View. In the reported impasse between the IGG and the BoU, the IGG cannot certainly issue directions or control in respect of the functions set out in Article 162 (1). She, however, has, the constitutional authority to investigate anything else within her remit including alleged impunity between employer and employee in a public institution, writes Didas Nkurunziza.
The reported impasse between the Inspector General of Government and the Governor Bank of Uganda is, in my view, a situation that can hopefully end in the growth and improvement of our constitutional democracy.
Both officers, whose respective institutions are creations of the Constitution, are, as they ought to be doing, jealously defending their turf. However, in this instance and in spite of the boisterous and vigorous positions taken by each of them, they cannot both be right.
In the development of our constitutional jurisprudence one of the principal tenets expounded by our highest courts has been the need to read the Constitution as a whole, to peruse all the provisions thereof with a view to giving coherent meaning and life to them and not seek to set one pro vision against another.
It is only in this way that understanding and meaning can be given and the intent ion of the framers of the Constitution arrived at and applied. In the context of the above reported impasse, therefore, it is important to read and understand the following provision s of the Constitution together;
Jurisdiction of IGG
“226. The jurisdiction of the Inspectorate of Government shall cover officers or leaders whether employed in the public service or not, and also such institutions, organisations or enterprises as Parliament may prescribe by law.”
The use of the words “and also” creates two distinct subjects to the jurisdiction of the IGG; (a) officers or leaders whether employed in the public service or not and, separately, (b) institutions, organisations or enterprises as Parliament may prescribe by law. Consequently, all officers or leaders in Uganda whether employed in the public service or not are, by this Article, subject to the jurisdiction of the IGG.
Chapter Two of the Constitution is about “The Republic”. Article 8A (1) thereof states,
“Uganda shall be governed based on principles of national interest and common good enshrined in the national objectives and directive principles of state policy.”
National Objectives and Directive Principles of State Policy No. 1 states as follows;
“The following objectives and principles shall guide all organs and agencies of the State all citizens, organisations and other bodies and persons applying or interpreting the Constitution or any other law and in taking and implementing any policy decisions for the establishment and promotion of a just, free and democratic society.”
Policy No. XXVI provides as follows;
i. All public offices shall be held in trust for the people.
ii. All persons placed in positions of leadership and responsibility shall, in their work, be answerable to the people.
iii. All lawful measures shall be taken to expose, combat and eradicate corruption and abuse or misuse of power by those holding political or public offices.
Article 161(4) of the Constitution is pertinent in this matter. It provides in relation to the Bank of Uganda;
“The office of Governor and Deputy Governor shall each be a public office.....”
Next, we come to Chapter Four of the Constitution which deals with protection and promotion of fundamental and other human rights and freedoms, otherwise known as “the Bill of Rights, universally applicable in the entire free world.” Article 20 states;
1) Fundamental rights and freedoms of the individual are inherent and not granted by the State.
2) The rights and freedoms of the individual and groups enshrined in this Chapter shall be respected, upheld and promoted by all organs and agencies of government and by all persons.
Bill of Rights
Article 42, also in the Bill of Rights, states;
“Any person appearing before any administrative official or body has a right to be treated justly and fairly and shall have a right to apply to a court of law in respect of any administrative decision taken against him or her.”
Whilst Article 50, also in the Bill of Rights provides that;
1) Any person who claims that a fundamental or other right or freedom guaranteed under this Constitution has been infringed or threatened is entitled to apply to a competent court for redress which may include compensation.
2) Any person or organisation may bring an action against the violation of another person’s or group’s human rights.
It is important to note that in none of the above provisions of the Constitution is there any condition set out for their observance and compliance. They are not made “Subject to any other provisions of this Constitution” as are some others. One such other provision is Article 162 (2) which states;
“In performing its functions, the Bank of Uganda shall conform to this Constitution but shall not be subject to the direction or control of any person or authority.”
This is the sub-Article that is at the heart of the impasse between the IGG and the Governor, Bank of Uganda (BoU).
IGG says ‘I have received complaints from individual employees of BoU who claim their rights and freedoms as such employees have been violated and it is my duty to investigate and come to a decision on the com plaints’.
