'We'll weed out the monkeys guarding bananas'
Mbongeni Mguni | Friday March 1, 2019 18:00
In unusually frank remarks that come as the country reels from its recent placement on a European Union blacklist for money laundering, Pelaelo said part of the problem was that “bad apples” were moving from one place to the other within the financial sector, without check.
Several high profile scandals have rocked the local financial sector, involving hundreds of millions of Pula in pensioners and taxpayers assets. Some of the cases are presently in the highest courts and involve prominent people including asset managers, politicians and even a Judge.
Pelaelo said the financial sector needed to be cleaned up.
“We need to get rid of personal greed. “We need to get these people out of the system. Trading in financial services is a huge fiduciary responsibility.
“You are not using your own money; you are using public funds.
“Fund managers have no balance sheet. Banks have balance sheets, but they are funded by deposits that are public money.
“If insiders abuse and chow away this money then what?
“How do we allow mice to look after seeds and monkeys to look after bananas,” Pelaelo said in response to BusinessWeek questions on Tuesday.
The governor said the newly formed Financial Stability Council would aim at enhancing the sharing of information among regulators, in order to tackle the free movement of “bad apples”.
The Council is made up of the central bank, the Non-Bank Financial Institutions Regulatory Authority (NBFIRA), the Financial Intelligence Agency (FIA) and the Finance Ministry. The four entities signed an MoU this week.
“We have to find a way through this Council to see how best to share information such that someone who has been fired by a bank for misconduct or some misdemeanour is not going to be circulated around the financial services sector,” Pelaelo said.
On Monday, the governor told captains of industry and fiscal authorities that the financial services sector was experiencing rising personal greed and governance failures which had the potential of undermining public confidence in financial markets. On Tuesday, he told BusinessWeek that the trend had the potential of inhibiting the participation of citizens in the financial sector and limiting the sector’s growth as well.
“Our Financial Sector Development Strategy states that we need to grow this financial sector because, relative to GDP, it’s still quite small.
“We have to enhance participation by citizens and make sure there’s greater confidence in financial markets by the public so that you can give your money to banks, fund managers and others to grow it for you.
“What we have to do is to look at institutional governance and look at governance frameworks but key is that you have boards and management of integrity and that’s why the fit and proper issue becomes very critical. “We have to work very hard to make sure these bad apples are flushed out because we need the integrity, safety and soundness of financial systems and we need to grow it.
“We want financial inclusion. If people are coming into our system and running away with your money, we won’t make progress,” he said.