The Central Bank of Seychelles’ (CBS) governor Pierre Laporte has outlined some of the measures taken to ensure the institution functions better.

During the bank’s annual anniversary lecture last Friday, which was attended by President James Michel, former President James Mancham, Vice-President Danny Faure, ministers and members of the National Assembly among others, he said the bank faced “serious structural challenges”.

“It has, over the past 24 months, undergone major structural reforms internally to improve our stature, including our governance structure,” said Mr Laporte.

He said the first major step toward a modern governance structure for the bank was a new CBS law in 2004 to bring more independence and transparency by eliminating the dual role of the governor, who was also principal secretary for finance.

“Despite this positive step, the deep-rooted nature of the economic liberalisation that the Seychelles economy entered into in late 2008, coupled with the challenges of the global financial crisis at exactly the same time, required further adjustments to the central bank law if the CBS was to fulfil its monetary policy, supervisory and regulatory mandates in an effective way,” he added.

Mr Laporte said in 2009 more changes were made to the CBS Act, paving the way for a more modern governance structure.
“The new legal framework provided for a streamlining of the CBS’s objectives, such that price stability was given prominence over others,” he said.

“Independence of the bank was strengthened by disqualifying members of government and of political parties as CBS board members; the provisions relating to government access to CBS credit were tightened; and transparency and public awareness were increased through a new clause that the governor could be asked to appear before parliament to answer queries regarding the affairs of the bank.”

Mr Laporte said the changes have helped the bank’s management and board to take other important measures over the past two years that have significantly strengthened governance.

“To ensure the highest level of transparency, several internal guidelines were drawn up and approved by the board to guide management and staff of the bank,” he said.

“These range from guidelines on monetary policy to those on internal audit and reserve management. To ensure adequate oversight, several committees, including a number of board sub-committees, were also established to see that the guidelines are adhered to and that risks are minimised.

“For example, the internal audit functions were restored with the appointment of a new internal auditor to fill the post, which had been vacant for a while. An audit committee, which is a sub-committee of the board, was then established to operate independently of the management with no staff being a member of this committee.

“The audit functions of the CBS are governed by an audit charter, which describes the functions, objectives and responsibilities of the audit committee.”

Mr Laporte said an audit plan is prepared annually, setting the priorities of the internal audit activities in line with the goals of the CBS.

He said to avoid conflicts of interest, the internal audit division reports to the audit committee on all audit issues and reports to the governor only on administrative issues.

“To ensure the highest level of transparency and eliminate conflict of interest, earlier this year the internal auditor was removed from all committees of the bank, including the audit and operational risk committee. Instead the auditor only has observer status,” he said.

In May an independent operational risk assessment of the CBS was done on the bank’s own initiative.

“Based on the recommendations of this audit, a set of operational risk guidelines is being drawn up. A risk implementation committee, which consists of management staff, is responsible for drafting policies on risk management,” said Mr Laporte.

“However, to ensure that audit and risk oversight of the CBS are carried out independently of the bank’s executive arm, an operational risk committee, which consists solely of non-executive board members, was also established. This has since been merged with the audit committee.”

The governor said there is always room for improvement, and the bank will review several other policies, for example those governing tenders and procurement, and conflicts of interest, which he said are critical in ensuring the bank continues to work with the highest degree of integrity and transparency.

 

Forrás: http://www.nation.sc/