COMMENTARY: As concern continues to simmer over the appointment of Lord Sevele ‘O Vailahi to the board of Tonga’s National Reserve Bank, New Zealand’s Reserve Bank is facing the same question of conflict of interest with the appointment of a new member.
The difference is that while the New Zealand Reserve Bank is defending the appointment, it has also made clear that it recognises public concerns and is keen to be seen to be managing them.
Former chair of New Zealand Post, Rodger Finlay, chairperson of NZ Post joined the central bank’s board at the beginning of this month. NZ Post has a majority stake in Kiwibank.
The Reserve Bank has defended his appointment on the grounds of his experience in governance and his work as a consultant.
Former RBNZ senior official Michael Reddell described Finlay’s appointment as outrageous.
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“Whatever the possible merits of Mr Finlay it sets a dreadful precedent and [is] outrageous,” he said.
Reddell said it was unthinkable that a person from a bank supervised by the RBNZ should be involved with the central bank and he should quit one of the roles.
New Zealand Reserve Bank chairperson Neil Quigley told Radio New Zealand it was aware of potential conflicts with the appointment and was satisfied they could be managed.
“We are satisfied his interest can be managed appropriately and does not disqualify him to be a member.”
Minister of Finance Grant Robertson, who appointed Finlay on advice from the RBNZ, said any potential conflict of interest could be managed.
Earlier this year the New Zealand body faced public criticism over the announcement of Paul Conway as its new Chief Economist.
Conway was employed by the Bank of New Zealand.
Lord Sevele’s appointment
As we wrote in April, there do appear to have been concerns about Lord Sevele’s appointment, but there have been few if any definitive statements about how the bank will manage those concerns.
Instead, Minister of Finance Tatafu Moeaki defended the appointment by saying that the Noble would bring experience to the position. He also denied there would be any conflict of interest.
Critics have argued that since most of the businesses with which Lord Sevele has been associated have ceased to function, he should not be regarded as a successful business operator. His record while in government as Prime Minister and chairman of a number of boards and committee is open to question.
The lesson to be learned from New Zealand’s Reserve Bank is that it not only recognises there is public concern, but that it has to deal with it, not just as a reaction to public criticism, but for the good of its reputation.
Learning to manage the concerns of taxpayers and citizens is something that could benefit Tonga’s Reserve Bank.
