Harbour Holding’s 2013 financial statements show: Royal rewards and remarkable loans

POSTED: 12/15/14 10:41 PM

St. Maarten / By Hilbert Haar – Kingdom Relations Minister Ronald Plasterk wants to include the risks government-owned companies pose to St. Maarten in the assessment of the country’s budget by financial supervisor Cft. The Harbor group of Companies has always been reluctant to open its books for the government. This newspaper obtained a copy of the harbor’s 2013 financial statements and of the 2014 budget forecast.

The picture that emerges from this rich source of data is confusing and impressive at the same time. The 2013 statements obtained the nod of approval from the external auditor, PricewaterhouseCoopers. The audit indicates that the figures the holding presented give “a true and fair view of the financial position of the St. Maarten Harbour Holding Company NV as at December 31, 2013, and of its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards.” The opinion is signed by PWC-auditor Cees Rokx.

However, there are certainly a number of issues that raise eyebrows, like the fact that the harbor has not paid profit tax over the past two years, that it has granted employees almost $160,000 in advance payments, that the members of the supervisory board receive $135,000 between them, even though, according to the 2014 budget, they only attend four quarterly meetings a year.

The board members receive $8,257 a month for their work. Currently there are just three board members. At four meetings a year, their remunerations ads up to $24,771 per meeting. There are people on our island who make less in a whole year.

The budget 2014 of which this newspaper has a copy covers the Harbour Holding Company NV and seven of its wholly owned subsidiaries – most of them with St. Maarten in their name: Harbour Cargo Facilities NV, Harbour Cruise Facilities NV, Ports Developments NV, Ports Authority NV, SMH Crane Company NV, Simpson Bay Lagoon Authority Corporation NV and St. Maarten Fueling NV. Excluded from this budget are several other port-related entities, like (St. Maarten) Harbour Finance NV, Harbour Operations NV, Harbour Consulting NV, Simpson Bay causeway NV and Harbour Seashore Development NV.

Altogether it is a near impenetrable web of twelve entities under the umbrella of the Holding.

The financial statements 2013 contain an overview of the outstanding loans. They total $208.3 million, consisting for the most part ($157.1 million) of a 5 percent corporate fixed rate corporate bond. Other outstanding loans are to Carnival Corporation ($27.2 million), Royal Caribbean ($13.8 million). The remaining roughly $10 million in loans is standing out with local organizations and companies, with one exception: Octavio Holdings, Inc.

This entity, established in Panama, entered into a loan agreement with SMH Crane Company NV in May 2009 for an amount of $3,250,000. The interest on this loan is 8 percent – the highest interest on any of the loans listed in the financial statements.’

Interestingly, according to documents provided to this newspaper, Octavio Holdings was established in Panama more than nine years ago, on April 20, 2005. More peculiar than the date of registration, is the name of the company’s president and secretary, Petrus Paulus Quirinus-Marie Soons. He is a brother of a former chairman of the harbor holding’s supervisory board, Michel Soons. There are two other directors listed: Eliseo de Leon as vice-president, and Jaime Garcia as treasurer.

The Octavio loan was used for the purchase of a second crane. The loan agreement is for 10 years and 7 months and ends in 2020.

Another remarkable loan is the one the St. Maarten Port Authority obtained from the government in February 1997 – almost eighteen years ago. The loan bears no interest so it was basically a gift from the government coffers to the port. It is unclear from the financial statement whether the port is repaying on the principal. Currently the loan is on the books for close to $2.9 million.

Then there is the loan from Windward Roads for the installation and financing of six windmills inside the harbor facility. At the end of 2013, there was still almost $344,000 on the books for this loan that bears a 7.5 percent interest rate. The original loan amount was just over $555,000, repayable in 48 months. There are however just five of these windmills at the port facility; the sixth one is standing, as far as we know, on the property of UP-leader Theo Heyliger. We were unable to confirm this yesterday, but reports are that the windmills at the port facility are not working.

On all loans combined, the harbor holding paid in 2013 $7.9 million in interest charges. The interest rates on nine of the ten loans vary from 5 percent for the fixed rate corporate bond to 8 percent for the loan to Octavio Holdings. In between, the interest rates vary from 6.5 to 7.5 percent. The exception is of course the government loan: that is free money.

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