DBSI Board Membership Breached

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The composition of the appointed Interim Board of Directors of the Development Bank of Solomon Islands has breached the DBSI Act 2018 [Part 6, Division 2, s49 – Transitional Matters stipulated inside the Act].

From information available including those in the website of the DBSI itself and in the absence of transparency,  the current composition of the interim board was not only politicized but breached the DBSI 2018 Act. Whilst the Minister of Finance might have appointed the current Board, whether he did so as provide for in DBSI Act 2018 Part 6, Division2, s49 remains not only obscure but questionable.

Whilst Transparency Solomon Islands is unable to find the Legal Notice of when the DBSI Act 2018 commences, Under Division 2 Transitional Matters of the DBSI Act 2018, the Act says that  the interim board of directors shall take office for a period of 6 months after the Act commences. It further says that the interim board will consists of the following members (s49(1)):

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• The Permanent Secretary of the Ministry responsible for finance, as chairperson;
• The Permanent Secretary of the Ministry responsible for development planning and aid coordination;
• The Permanent Secretary of the Ministry of Commerce;
• 5 other persons appointed by the Minister.

The Act went on to say that during the term of office, the interim Board members (s49(2):

• Have all the powers and function of Board members under this Act; and
• Must appoint the first Chief Executive Officer of the Bank.

If  June 8^th 2020 when DBSI was launched was also the date that the DBSI Act 2018 came into force the current composition of the interim board of directors breached the process stipulated in the Act when it put in place an interim board of DBSI.

The membership of the current DBSI board of directors are Robson Djokovic, John Muria Jnr, Andrew Manepora’a, Trevor Manemahaga and Gane Alva Simbe. None of them is a Permanent Secretary (PS) of the three ministries mentioned in the DBSI 2018 Act, as required under the Act.

Therefore, this is a clear breach of the requirements of the Act and the manipulation of the process for the appointment of an interim board as stated in the Act (s49).  The Act is clear about which Permanent Secretaries are to be appointed to the Interim Board.

The beneficiaries of the services expected to be provided by this new financial institution should be concerned about the composition of the interim board and the obscure manner in which they were appointed.  In Transparency Solomon Islands view the Minister of Finance failed to adhere to the requirement of the DBSI Act and has overly politicized this new institution.

TSI commends the national government for the effort put into reviving DBSI but what has so far transpired with regard to the governance of the bank raises a lot of question of trust and sense of hopelessness and doubts about the bank’s future.  At the start it is already not looking bright.

Transparency Solomon Islands reminds and cautions the government that the continuation of running the financial institution without adhering to the DBSI 2018 Act, as we can see it starting with the  appointment of the board directors the bank will head for demise, disaster in the near future. Former Permanent Secretaries of the relevant ministries, general managers of NPF, credit schemes, women running savings scheme would add value to this Board. As it is, it is heavily filled by political appointees with very little to no knowledge of financial institutions, the banking sector, and the developmental needs of the country.

Part 3 of the Act provides for Board and Staff and under Division 1 s10 it provides for the powers and functions of the board and established the board as the governing body of the bank.  The membership of the Board it says will consists of the following members (s11(1)(a)(b):

• The Chief Executive Officer;
• And 8 other members appointed by the Minister by Gazette notice.
  
  

The Act went on to clarify the process by stating that the members appointed by the minister into the board must in accordance with the nomination of the nominating committee.

The nominating committee consist of 3 members appointed by the minister on the advice of the interim board.

Part 3 of the DBSI Act 2018 clearly sets out the process for the appointment of the Board of DBSI. It says before nominating a person for board membership, the nominating committee must call for application for members by publishing an advertisement in a newspaper circulating throughout Solomon Islands (and in any other way considered desirable).

The Act explained further that after considering the applications received, the nominating committee may nominate a person for membership if the person meets the following eligibility criteria:

• The committee is satisfied that the person:
• Is a person of high integrity and is capable of exercising diligence, sound judgement, confidentiality, and impartiality in the performance of their functions; and
• Has significant knowledge and experience relevant to the operations of banks;
• Has the physical and mental capacity to perform his or her functions as a board member;
• The person is not any of the following:
• A staff member of the bank;
• A director, company secretary or executive officer of a body corporate supervised by CBSI;
• A member of parliament;
• A person with an outstanding loan with the bank or who is a director, executive officer or shareholder of a body corporate that has an outstanding loan with the bank;
• An undischarged bankrupt in Solomon Islands or elsewhere;

The question is what due diligence check was applied to the selection of people to be in the Board regardless of whether the board is an interim board or the board proper. Whether the board is interim or not it is of grave concern that the process required by the Act to nominate the board of directors is absolutely breaches the law governing DBSI. Transparency Solomon Islands understands that when expression of interest was called, people put in their interest to be in the Board.  Did John Muria Jnr, Robson Djokovic, Andrew Manepora’a, Trevor Manemahaga and Gane Alva Simbe put in an application as required by the Act or were they handpicked outside the process.

The latest is that this Board is no longer an interim board but the Board proper.  Did they put in an application, appoint themselves or were appointed without following the process?  It is interesting to note that this is now the Board with three more being appointed lately.  There is nothing transparent about these appointments let alone being compliant with the DBSI Act 2018.  Surely, for the Attorney General and those working in the Prime Minister’s Office this would be a clear case of conflict of interest, revolving syndrome and inside trading.  Can the Minister inform the public who the three members of the nominating committee are?  These are important questions to ask now than later to give this institution a chance of success on day one.

Transparency Solomon Islands learned that Muria Jnr and Djokovic are directors of Clandestine Entertainment Limited according information kept by the Company Haus and Cowboy Grill belongs to them. Recently the Cowboy Grill has been approved as a gaming and lotteries premises.

Whilst there may have been advertisements calling for applications for the position of Board of Directors the appointments indicate this was not adhered to and that the current members were handpicked. How can we trust this board of directors when the manner in which they were appointed does not follow the rightful process stipulated in the DBSI Act 2018? It is obvious that a network of people with strong political connections are manipulating the membership of the board of directors of DBSI. This is not a healthy restart of the once defunct bank that desperately needs the right people with background in banking institutions and most significantly, independent from politics.

According to the DBSI website, the five-member board of directors is an interim board, but that does not change the fact that it breaches the DBSI Act 2018, which requires three members to be Permanent Secretaries from three different ministries, namely the Ministry of Finance, Ministry of Commerce and Ministry of Development Planning.

Transparency Solomon Islands continues to call for a transparent, accountable, and legally binding process for electing a new board of directors by adhering to the 2018 DBSI Act.

TSI cautioned government that failure to abide by the process stipulated in the Act will resulted in another failed attempt to revive the bank that costing government so much resources, time, and efforts to re-establish.

//End//

ISSUED BY TSI tonight

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