Bank of Namibia denies conflict of interest with e-Bank license
He was approached by PointBreak Group Namibia only after the provisional licence was granted
The Bank of Namibia has denied suggestions that former Assistant Governor Michael Mukete might have been acting in conflict of interest when he presided over the awarding of a provisional banking licence to e-Bank.
Mukete left the central bank unceremoniously last Friday to pursue a career at PointBreak, a private equity firm which holds a controlling stake in the recently licensed e-Bank.
The hasty departure of Mukete from the central bank to PointBreak has raised suspicions that the former Assistant Governor might have acted in conflict of interest in the awarding of a provisional licence to e-Bank since the banking supervision department, responsible for the screening and awarding of banking licences, fell directly under his control.
However, the central bank said this Thursday that it has a sworn statement from Mukete stating that he was approached by PointBreak Group Namibia only after the provisional licence was granted.
Ndangi Katoma, the Director in the Department of Strategic Communications and Financial Sector Development at Bank of Namibia told the Economist that Mukete did not recuse himself from the deliberations to award e-Bank a provisional licence as he was only approached by the investment group after the provisional licence was already granted.
Katoma said: “First, it should be stated clearly that the Bank has a sworn statement from Mr Mukete stating that he was approached by PointBreak Group Namibia only after the provisional licence was granted. Secondly, recusal is done where there is a declaration of interest. The provisional banking license was granted to e-Bank valid for a period of six months as from 1 August 2013 to allow it to set up their operations. As Mr Mukete, was only approached after the provisional licence was granted as per sworn statement, there was therefore no need for him to recuse himself.”
Katoma said the Bank of Namibia has processes in place to ensure that it is not possible for one individual to influence the process of granting a banking licence.
“These internal processes are very clear and the discussions and scrutiny are quite intense. The evaluating department makes recommendation to the Management Committee, which consists of about 15 people, which in turn makes a recommendation to the Board, and the Board makes the final decision on granting or declining to grant provisional and final banking licences,” Katoma said.
The central bank added that it has signed an agreement with Mukete requiring him not to have any direct or indirect engagement with the banking industry until his “cooling off” period ends.
Although the Bank of Namibia Act allows for the establishment of the position of Deputy Governor, the Assistant Governor position is a de facto Deputy Governor position with four departments reporting directly to the incumbent. These departments [financial markets, banking supervision, finance and administration as well as payment and settlement systems] will now report to the Governor and the Deputy Governor in the absence of Mukete.
Katoma explained the rationale behind the granting of a so-called “cooling off” period to Mukete. He said: “The reason why the cooling off period is provided for is to serve two purposes: first is to ensure that Mr. Mukete is recused from the process before the final decision pertaining to the approval or disapproval of the granting of the final license by the Board of the Bank is made.
“The second reason is to cut the individual concerned’s access to vital and sensitive information, which is at the disposal of the Bank as a regulator. This is important from a central bank corporate governance perspective and it is in line with changing best international practices in central banks.”
Mukete was appointed Assistant Governor and Head of Financial Stability on 01 August 2010. Before that appointment, he served as Director of the Banking Supervision Department (July 2008- July 2010) and Director of the Financial Markets Department (January 2007-June 2008). He joined the Bank of Namibia in October 1997 as a Junior Dealer in the Financial Markets Department and subsequently assumed increased roles and responsibilities in the same department until he became its director.