The firewall that isn’t there

Jun 15, 2026 Features / Columnists, Peeping Tom

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(Kaieteur News) – Professor Tarron Khemraj and Mr. Sukrishnalall Pasha have offered a spirited defence of the Guyana Development Bank Bill. Their argument is dangerously wrong.

They contend that the Bill erects robust institutional firewalls between the executive branch and credit decisions. They point to Clauses 9(b) and (c), which task the Board with safeguarding “the independence of credit decisions.” They cite Clause 25’s requirement for written credit policies. They invoke Clause 26’s limits on restructuring and write-offs. All of this, they suggest, insulates the Bank from political interference.

The problem is not whether the Bill mentions independence. The problem is whether the structure delivers it. And this Bill does not.

Let us start with the Board. Khemraj and Pasha note that the Minister appoints the Board but does not make individual credit decisions. That is technically true—and practically meaningless. The Minister appoints every single director. The Minister can remove any director for “misconduct” or “neglect of duty”—terms so broad they could cover any disagreement. The Minister chooses the Chairperson and Deputy Chairperson. There are no fixed terms that survive ministerial displeasure. No private-sector or civil society nominees.

Tell me what kind of Board member, knowing they serve at the Minister’s pleasure, will vote against a loan the Minister quietly supports?  The “independence” Clause 9(c) speaks of is a paper promise with no structural anchor. Firewalls made of cardboard burn just as quickly as those made of paper.

Let us recall that when GNCB ran up massive bad debts under the PNC government, the government established a loan recovery agency to absorb these bad debts to remove this financial burden off the bank’s books. The same arrangements were in place: a firewall in the form of a Board that was supposed to insulate the bank from political directions.

Did it work? Insiders relate about a massive loan to a rice miller that was politically directed and which eventually led the said bank to pile up massive new bad debts.

Khemraj and Pasha also point to Clause 25, which requires the Bank to adopt written credit policies. This is a good thing—but it is not a firewall. A written policy that says “loans shall be made based on risk assessment” does not prevent a phone call from a political person asking a Board member or even a CEO to “reconsider” a particular application. Without tenure protection, without diverse board composition, without regulatory oversight, written policies become procedural theater.

Then there is the matter of the CEO. Khemraj and Pasha celebrate that, day-to-day operations are assigned to the Chief Executive Officer and technical staff under Clauses 18 and 19. But who appoints the CEO? The Board—which the Minister appoints. Who can remove the CEO? The Board—which the Minister can reconstitute at will. The CEO serves at the pleasure of a Board that serves at the pleasure of the Minister. That is not independence. That is a chain of political control.

We know how these things work in Guyana. Which Board will want to appoint someone that does not find favour with the Minister? Which Board will want to deny someone the job of CEO if that someone has the backing of Cabinet?

Khemraj and Pasha also laud Clause 26 for limiting debt restructuring and write-offs to Board supervision. But again, supervision by a politically appointed Board is not a constraint; it is a channel for the same political pressures. The Bill does not require independent loan review, does not require regulatory or audit oversight of large write-offs, and does not create any external check on the Board’s decisions.

Khemraj and Pasha write as if the danger is the Minister personally signing off on each loan. That is not how political lending works in practice. Political lending works through appointment power, through the implicit threat of removal, through the social and professional networks that connect political elites to Board members, through influence and through political phone calls. A politician who never makes a single formal credit decision can still ensure that loans flow to preferred constituents—simply by appointing Board members who understand what is expected of them or by simply making a phone call. The Bill does nothing to prevent this. Indeed, it facilitates it.

Khemraj and Pasha also note that Clause 2 defines SMEs explicitly, preventing the Bank from lending to large, well-connected firms. That is a welcome provision. But it does not address the core problem: among the thousands of SMEs that will apply, political influence can easily determine which receive loans, on what terms, and whose loans are restructured when they default.

Independence requires structural separation: multi-stakeholder boards, regulatory oversight, fixed and staggered terms for Board members, independent audit committees, and transparent disclosure of all loans above a modest threshold. This Bill has none of those things.

Khemraj and Pasha accuse critics of overlooking the Bill’s design. I accuse them of mistaking legislative language for institutional reality. The Bill is not a firewall. It is a facade. And calling it best practice does not make it so.

(The views expressed in this article are those of the author and do not necessarily reflect the opinions of this newspaper.) 

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• firewall, Guyana Development Bank Bill, institutional firewalls, Peeping Tom

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