he is directly related to a “Prime Dealer” in the Bond Market. That would have been sufficient grounds for not appointing him to this position. Leave aside legal arguments, that “Common Sense” would have been sufficient to refrain from making this type of appointments. This is the “PROBLEM” with the people in authority. They always “disregard” what the “Public” expect of them and with an “ATTITUDE” of “Who Cares”; go on to discharge their duties unconcerned of the “Consequences. Hope the PUBLIC – VOTERS will take stock of the situation in the coming days and months when THEY are to decide whom to be sent to represent them at the Legislature.

  3. Nimal Says:

    UK being a true Buddhist country, perhaps also a Christian country seem to practice what they preach where their Governor of their CB(BoE) is a Canadian. They gave the job on merit. So sudas must teach likes of our politicians how to be tolerant and accommodation as little of the noble teachings are practiced in the island.

  4. Independent Says:

    The hidden agenda of the Central Bank Governor

    Details Created on Friday, 29 May 2015 08:26 Category: General

    Arjun 29The 30-year Bond that rocked the hundred-day government is still far from over. COPE is set to unearth the real truth in a few weeks. The culprits behind the issue are still at large, no action has been taken so far.

    The controversial governor shamelessly continues despite the public outcry, while the Opposition Leader openly accuses the UNP Chairman of having a hand in the entire deal. The country will continue to lose money for the next 30 years. Any kindergarten child can calculate the loss the country will carry for the next 30 years. The true loss to Sri Lanka which is the payment of almost 3% more for the next 30 years, amounting to Billions of Rupees.

    It is baffling how the government appointed committee or our respected judges did not comprehend this. The Central Bank so far has been walking from one crisis to another. In the last few months the Central Bank has held the interest rates down and continued to defend the Rupee depleting the country’s foreign exchange reserves.

    The Central Bank has embarked on an “impossible trinity” of open-economy macroeconomics – that independent monetary policy, low interests, and a fixed exchange rate can all operate simultaneously. It would be a disaster to first take a position that the currency would be managed, and then to witness it fall, would be a grave loss of credibility for the government.

    It is alleged now the Central Bank is deliberately keeping the interest rates down, while inflation is creeping up and the foreign reserves are getting depleted to defend the Rupee to help the Bond perpetrators who are currently bleeding by holding the bonds, to get them out of their misery. If the interest rates move up the perpetrators would find it hard to unload the bonds, other than to a state fund like the EPF, which the Central Bank is managing. Despite many assurances given by the Government that all EPF losses would be investigated, no action has been forthcoming, because the Governor’s son in-law is involved in many of the controversial transactions.

    It is obvious to many people that sound monetary policy would only return to supporting growth once “stability” had returned to those bond perpetrators and the Governor’s son in

    The President should intervene to stop this alleged action of the Central Bank to deplete our foreign exchange reserves and borrow more Dollars.

    The 30-year Bond has already buried us alive for thirty years, but allowing monetary policy to be decided solely by a governor already tainted with corruption, would be a disaster for Sri Lanka. The Governor must be relived of his duties until Parliament exonerates him from any wrong doings. Sri Lanka that Mahinda Rajapaksa, Sarath Fonseka and our gallant soldiers resurrected, cannot be allowed to be taken for a ride like this by a non Sri Lankan citizen.

    Good Governance Activist

  5. Independent Says:

    This Hora Mahendra has accepted that his Hora Son in Law’s family is holding shares of the company who gave the Hora loan to Sri Lanka.

    There will be a lot of owners to Sri Lanka in 10 years time. Already so many owners.

  6. Christie Says:

    Namaste: G L you know as the former Foreign Minister that you had to tow the line of the Indian Empire. Now we are directly administered by the Indian Empire. As long as the person falls in to “Bharathi Diwas Prawasi” he or she is fit to be an Administrator in the Indian Empire. So this Mahendran is fit any job in the Indian Empire. Jai Hind

  7. jay-ran Says:

    This is the outcome of the MY3 HORAGUDDA’S,BATALANDA MINEEMARUWA RANIL THE JADA BALLA’S & MODI WANACHARA KRISTHIYANEE GENIGE SAHA PAGAAWA GAHALA SHIPS GATHTHU,KIDNAPPING AN UNDERAGE GIRL FOR SON’S PLEASURE JADA BALLA RAJITHA KIYANAA KUPADIYA’S JADA PALANAYA’S KIRIRU WEDA.
    THESE PONNA DOG’S,THEORY-PROBITS DUAL CITIZENS CONTESTING PARLIAMENTARY ELECTIONS!!!
    BUT!,
    DUAL CITIZEN HOLDER ARJUN THE BIGGEST ROBBER APPOINTED AS GOVENER OF CENTRALBANK???
    Thisis good lesson for SIRISENA GONG HARAKA’S BOOT LICKERS IN SLFB!!!
    YOU BLOODY FOOLSD WILL LEARN A “GOOD LESSON” IN THE NEAR FUTURE!!!

  8. Susantha Wijesinghe Says:

    LORENZO !!YOU KNOW THAT I WAS WITH YOU THEN, AND NOW.

    DOES NOT THE CONSTITUTION REFLECT THAT NO FOREIGNER CAN HOLD EXECUTIVE AND LEGISLATIVE JOBS IN SRI LANKA. THIS RANIL AND MY3PALA ARE BECOMING THE TWO JOKERS IN SRILANKA. BOTH ARE LIKE HEADLESS CHICKEN NOT KNOWING WHAT TO DO. PISSU HATANA DEKAK. PAKAYA WILL RUIN THE COUNTRY. THIS WORD SHOULD GET INTO THE DICTIONARY. I HOPE THEY WILL USE IT VERY OFTEN IN PARLIAMENT TO ADDRESS EACH OTHER.

  9. ranjit Says:

    I am 100% with you Lorenzo.To discipline our people first, we must have a Military Govt..The current political situation is very ugly and shame.It’s not democracy but Gestapo style police Govt. with arrests,Intimidation and Thuggery with two laws instead of one law to all citizens. The current jokers who are ruling the country should be put in jail and starved to death for their crimes against humanity and selling the country to foreigners.

  10. Kumari Says:

    From the very beginning this bunch of no gooders have shown that, they captured power not to prosper the country, but to destroy it.

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