PS calls protest at Central Bank

WILLEMSTAD--Curaçao coalition party "Pueblo Soberano" (PS) is organising a demonstration at the joint Central Bank of Curaçao and St. Maarten (CBCS) this Saturday, against the US $150-million bond loan for St. Maarten Harbour Holding (SMHH).

The initiative comes on the heels of news that the Curaçao-appointed members of the CBCS Supervisory Board are boycotting a meeting called for the same day by their St. Maarten-appointed counterparts, because they don't agree with the apparent intention to approve – among other things – the bond issue with a so-called "repurchase facility."

In addition, Curaçao Finance Minister George "Jorge" Jamaloodin (MFK) filed a complaint with the Prosecutor's Office against CBCS president-director Emsley Tromp, on Wednesday evening. He called the latter's actions regarding the St. Maarten bond loan unlawful, because the loan violates the Central Bank's investment policy.

Curaçao board member Glenn Camelia had already questioned in a March 5 letter whether particularly the repurchase facility, whereby the Central Bank guarantees it will buy bonds not sold to third parties, was legal.

Management – read Tromp – had stated in a response recently that there's no obscurity about the validity of its investment policy. According to CBCS, a credit rating is not necessary to invest in a loan on behalf of SMHH, because it involves a national investment.

However, an analysis of the bank's articles of association and investment policy show that there may be reason to doubt that everything proceeded legitimately. The statutes state that CBCS can invest its capital and reserves according to the rules that the Supervisory Board has set in the investment policy.

Article 27 only mentions investments and doesn't make a distinction between national and non-national. "The investment of its capital occurs on the basis of a pre-determined investment policy, whereby it can only invest in the indicated securities."

However, the board did not determine an investment policy for 2012 and the last approved investment activity dates back to last year. That policy stated that the bank's investment activities are focused on maximising return on its capital and must occur within the legally embedded restrictions, within the scope of the monetary policy and the chosen risk limits.

It further stated that within such limits, all investments must fall into four determined categories: bonds from foreign governments, government-guaranteed institutions, international organisations with a credit rating of AA3 and foreign banks with a credit rating of at least AA3. It appears the loan on behalf of SMHH is outside these categories.

The argument is that based on the 2011 investment policy, CBCS would not have been allowed to buy the bonds, let alone guarantee their repurchase against the rate of issue. The guarantee that CBCS sent, in a letter to AIC Finance on February 10, would only be allowed in the bank's role as "lender of last resort," according to the explanatory memorandum to Article 10, Section 6 of the bank's articles of association.

In his letter to Acting Board Chairman Renny Maduro, Camelia had also indicated that it's hard to make any appointments on an inquiry into the actions of Tromp. It is even suggested that Tromp may be acting in bad faith.

In a board decision of October 12 last year, it was determined that an inquiry would take place, according to Camelia. To enable this to proceed objectively and independently, it was determined that Tromp would take a paid holiday.

The letter states that Tromp had ultimately agreed and the decision was handed to him personally on January 3. However, from various correspondences, Camelia assumes Tromp is yet to honour the agreement and refuses to cooperate with an objective inquiry. "This leans towards anarchism," Camelia wrote.

"The president doesn't honour a decision from the board based on its supervisory role and thinks he can attend a meeting with the same board. Even worse, the president thinks he can convene a meeting of the board on his own."

Camelia referred to the bank's articles of association, which state that the Supervisory Board meets at least once every two months and as often as the chairman, president or two members deem necessary or desirable.

"However, if two members deem a meeting necessary or desirable, also if the president deems such desirable or necessary, one must follow the procedure via the chairman. It attests to bad faith and is against the spirit of the bank's articles of association, when the chairman indicates with reason that a meeting with the president should not be held under these circumstances and the president still believes he can convene such, have the bank pay the cost involved and give the impression of taking lawful decisions," wrote Camelia.

That something has been brewing at CBCS for some time is known. Especially "Tromp's behaviour" is a problem for the current MFK/PS/MAN government.

He first came under fire a year ago, when Prime Minister Gerrit Schotte (MFK) revealed documents from which it appeared that US $400,000 had been deposited into Tromp's pension account from a loan of several million, which the boutique of his girlfriend had been granted without any collateral.

Then there's the approval of a bond loan on behalf of Curaçao utility company Aqualectra for NAf. 300 million in December 2009 and now the guarantee for the SHMM bond loan of US $150 million.

Source: http://www.thedailyherald.com/islands/1-islands-news/27233-ps-calls-protest-at-central-bank-.html

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