KINGSTON, Jamaica: Prime Minister Bruce Golding has announced that former governor of the Bank of Jamaica, Derick Latibeaudiere, was fired after the government found the interpretation and application of certain provisions of his contract “unacceptable”.
However, during an address to Parliament, Golding said the decision would not disturb current negotiations toward a stand-by agreement with the International Monetary Fund (IMF). The nation had sought IMF help after being hit with a drop in revenues by bauxite mining and alumina products, as well as a falloff in tourism and remittances during the global recession.
“The leadership of the Bank of Jamaica is in safe and capable hands,” said Golding. “A technical team from the IMF is currently in Jamaica working with us on the fiscal, monetary and medium-term economic program we have presented.”
Golding told Parliament that Latibeaudiere’s contract had been signed by former finance minister Dr. Omar Davies in May 2007 and was retroactive from August 1, 2006 for a five year period ending in 2011.
“It was a strange contract, the likes of which has not up to now been found anywhere else,” said Golding, noting that it provided for a basic salary at J$11.2 million (US$126,197) to be increased annually by whatever percentage increase is granted to public sector employees.
“In addition, the governor was entitled to further increases determined by incremental adjustments or as a result of the applicable performance appraisal process,” Golding said, noting that as of October 30, 2009, Latibeaudiere’s basic salary had risen to J$14.5 million (US$163,380).
Golding said in addition to his basic salary, Latibeaudiere was provided with a fully maintained motor car, reimbursement for “all fair and reasonable” entertainment expenses for official purposes, group medical and life insurance coverage, all benefits under the Bank’s pension scheme and other benefits.
“The governor thus enjoyed the generous terms of a specific contract while retaining all the benefits and privileges of a non-contracted service worker,” Golding said.
Golding said the contract stated that Latibeaudiere would be provided with a fully furnished and maintained official residence including household and gardening staff and unlimited expenses for telephone, electricity and water.
The Prime Minister said that in 1998 the BOJ purchased a house as an official residence for Latibeaudiere which cost several million dollars. However, by December of that year, Latibeaudiere suggested that the house be sold.
Golding said several board members expressed surprise at the event and in 2002 the BOJ agreed to sell, lease or rent the property. The Prime Minister also said during a board meeting in 2003, it was agreed that the property be sold to Latibeaudiere since he expressed interest in purchasing it. However, Golding said Latibeaudiere did not accept the offered price and the property was later sold on the open market.
“In the absence or non-occupation of an official residence, therefore, the Bank’s contractual obligations reverted to paying the governor rent and maintenance for the house that he occupied,” Golding said.
The Prime Minister said between 2006 and 2008, Latibeaudiere secured loans totalling J$55.44 million (US$624,225) at an interest rate of five per cent to build a house that was never completed.
“There are several troubling issues surrounding these loans. In her annual report for Financial Year 2007/2008, the Auditor-General states that no evidence was presented of the approval of the Board of Directors for these loans and that the management of the bank had indicated that under its current arrangements there is no specific requirement for Board or ministerial approval,” Golding told legislators.
Golding said Finance Minister Audley Shaw “had some time ago indicated verbally to the governor his desire to renegotiate the housing provisions of the contract” and that, following other negotiations, Latibeaudiere agreed to accept a reduced rent for the first two years beginning in September 2008.
“The compensation package for the governor would now amount to $38,363,360 (US$434,220),” Golding said. In addition, Golding said Latibeaudiere would receive other perks even though “research shows that this exceeds the compensation package for the Chairman of the Federal Reserve Board of the United States”.
A statement from the Ministry of Finance issued last Friday had indicated the decision to step down was by mutual agreement between Shaw, the public service and Latibeaudiere.