THE HAGUE--St. Maarten is circumventing financial supervision with the US $150-million loan of the St. Maarten Harbour Group of Companies, believes Member of the Dutch Parliament's Second Chamber André Bosman of the ruling liberal democratic VVD party, on Tuesday.
The harbour loan is not only on the fringe of the rules of financial supervision, but it is also a "financial risk" for St. Maarten's Government, because, in his opinion, the latter stands guarantee through the Central Bank for Curaçao and St. Maarten (CBCS), Bosman said, during Tuesday's weekly questioning hour of Dutch cabinet members in Parliament.
Minister of Home Affairs and Kingdom Relations Liesbeth Bosman was called to Parliament to answer Bosman's question about what he labelled a "fraud sensitive" loan of the Central Bank for St. Maarten's harbour company, "which remains out of the government books, thereby eluding financial supervision."
"The CBCS stands guarantee for this loan with a repurchase facility. These bonds can always be sold back to the Central Bank for the original price. If the loan has an insufficient output and the value of the bonds drops below price, the Central Bank will lose," said Bosman.
In his opinion, it indirectly concerns a guarantee of the Government of St. Maarten, said Bosman, who in February had already posed written questions to Minister Spies on this issue. Bosman based his view on Articles 15 and 16 of the Financial Supervision Law for Curaçao and St. Maarten, which regulate the countries' entering into loans.
"You can say that it isn't a loan of government, but of the harbour. But the guarantee lies with government, so indirectly it is a government loan. I have a feeling that we are being taken for a ride via a detour. The transparency is insufficient," Bosman told The Daily Herald after the meeting.
The loan is a financial risk to St. Maarten's budget, Bosman said in Parliament. The fact is that if the bond doesn't perform, the Central Bank will have to write off the loan. This will negatively affect the payment of dividends of the Central Bank to the Governments of Curaçao and St. Maarten, which respectively own 75 and 25 per cent of the Bank's shares. Lower dividends will have an adverse effect on the budgets of these two countries, because of lower revenues.
Minister Spies repeated the answer that she had given to Bosman's written questions: that the harbour was a company according to private law and as such the loan doesn't fall under the regulations of the Financial Supervision Law.
According to Spies, the fact that the Central Bank stands guarantee doesn't mean that The Netherlands should have an immediate opinion on this matter. She pointed out that the Central Bank was a responsibility of Curaçao and St. Maarten and that is where the discussion should take place.
CFT mandate
Bosman wants the Council for Financial Supervision CFT to have "complete access" to the financial situation of the government-owned companies and their loans. Until that time, the CFT should not approve the budgets of Curaçao and St. Maarten, he added.
Member of Parliament (MP) Bas Jan van Bochove of the governing Christian Democratic Party CDA asked if the financial situation of the government-owned companies should not be taken along in CFT's findings.
Spies pointed out that the regulations of the CFT would have to be changed to give the council more responsibilities, more leeway and more authority. And to do that, there has to be a collective agreement by all three countries: Curaçao, St. Maarten and The Netherlands, she said. She said that the CFT had already warned of the risks of mixing up government finances with the finances of "quite a few" government-owned companies in Curaçao and St. Maarten.
During Tuesday's meeting, Bosman also expressed his concerns about the developments surrounding the CBCS and its President Emsley Tromp. "By granting the US $150-million harbour loan, he [Tromp-Ed.] reinforces the impression that there is no transparency and trust within and outside the Bank."
Split-up
Bosman also shared his concerns about St. Maarten's desire to split up the joint Central Bank. The MP is against a split-up. Besides it being against the agreement that was made with The Netherlands, he said that St. Maarten was also ill equipped to ensure an independent position of the Central Bank, because of St. Maarten's small scale. He asked the Minister if that split-up could be prevented.
Spies pointed out that it had been agreed in the Kingdom Charter that there would be a joint Central Bank. "A split-up would put pressure on the Charter," she said, adding that she was under the impression that there was no support for a split-up in the Central Bank's Board of Supervisory Directors.
The Minister said she "very much shared" Bosman's concerns about the developments surrounding the Central Bank. "The fact that the Central Bank is under discussion in two countries is not good for the Bank's image. It is not good for the financial stability and the confidence in the Bank."
Banana republic
Independent MP Hero Brinkman took the opportunity to refer to Curaçao and St. Maarten as a "banana republic." About Curaçao, he said: "I can imagine the concerns about integrity, when the Central Bank President and the Prime Minister are quarrelling about being the biggest crook."
Brinkman asked the Minister if she could guarantee that The Netherlands would not foot the bill if St. Maarten's harbour proved unable to repay the loan. Spies said she considered it "highly unlikely that there would be a positive answer," if the other countries in the Kingdom requested The Netherlands to cover the losses. MP Eric Lucassen of the Party for Freedom PVV asked the Minister to prevent the countries from building up a debt again.
In a reaction after the meeting, Bosman said he would again raise the issue of the CBCS and the harbour loan during the debate with Spies, this Thursday. "I want to know what the possibilities are to broaden the mandate of the CFT. I stand by my point that this construction poses a financial risk for St. Maarten's budget."
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