We have seen two top govt executives behind the financial crisis join the Financial Street after their assignments. Mervyn King, head of BoE joined Citibank and José Manuel Barros head of EU commission joined GS. It is amazing how these things continue despite much opposition.
I was just alerted to this development in Nepal where its central bank top officials are barred from joining banks for lifetime. And lower level executives can join only after a cooling period:
Retired staff of Nepal Rastra Bank (NRB) will be barred from joining banks and financial institutions (BFIs) for up to three years after leaving their jobs.
The parliamentary Finance Committee on Tuesday inserted the restriction in the bill to amend the Nepal Rastra Bank Act in a bid to avoid conflict of interest. The governor, deputy governor and executive directors of the central bank are already subject to such a provision, and the House panel has extended the restriction to junior level staff.
However, the Finance Committee has reduced the prohibitory period for deputy governors and executive directors to three years from the proposed seven and five years respectively in the original bill. The governor, however, has been banned for life from working in BFIs after leaving the central bank. Former staff will need to get NRB’s okay to join any BFI at the end of the prohibitory period.
The Finance Committee decided to insert the provision in the bill following a request by NRB Governor Chiranjeevi Nepal to the House committee on Tuesday even though lawmakers had submitted no proposals.
During the meeting, Governor Nepal said that even officer-level employees of the central bank had become CEOs of BFIs right after retirement. “So it is necessary to fix a certain prohibitory period for them too to avoid conflict of interest,” he told lawmakers.
The prohibitory provisions were inserted in the bill due to concerns that central bank officials could work in the interest of the BFIs which they planned to join after retirement.
So the revolving door was active in Nepal too until this law which has tried to provide some brakes.
I mean Nepal sees these conflicts of interest and take out a law against these practices. Why is advanced world sleeping where these conflicts are much much larger in scale and scope? I know they might hate to learn these lessons from Nepal but they have little choice on these matters…