PHILIPSBURG--Negatively affecting the retirement provision of about 30,000 people living mainly in Curaçao and St. Maarten, the problems at pension insurer Ennia are a societal issue that also pose a risk to these countries’ budgets, warned State Secretary for Kingdom Relations Alexandra van Huffelen. The governments of both Curaçao and St. Maarten have been asked to come up with a solution.
Van Huffelen recently held a digital press conference discussing the support provided by the Rutte cabinet to the islands through an investment programme for the economy and energy transition. At the end, she mentioned sending letters to the three governments of Curaçao, Aruba, and St. Maarten regarding refinancing, to indicate “the contours according to which we would like to shape that refinancing.”
The contents of those letters are still confidential, but with regard to Curaçao and St. Maarten, Van Huffelen mentioned that “in connection with the repayment regime, the Ennia issue is also being considered.”
The Netherlands asked both Curaçao and St. Maarten to “come up with a solution to the problems at the pension insurer Ennia.”
The intention is to achieve long-term refinancing of the liquidity loans, tailored to the countries’ financial capacity, said Van Huffelen. “It is important for the budget risks to be clear and for measures to be taken to manage those risks. If a solution is found for this problem, we can arrive at an appropriate refinancing.”
Curaçao’s Council of Ministers will discuss solutions to the Ennia problem today, Wednesday, Curaçao Finance Minister Javier Silvania (MFK) announced during an interview with the newspaper Amigoe.
Silvania explained that the Council of Ministers had set up a commission at his request last year. This committee, consisting of Raymond Faneyte, Miguel Jackson and Kelvin Kleist, among others, was tasked with making concrete proposals to solve the “Ennia problem”. The committee delivered its opinion last week and the decision document will be put on the agenda of the Council of Ministers today. The committee will also give a presentation.
An important judgment from the Court of Justice is expected in early June in the major liability case that the Central Bank of Curaçao and St. Maarten (CBCS) has brought on behalf of Ennia against owner Hushang Ansary and several former directors of Ennia. In the first instance, CBCS/Ennia won the case in November 2021, with an award of damages of more than one billion guilders.
Ansary, or Parman International BV, has previously indicated that it is willing to pay. In a letter to CBCS, he said through his lawyer Mirto Murray that he is willing to repay his share to Ennia. Together with his daughter Nina, Ansary would be liable for 945 million guilders (US $524.9 million). However, his daughter distanced herself from this. Nina Ansary has sued CBCS in a US court, accusing the bank of “opportunistic looting”. She is seeking damages of no less than US $110 million.
Ennia has an ongoing appeal case on St. Maarten against Ansary regarding the Mullet Bay property. In addition, Ennia has filed a case against former Ennia director Ralph Palm, who is held liable for 232 million guilders (US $128.9 million).
If the owner of Ennia, Nina Ansary, continues to refuse to contribute or return withdrawn funds to address the solvency shortfall, it is likely that a request for assistance will be made to the Netherlands on behalf of Curaçao and St. Maarten. The countries have not yet made such a request, confirmed State Secretary Van Huffelen.
CBCS director Richard Doornbosch has asked the governments of Curaçao and St. Maarten to make a decision regarding Ennia before June 30. CBCS has concluded that if the alleged damage to Ennia is not compensated by, among others, Nina Ansary, CBCS will at some point have to proceed to a reduction in benefits and accrued pensions.
The solvency deficit of Ennia Caribe Leven (ECL) must be resolved. According to the committee that is giving a presentation to the Council of Ministers of Curaçao today, a capital contribution of between 600 million and 700 million guilders is needed by the end of 2023 to prevent policyholders from having their pensions cut. This money should come from the governments, pending the outcome of the liability case against Ennia owner Hushang Ansary and return of withdrawn funds.
A second option, based on the financial model developed by the committee in close collaboration with Deloitte Netherlands and Phenox, is that the governments jointly contribute 50 million guilders (US $27.8 million) annually over the next 25 years, rising to an amount of 1.26 billion guilders (US $0.7 billion). In this scenario, there would be an 80% discount on old entitlements, resulting in lower benefits for policyholders.
The question arises as to how the countries will obtain this money. The committee mentioned a number of possible ways, such as financing via capital markets, levies on the financial sector, distribution of partially silent reserves on the CBCS balance sheet to the fund and dividend payments from CBCS to the fund.
The committee recommends setting up a financial stability fund (FSF) to deal with crises in the financial sector in a structural way. This fund would act as a compensation mechanism.