BoU responds ‘we are not subject to the direction or control of any person or authority so you cannot investigate us’.
Article 162(2) is clear. The BoU is under constitutional obligation to “conform to this Constitution.” That means it must conform to and comply with the Articles referred to above, among others, and in particular Article 20(2) which commands that: “The rights and freedoms of the individual and groups enshrined in this Chapter shall be respected, upheld and promoted by all organs and agencies of Government and by all persons”.
Wisdom of the framers
However, the same Article 162(2) in the wisdom of the framers and for the reasons of confidence and stability that were well articulated by the Governor in his correspondence as cited in the media, gives a window of immunity. It states that: “In performing its functions, the Bank of Uganda.....shall not be subject to the direction or control of any person or authority.”
What are those “functions”? They are enumerated in Article 162(1) (a) to (d) and relate to the stability and regulation of the currency system in the interest of the economic progress of Uganda and the promotion of economic development through effective and efficient operation of a banking and credit system.
Paragraph (d) refers to all such other things not inconsistent with the article which, as all lawyers will know, must be construed ejusdem generis, i.e., similar to the foregoing.
The questions that arise then are these; do the “functions” given immunity under Article 162 (2) include internal administrative activities not directly involved in the stability and regulation of the currency system or the banking and credit system? Did the Constitution intend to give the BoU a blanket immunity over all its activities no matter how remote they may be from the functions set out in 162(2)?
If I have a tender to supply stationery to BoU and they refuse to pay me though I performed, am I barred from claiming because BoU is not subject to the direction or control of any person or authority, including a court of law adjudicating a sale of goods dispute between a trader and the BoU?
In my humble opinion that cannot have been the intent of Article 162. If any person or authority were to attempt to give direction or control to the BoU in respect of any function set out in Article 162 (1) then, certainly, BoU would be entitled, as a matter of law, to ignore such direction or control due to that constitutional provision designed to protect and preserve confidence in the economy.
However, in respect of any other activity it would be a question of fact whether such activity is actually so interwoven with the functions under 162(1) as to be not subject to direction or control. It would be a question of fact requiring investigation and decision by the investigator/ adjudicator if canvassed as a defence by BoU.
A recent example may suffice to elucidate the foregoing. Article 128 of the Constitution states;
1) In the exercise of judicial power, the courts shall be independent and shall not be subject to the control or direction of any person or authority.
2) No person or authority shall interfere with the courts or judicial officers in the exercise of their judicial functions....
3) A person exercising judicial power shall not be liable to any action or suit for any act or omission by the person in the exercise of judicial power.
While conducting a criminal session a judge of the High Court was accused of not remitting allowances for that session to her support staff. She was investigated and ordered to remedy the situation.
No attempt was made to raise “judicial immunity”. Her immunity was clearly only in respect of her “exercise of judicial power”. Any impropriety or impunity outside that exercise was eligible for investigation and appropriate action. She was directed to refund the concerned support staff. In order to encourage compliance with the rule of law and observance with the Bill of Rights this interpretation ought to and should equally apply to Article 162.
In this regard, Article 161 of the Constitution is, again, most significant. Sub Article (5) provide as follows;
“The governor, the deputy governor or any other member of the board may be removed from office by the President only for-
a) Inability to perform the functions of his or her office arising from infirmity of body or mind;
b) Misbehaviour or misconduct; or
‘Constitution does not state’
The Constitution does not state how an investigation to establish the grounds for removal of a governor or deputy governor would be carried out but since they are specifically stated to be public officers under Sub-Article (4) then the provisions of Articles 225 and 226 of the Constitution would apply and the IGG would have the authority to exercise her jurisdiction over them to investigate accordingly.
Suffice to say, however, that if the Governor of the Bank of Uganda can be subject to investigations that may lead to his removal for misbehaviour or misconduct or incompetence then it is difficult to appreciate why the Bank itself may not be investigated on allegations that do not directly impinge on its functions as set out in Article 162 (1).
In any event there is nothing in Article 162 to prohibit those functions listed therein from being investigated. The caveat is that any purported direction or control emanating from such investigations or other sources may be lawfully ignored by BoU since it is, by Constitutional command, not subject to the direction or control of any person or authority in respect to performing its functions.
In the reported impasse between the IGG and the BoU, the IGG cannot certainly issue directions or control in respect of the functions set out in Article 162 (1). She, however, has to my mind and based on the above Articles, the constitutional authority to investigate anything else within her remit including alleged impunity between employer and employee in a public institution and to act upon any complaints accordingly.
It is a silent but eloquent principle of law that where there is a wrong there ought to be a remedy. Where the wrong is by the complainant the remedy is dismissal of the complaint with, sometimes, costs. Where the wrong is by the other party to the complaint the remedy, at the very least, may be damages. Otherwise the law would properly be called “an ass”.
In conclusion, I would request that the two protagonists remind themselves that they work for the same master, the Constitution and the People of Uganda. It does not bode well for us, the people, to see our respected champions flexing with each other, especially in public. Get together, please, share the issues and find solutions.
Opinion. In my view, the essence of the debate ought to be, what is meant by “independence under Article 162 and what is the extent and limitations of this independence? Is Central Bank independence absolute? writes Bob A. Kasango
The difference of opinion regarding the mandate and independence of the Bank of Uganda vis-à-vis the powers of the IGG have in the recent days reignited an old but relevant debate – the meaning and extent of Central Bank independence post the financial meltdown of 2008.
The IGG and the Governor of the Bank of Uganda have both strenuously and persuasively made their arguments in defence of their powers. The President, as has the minister of Finance, have weighed in seeking restraint on the part of both parties.
The most eloquent expose of the legal position though has come from Mr Didas Nkurunziza, a senior advocate of the courts of judicature of Uganda. He concludes that the IGG is right and the Bank of Uganda is not independent in the exercise of powers not envisaged under Article 162 (1) of the Constitution relating to the independence of the bank and in view of Article 226 of the Constitution regarding the powers of the IGG. I respectfully disagree and I am of the persuasion that both the IGG and the Governor are correct in the positions they hold!
Central Bank independence is premised on two conditions. The first, and more important, is that there is a broad consensus on the goals of monetary policy. The second is that an independent Central Bank is staffed by professionals that can deliver those goals. The first of these conditions is agreed to by all parties to the debate. The second is under a cloud.
There are two main tenets of Central Bank independence: “goal” and “operational” independence. In the former, the bank has the power to set the objectives of monetary policy, such as price stability along with an inflation target. The latter connotes independence in the exercise of powers and duties such as bank supervision and such other related duties that make the achievement of “goal” independence possible.
In the persuasion of the IGG and Mr Nkurunziza, “operational” independence is not covered under Article 162(1). Mr Nkurunziza further opines that Article 162(1) (d) that refers to “all other things not inconsistent with this article…” must be construed ejusdem generis; in his view meaning only such things as are related to monetary policy.
My own persuasion is that paragraph (d) of Article 162 even when read ejusdem generis, was so couched for purposes of brevity and to avoid repetition. The framers of the Constitution, in my view, envisaged under paragraph (d) the “operational” roles of the bank for which it as well enjoy independence. The bank cannot achieve its “goals” in a vacuum. These goals are achieved in an “operational” setting.
Essence of the debate
In my view, the gravamen of the debate ought to be, what is meant by “independence under Article 162 and what is the extent and limitations of this independence? Is Central Bank independence absolute?
Independence signifies ignoring pressures, whatever its source. The independence of Central Banks goes beyond independence from political, Executive and Legislative power. It also equates with independence from private or collective economic interests.
In a democratic society all decisions should be subject to scrutiny by the elected members of the Legislature and the concept of an absolute autonomous Central Bank is, therefore, not acceptable or even lawful, as the Governor seems to assert.
There is a fundamental confusion here between being independent and lacking accountability. The Central Bank cannot be totally independent, in the sense that it is not answerable to anyone – that would be absurd because that line of thought could be stretched to vulgarity by arguing that even our courts of law cannot review actions of the bank.
Even the most autonomous central bank has to report in some form or another to the legislature, which in any case also has the ultimate power to change the laws governing the central bank. All the same, there is a difference between a situation where policy decisions are under continuous scrutiny, and an arrangement where the central bank reports to the legislature periodically.
The key issues here quite clearly are independence, accountability and dialogue with the political authorities.
