The Central Bank’s two former governors—Indrajit Coomaraswamy and Sunil Mendis—refused pension benefits that were introduced last year at the behest of another former Governor, Ajith Nivard Cabraal, a response to a Right to Information (RTI) application shows, reported by Sunday Times
Mr Cabraal was first paid pension arrears for his first term as governor from July 2006 to January 2015.
He now receives the benefit computed on a significantly higher salary for the mere six-and-a-half months he served from September 2021 to April 2022.
After lobbying by Mr Cabraal, the Monetary Board on December 23 last year approved a scheme granting any Central Bank governor 74 percent of his or her salary along with cost of living and fixed allowances as pension. This is payable irrespective of length of service.
The Board acted on the instructions of P.B. Jayasundera, who was the presidential secretary under ex-President Gotabaya Rajapaksa, the RTI application revealed. However, it was not clear whether the letter explicitly stated that the change had been approved by the Head of State, who is the appointing authority, as the Monetary Board cannot otherwise take such action.
Surviving governors appointed after 1998 were made eligible for pensions under the new procedure. They were Mr. Mendis (2004-2006), Dr Coomaraswamy (2016-2019), Mr. Cabraal (two terms) and W D Lakshman (2019-2021).
Arjuna Mahendran, who held the post from January 2015 to June 2016, was excluded on the basis that there were criminal investigations or proceedings before a court of law in respect of him. However, payment is only suspended until their conclusion.
The Central bank first introduced a pension scheme for its employees in 1965. Effective from 1967, governors were also made eligible irrespective of their period of service, provided it was approved by the head of government and included in the letter of appointment of the governor.
In 1998, pension benefits of employees and governors appointed after January 1 that year were removed. They were re-introduced in January 2015, but governors were left out at the request of the CBSL’s then governor Mahendran.
In October 2019—while Dr Coomaraswamy was Governor—the Monetary Board referred the matter to the Secretary to the then President, as Mr Cabraal was seeking the benefits. The Secretary responded in September 2020 and the relevant Monetary Board decision was taken in December that year.