Dear Editor,
The Central Bank Statute of Curaçao and Sint Maarten contains areas of concern that could seriously impede good governance and threaten the independence of the CBCS. The concerns are listed here, with reference to the articles of the Central Bank Statute from which they are derived:
First: It is virtually impossible to hold CBCS directors and supervisory board members liable for gross negligence or gross neglect of duties (derived from Article 14).
The Banking Statute states that The CBCS, the Supervisory Board (SB), the Executive Board (EB), the staff or engaged third parties, are not liable for damage inflicted in the normal exercise of their statutory duties and powers, unless the damage is due to intent or gross culpability. Intent or gross culpability are very high thresholds. In the case of regular directors and supervisory board members, the threshold for liability is much lower, namely at the question of whether they can be “blamed seriously”. In itself it is defensible and also according to international principles that there is (some) protection for directors and supervisory board members of financial supervisory authorities. However, this protection does not have to be virtually absolute. The extremely high threshold may result in not being able to hold CBCS directors and supervisory board members accountable for gross negligence or serious neglect of duties, while these may cause significant damage to the CBCS, the financial sector and the supervised institutions.
Second: There are no consequences for the violation of the legal independence of the CBCS, the Executive Board and Supervisory Board with regard to the countries of Curaçao and St. Maarten (derived from Article 18).
The Bank and its organs are not allowed to seek or accept instructions from the countries or organs of the countries. Influencing is not permitted according to the law. However, the article of the Bank Statute that mentions this independence does not attach any consequences to its violation. Therefore, this seems to happen with some regularity. Successive ministers of finance seem to have interfered in the past to a far-reaching extent with the course of events within the CBCS by means of improper (political) steering instruments. Even if this did not actually happen, even the appearance of it should be avoided in an independent institution like the Central Bank.
Third: The appointment of the president, the members of the Executive Board and the Supervisory Board is susceptible to political influence (derived from Articles 20 and 25).
The directors and supervisory board members of the CBCS are appointed by joint national decree of Curaçao and St. Maarten (the countries). This means that the countries have to agree on this politically. In general, a politicized appointment is already problematic because not always the right person will be considered for the position. On top of that, in case of political disagreement, the countries can hold each other “hostage” by stalling a national decree to appoint. This procedure should therefore be rethought and redesigned. Expertise and relevant experience should play a decisive role, and not affinity with a party or the (lack of) possession of a certain nationality.
Fourth: The process of appointing the president of the CBCS is unnecessarily complex (derived from Article 20).
In addition to the political nature of the president’s appointment, the process is also unnecessarily complex. The president and the two directors are appointed from a joint nomination of three persons for each position. The nomination is based on a recommendation by at least five members of the Supervisory Board. If the countries do not accept a recommendation within three months, the Supervisory Board appoints a temporary president or director from that recommendation. Recent years have shown time and again that this procedure can be delayed and frustrated for political reasons. This is undesirable, also for the reputation of the CBCS and those involved. This procedure also needs to be rethought and redesigned.
Fifth: The appointment of the chairman of the Supervisory Board is unnecessarily complex and easy to frustrate (derived from Article 25).
The chairman of the Supervisory Board is appointed by joint national decree, following a joint nomination by the ministers of the countries, based on a recommendation made by a 5/6 majority of the supervisory board members. This process is complex and – for political reasons – can easily be frustrated. In that case, the president of the Common Court of Justice of Aruba, