independence


Many of the discussions at organizations such as ours that are driven by the need to influence policy through research, center on indicators. We need to be able to communicate quickly and effectively how things have changed for the better or for worse, ideally in comparison with benchmarks. The best way to do this is through an indicator. In academic settings, it is common to bemoan the incompleteness of various indicators, when those same academics are faced with the task of communicating their research to policy makers or the general public, they fall back on one or at most two indicators to tell their story. One thing I say about indicators is that they are all imperfect.
The decision of a significant court case with relevance to regulatory practice was issued recently. The Chairman and Director General of the Sri Lanka Telecom Regulatory Commission were sentenced to jail and were required to pay substantial fines after being found guilty of criminally misappropriating USD 3.9 million from the stand-alone fund of the Commission. Because this is of relevance to regulatory practice, I wrote up a short note and am thinking of fleshing it out as a journal article. Suggestions and comments are welcome.
The legislation creating the Public Utilities Commission and the Telecom Regulatory Commission specifically provide for the regulatory bodies to have their own funds. The Minister of Finance in the 2017 Budget has announced he intends to expropriate the money in the funds and give it out on request. My response in today’s Daily FT: It is customary for independent, sector-specific regulatory agencies to have a separate fund. The agency is operated with fees and other payments from the entities that it regulates that go into this fund. The principal rationale is insulation from pressure that could be exerted by the Government which could use disbursements from the consolidated fund as a carrot or a stick.
Among the PiRRC contributions to the Pacific Broadband Forum just concluded in Nadi, Fiji, was a panel discussion on regulatory independence. In addition to the practicing regulators of Papua New Guinea, Samoa and Vanuatu, they invited some observers to participate. Preparing for the panel, I looked through some old slidesets and came up with this structure. Did not use the slidesets, but the structure was useful. What surprised me was how easily I switched from the role of disinterested scholar to former regulator.
Usually politicians like low prices. But the Kenyan President dislikes them so much that he could not wait for the Task Force established by the Prime Minister to examine a decision by the “independent” regulator to lower mobile termination rates, an esoteric wholesale price determined by technical methods. I have not looked at the Kenyan legislation in detail, but I’d be surprised if the legislation permits review by a Prime Minister’s Task Force, let alone the President acting after a meeting with a few of the stakeholders behind closed doors. With its “independence” in tatters, the regulatory agency did the one thing it can do to recover: it ratified the President’s unlawful act. A mass resignation would have been the more appropriate response, methinks.