If it is up to Sint Maarten Government, the Corporate Governance Council will die a slow and silent death. Within soon (November 16, 2013 to be exactly) the term for which the five members of the Corporate Governance Council were appointed will expire. Sint Maarten Government evidently does not intend to re-appoint the current five members, neither does Sint Maarten Government – as far as I know - intend to appoint new member for this important advisory council. It is a public secret that the Corporate Governance Council is supposed to disappear from the political playing field. Since its inception the Corporate Governance Council has been treated by the tree different Governments as an undesired stepchild. Not only Government, but also Parliament (our highest legislative body, our elected representatives and the body that is supposed to check upon and control Government) will not cry a tear if the Corporate Governance Council will disappear.
The Corporate Governance Council has never been properly funded or accommodated (in terms of decent office spaces and office supplies). Not surprisingly the Corporate Governance Council was not on the 2012 budget and will most likely not on the 2013 and 2014 (final) budget either.
Why is it important that the Corporate Governance Council will continue to exist, that the Council will be properly funded and will (continue to) play an active) role in the political and constitutional playing field.
Sint Maarten has a Corporate Governance Code (or which the legal standing is also questioned by some). It is scientifically proven that Countries that have a Corporate Governance Code and take these rules seriously are doing economically much better than countries that do not apply these rules. In other words: to apply the Corporate Governance Code is in the interest of fostering sustainable economic development and creating healthy and attractive investment climate for (potential) investors.
Corporate Governance rules are about applying the rule of law, about transparency, accountability and about putting in place proper checks and balances. It concerns rules about proper corporate governance that are internationally accepted by most developed countries.
The Corporate Governance Council plays a crucial role by advising Government about the application of the Corporate Governance Code in cases where a government owned company or foundation is involved. The Corporate Governance Council advises Government amongst other about:
- Appointment and dismissal of competent directors and supervisory directors;
- Policy and paying out of dividends;
- Acquisition and selling of shares;
Why would Sint Maarten be against fostering sustainable economic development and why would Sint Maarten be against creating a healthy and attractive climate for (potential) investors? The only reason one can think of why Sint Maarten wants to get rid of the Corporate Governance Council is that Sint Maarten is not in favor of the Good Corporate Governance rules and its high standards and that Sint Maarten Government considers these rules and the Council a stand-in-the way for political "wheeling's and dealings," that do not satisfy the Corporate Governance Rules. It is not a public secret that some politicians like to see government owned companies as 'their' political toys, which is not in the interest of the real owners of government owned companies, namely the electorate / the people of Sint Maarten.
In addition, different from what (some) politicians often claim, the Corporate Governance Council is not an adversary of the Government, but – if used properly – is supposed to play a 'supportive role' for Government. The Corporate Governance Council does not dictate what Government should do, but the Corporate Governance Council only advises Government. Based on Corporate Governance legislation the Government is obliged to either comply with the advice or she should explain why she does not follow the advice in a particular case. The so called "comply or explain" mechanism is embedded in this legislation.
In Curacao, great improvements have been made as a result of the functioning of the Corporate Governance Council ("De Stichting Bureau Toezicht en Normering Overheidsentiteiten"). In particular these improvements have been made in the field of appointing and dismissing (supervisory) directors of government Companies. These directors should not be appointed or dismissed because of their political colors, but they should be appointed because they satisfy a certain profile, which include required standards of education, background and competency and they should be dismissed if they are not performing satisfactory (and not because there is a change of political colors). The quality of the (supervisory) directors has been greatly improved since 2010 because of the active role of the Corporate Governance Council and the so called "naming and shaming" in press reports. In Curacao the advises of the Corporate Governance Council ("De Stichting Bureau Toezicht en Normering Overheidsentiteiten") are made public and as a result of this, incompetent directors no longer postulate for certain positions out of fear of the "naming and shaming" mechanism.
In my view Sint Maarten should go in this same direction and Sint Maarten Government should lead by example and embrace the Corporate Governance Code and the Corporate Governance Council. Killing the Corporate Governance Council definitely gives the wrong impression and the three Integrity Probes should pay proper attention to this subject.
Let's not allow Government to silently kill the Corporate Governance Council.
Roeland Zwanikken
Partner of BZSE Attorneys at Law/Tax Lawyers