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MAY 22, 2000 VOL. 155 NO. 20 Clash of the Mandarins Thailand's prickly, aristocratic central bank governor has cleaned up the scandal-plagued institution, but he continues to spar with the country's respected Finance Minister By ROBERT HORN Bangkok
In his two years at the helm, Chatu Mongol has brought renewed legitimacy to the scandal-plagued institution. Once one of Asia's most respected central banks, it lost that reputation in 1997 when it squandered nearly all of Thailand's foreign reserves in a failed defense of the baht. The blunder ignited Asia's economic crisis. Since then, Chatu Mongol has tried to set the institution right: restructuring operations, increasing transparency and tightening supervision of the nation's commercial lenders. "Nobody has attempted to so radically re-engineer any part of Thailand's bureaucracy," says Kanjana Spindler, a Bangkok Post columnist. The governor has also personally twisted the arms of corporate debtors and filed charges against some of those deemed culpable for the meltdown. "He's gone a long way toward restoring the bank's credibility," says Peggy Creveling, head of research at Salomon Smith Barney in Bangkok. Despite those achievements, however, Chatu Mongol continually seems on the verge of losing his job. Outspoken and at times caustic, he has a knack for deliberately provoking controversy. That has led to frequent clashes with Finance Minister Tarrin Nimmanahaeminda. During the past six months the two have locked horns over several big issues: the management of state-run Krung Thai Bank, the whereabouts of funds donated to the government by a Buddhist monk and a fraud case involving Tarrin's brother. By late April the relationship had grown so tense that Prime Minister Chuan Leekpai summoned the two for a talk. When the governor didn't show up, the minister went to the central bank. But the governor then left to meet with Chuan. It all came off like a Bangkok bedroom farce. With Thailand's two chief financial architects at loggerheads, many wondered how the country could hope to build a framework for a stable economic future. Tarrin and Chatu Mongol should be natural allies. The two played critical roles in leading Thailand out of the economic crisis. Tarrin concedes that Chatu Mongol has "turned out to be a very good governor," but he says the aristocratic banker can "exasperate" him. Tarrin wants to use excess reserves to help pay off the massive debt the government ran up trying to rescue insolvent banks and finance companies. Chatu Mongol initially supported the controversial plan, but then backed off, accusing the ministry of trying to weaken the bank. Later, after meeting Tarrin, he pledged his support again--in principle. Is there potential for more conflict? "Absolutely," Chatu Mongol says. The governor concedes that the relationship is sometimes rocky. "We can't be seen to be working hand in hand with the government," he says. "We're trying to be independent." For now, however, the bank still takes orders from the ministry. A draft law would give it considerably more freedom, but full autonomy isn't likely. "The politicians won't give up all control. Not with the smell of '97 still in their nostrils," says Chris Baker, co-author of Thailand's Boom and Bust. Chatu Mongol says the current draft would still make it easy for politicians to sack the governor and thus control the bank. Tarrin, for his part, sees things differently. "The governor cannot be fired for carrying out his job," he says. "The central bank must be able to oppose political influence." Chatu Mongol makes no apologies for his rebelliousness. "It's important the country understands these issues and that they are discussed. That's why I have to be controversial," he says. That attitude can exact a price: the previous government removed him as permanent secretary of finance when he refused to keep silent about the impending economic crisis. His outspokenness could hurt him now if a strong potential replacement emerges, but that prospect seems remote. Until then, Chatu Mongol is sure to keep firing broadsides from his family's former palace as he battles to make his bank truly free. ALSO IN TIME (the full, Web-only interviews) THAILAND: Collision Course Thailand's Finance Minister hasn't always seen eye to eye with his country's central bank governor • 'I'm Here To Do a Job': Outspoken Bank of Thailand Governor Chatu Mongol Sonakul pulls no punches Write to TIME at mail@web.timeasia.com TIME Asia home Quick Scroll: More stories from TIME, Asiaweek and CNN
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