American University uses Cayman construction to ease tax burden

POSTED: 05/8/11 7:05 PM

Dismissed professor want her job back at AUC

St. Maarten / Hilbert Haar – The American University of the Caribbean pays its faculties almost half of their salaries through a company in the Cayman Islands. The university says that the construction is based on an agreement with the tax inspectorate in St. Maarten and that it was put in place to ease the university’s tax burden. Insiders say that the AUC turns over approximately 450 million per year in St. Maarten. The tax inspectorate was unavailable for a comment yesterday afternoon.

The tax construction surfaced yesterday morning during a lawsuit initiated by a professor whose contract was terminated by the AUC per the end of this month. The professor, who asked this paper not to identify her by name over concerns for her reputation, contests the dismissal and wishes to return to work.

Judge Mr. R.W.J. van Veen heard arguments from both parties in summary proceedings yesterday. He will rule on the case next Friday morning.

Mr. W.A. van Sambeek told the court that the reasons the AUC has given to terminate the contract are unreasonable and that a judge in a normal court procedure would certainly rule in his client’s favor.

Relationships at the university soured after the AUC fired the professor’s husband on questionable grounds last year. The university argues that the professor’s behavior became untenable and that, anyway, her performance was below par.

Van Sambeek contested that notion, saying that his client had been given a full professorate in 2008 and that she had made significant contributions to the university’s study program.

The AUC paid the professor an annual salary of $87,500; but after it terminated the contract per May 31 sometime in January, the university only paid the part of her salary that comes out of its local accounts.

Van Sambeek pointed out that the faculty manual is a part of the labor contract. This manual contains rules about the procedures parties have to follow in case of conflicts. Because the university did not follow these procedures, the dismissal is null and void, van Sambeek said. But the attorney for the AUC, Mr. C.J. Koster, countered that the university is not obliged to follow these procedures.

“My client’s family would be without income and would be forced to leave St. Maarten because there are no alternative similar positions available elsewhere,” Van Sambeek said, adding that the professor has been living in St. Maarten since 1988.

Mr. Koster said that the national ordinance on labor does not apply to educational institutions like the AUC and that it is therefore not necessary to ask permission for a dismissal. He said that the salary paid out of the Cayman Islands comes from a different legal entity and that this was for “consulting services,” not for teaching at the university in St. Maarten. Later however, Koster said that the Cayman construction was put in place to ease the tax burden for the university.

That prompted Judge Van Veen to remark that therefore the Cayman-payments were part of the professor’s salary.

Koster referred to several incidents over the past years to illustrate that the professor’s performance was far from stellar. But Van Sambeek later read a letter that showed appreciation for her work.

Koster maintained that the working relationship is disrupted. He contested that the professor has an interest in handling the case in summary proceedings because the university keeps paying her salary until the end of this month. He contested the interest in H

“It is unlikely that a judge in a normal court procedure will rule that the dismissal is unreasonable,” he said. “After her departure the atmosphere at the university has improved.”

Koster said that, in case the court rules that the professor has to be re-instated, the university will ask it to set an amount for severance pay. An earlier attempt to settle the dispute out of court for close to $100,000 failed.

Van Sambeek said that he had listened “with amazement” to the university’s arguments, and said that the only fact it had brought to the table was its productions.

Koster, unperturbed, turned to the judge and asked rhetorically: “Do you see grounds for a healthy working relationship between the university and the professor? I don’t.”

The dean of the university, Dr. Testa, and the professor both got the last word. While the professor stated that she loves her work and her students, Testa did not mince his words. “We expected the professor to be angry and disappointed after her husband’s dismissal, and we have been very patient. But there have been no collective actions or petitions from students to protest against her dismissal. People no longer wanted to be contaminated by her toxic comments.”

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