Independence in the context of the Central Bank is not absolute, but relative. Independence is freedom from political instruction on the one hand and from financial markets on the other hand. Accountability is not simply an ‘add-on’ to justify independence. Hence the term ‘accountable independence’. Accountability - ex ante and ex post - is a constitutive part of the design of an independent agency in a democratic system, whose aim is to bring back the Central Bank to the system of checks and balances.
Accountability does not necessarily politicise or interfere with the constitutional mandate of the Central Bank; rather it means that the Central Bank should provide a justification of its actions. The design of accountable independence is a balancing act. Too much independence leads to an undesirable state within the state. Too much accountability threatens the effectiveness of independence. Therefore, contrary to the belief by the IGG and Mr Nkurunziza that the Central Bank decisions relating to monetary policy are beyond the powers of the IGG and an investigation of the exercise of these powers may be unconstitutional is erroneous.
There is no power conferred upon the Central Bank that is beyond review. Independence does not take away accountability. The IGG is clothed with the power to seek accountability from the Central Bank even in respect of the powers conferred upon the Bank under Article 162(1). What the IGG has no authority to do is interfere with the exercise of the powers, but can investigate how (ex post) the powers were exercised.
The question of excessive reach, that is whether the Central Bank has abrogated to themselves powers which are not in the mandate, and the legal interpretation of whether the Central Bank is abiding by the mandate or exceeding its powers, are fundamental issues in a democratic system and to totally take the Central Bank out of that equation and scrutiny would be undemocratic.
What is clear is that if the mandate gets overstretched the balance between independence and accountability should tilt towards accountability.
The review of administrative actions to prevent an arbitrary and unreasonable exercise of discretionary authority is an important element of the rule of law. An accountable Central Bank should, therefore, be judged for the reasonableness of its actions.
When reviewing central bank policies or decisions to assess whether or not a central bank has exceeded its powers, the competent authorities, like the IGG, must exercise restraint – and this is what the President and the minister of Finance have advocated. This exercise will vary depending upon which Central Bank function is at stake, since the contours of discretionary powers are different when it comes to monetary policy than when it comes to operational objectives. The latter relies on a much more extensive and detailed legal framework than the former.
The Central Bank’s discretion (a key component of independence) is the freedom to act within the limits of a legal framework. Administrative or judicial review should not extend to the ‘content of the decision’ (the aim of the reviewing body or court should not be to be supplant or replace the decision taken or to second guess the Central Bank’s “should have been), but it does extend to parameters and legal framework that surround such decision in order to determine whether or not the Central Bank mandate has been exceeded.
Performance of banking supervision
In the particular instance, the actions of the Governor seemed to be predicated on the failures of banking supervision over the years. The reviewing authority, in this case the IGG, would be well advised to question whether the private employment interest(s) of particular individuals affected overrides the urgent need to strengthen and reform banking supervision. The reasonableness test would have to be applied in making the decision whether to dive deep into a disruptive investigation or not.
Dialogue as advocated by Mr Nkurunziza, the President and the Finance minister is key. But dialogue of the type advocated by the minister and the President at public fora and by way of berating both the IGG and the Governor is unhelpful. This incident should cause us as a nation to think about establishing a body akin to the UK’s Star Chamber where disputes of this nature between Government agencies are resolved in “secrecy”.
February 7: Governor Mutebile makes sweeping changes at Bank of Uganda, with the reshuffle affecting eight Executive Directors, 13 directors, 24 assistants/deputy directors and four staff.
February 8: A group of workers petition the Board of BoU, the Inspector General of Government (IGG) and the parliamentary committee on Commissions, Statutory Authorities and State Enterprises (Cosase).
March 12: IGG Irene Mulyagonja blocks the staff changes that Mutebile had made pending conclusion of investigations into allegations that the decision on the same was irregular.
March 20: MPs start a process to investigate the controversial senior staff changes at BoU.
March 19: Mutebile rejects order by Mulyagonja to halt disputed staff changes he made.
March 24: IGG threatens to arrest Mutebile
March 26: President Museveni summons Mutebile and Mulyagonja to defuse the escalating tension between the two principals.
March 28: Finance Kasaija asks IGG, Mutebile to calm down