Corporate Governance Council takes budget struggle to ParliamentPOSTED: 02/25/11 12:45 PM
Duzanson: “This is a vicious cycle”
St. Maarten / By Donellis Browne – Parliament has been requested to intervene in a yearlong battle for the Corporate Governance Council to receive its budget allocation for 2010 and 2011. A letter with three instructions to government was submitted by the Council’s Chairman Louie Duzanson on Wednesday. The budget has been discussed in letters and at meetings on February 26, 2010, August 3, 2010 with the Central Committee of the Island Council, August 5 with the Executive Council and January 6 with the Council of Ministers.
The letter asserts that government is in breach of its own laws and the Kingdom Law on Financial Supervision for not ensuring the budget for the Council has been approved and handed over. It then requests that Parliament instruct the government to approve the budgets for 2010 and 2011, to instruct the government owned companies and government controlled foundations to make the funds available in one month and retrieve the funds after establishing the division key.
The news comes as the Council prepares to mark its first birthday on February 26. In that year Council members have funded the body’s basic operations from their own finances “for love of country.” A year on and with tasks completed they’ve elevated their pressure tactics because of the requests because of unresponsiveness and because of the requests they are getting from companies and foundations that fall under their scope and others that do not.
Article 12 of the Island Ordinance Corporate Governance Council, which was approved on May 11, 2009, mandates the council to present its budget for honorariums, expenses for the administration, and the hiring of external experts, to government no later than October 31 of the preceding year i.e the 2012 budget is due this October. Article 12 further mandates government and the companies and foundations to come to an agreement on how the latter two entities will cover the budget via a division key.
Duzanson explained that the budget for 2010 was submitted in April 2010, simply because that was the first period after the Council was sworn in on March 9, 2010 when the request was submitted. A request was already delivered for an advance. Both of these have not gotten a response. On October 4, 2010 the Council submitted a revised budget for the year with certain elements removed. On October 25 they submitted the budget for 2011.
“So far we have not had any response on the budgets and the request for an advance. We also have not received any response on our four year plan of action and the division key that we drafted and suggested but government seems to be leaving the collection of our budget very much up to the association,” Duzanson said.
He added, “We have no office. We have no staff. We have no financial assistance. The members are funding the operation and right now it seems like a one sided operation. If we had means we could also comply with the mandate to publish our advices so people could follow our approach to government.”
The lack of a budget has not completely stopped the Council from functioning as they’ve provided advice on four appointments to supervisory boards of directors for government owned companies and hosted a seminar in November that was supported by Price Water House Coopers and VanEps Kunneman VanDoorne. The council believes having their budget will allow to do much more, including responding to the requests for assistance from the government owned companies and government controlled foundations that resort under their authority.
“We want to have more seminars and workshops to help directors understand their position and how to effective lead these companies and foundations. We believe that if these directors don’t know their task they’ll sit back, collect their stipends and attend meetings and that is a vicious cycle. In fact they have reached out to me for assistance and I have said I want to help, but I will not open my home office for that. I have already been approached by at least two people who are directors and I have gone as far as having them pass by my house to drop off and/or collect information. I have also gone to the offices to collect information but there comes a time when a more permanent space is needed,” Duzanson said.
Directors of Winair are among those who requested assistance, but Duzanson said he’s informed them that they don’t fall under the body’s mandate. The company’s board is on the brink of being sacked by the Shareholder Representative – Prime Minister Sarah Wescot-Williams – and they’ve turned to the council for advice.
The Council’s push also comes in response to a February 7, 2011 letter from the Board of financial supervision (Cft). The Cft asserts they have a role to play in implementing Corporate Governance, but Duzanson has informed them in a letter on February 14 that the Council does not share that opinion based on their review of both Kingdom Law on Financial Supervision for Curacao and St. Maarten and the law establishing the Council. The General Measure on Financial Supervision gave the Cft a role in ensuring the Council was set up, but that task came to an end on October 10, 2010.
“The task of identifying risks and verifying revenues does not imply corporate governance supervision and we believe the government is you port of call when it comes to acquiring the annual accounts of the government owned companies. According to the Corporate Governance Council’s plan of action we will seek to ensure that companies and government controlled foundations submit annual accounts to government to ensure the Cft can have them for analysis,” Duzanson said.
Prime Minister Sarah Wescot-Williams said Wednesday she is aware the Council has been working albeit with limitations because they have not yet received their budget. She also announced that no formula had been worked out for the contributions, which is in direct contrast to what Duzanson said about and advice having been submitted.
“That picture has not been worked out,” Wescot-Williams said.
Duzanson has also pleaded for government to appoint a liaison officer that the Council can speak to directly as is seeks to carry out its core task of providing solicited or unsolicited advice. They’ve also requested that the task of the Council as assigned in the Decree of Institution (Instellingsbesluit) be examined as in their view it encroaches upon the work that should be done by the directors themselves. Those additional tasks include structurally supporting and advising the government on the strategic policies of the companies, reviewing annual accounts, budgets and quarterly reports, assisting in preparing annual general meetings, assisting in preparing resolutions for annual general meetings, assisting in preparing resolutions for the shareholder outside of meetings, coordinating reports by the shareholder.
Duzanson believes there should be no issue where the specific Corporate Governance legislation is concerned because the Island Council had already taken a decision that island ordinances would become the law when the island became a country and that only legislation in areas that were not yet regulated by island ordinances would be taken over from the Netherlands Antilles.
“How can that law then be taken over, when we already had an island ordinance. What needs to be considered is that Federal Ordinance allows the government to appoint an external agency like the SOAB, which we have seen in Curacao. If the government wants to do that here, then they just need to come out and say it,” Duzanson said.
The Council of Ministers discussed the choice between ordinances on Tuesday, but did not make a decision. The prime minister does not believe however that work should stop because there is an ongoing discussion.
“The work will have to continue, but government has been discussing whether given the country statues of St. Maarten whether the ordinance, the law that was put in place as an island territory for the Corporate Governance Council is the basis on which we want to continue with the operation of the Council,” Wescot-Williams said.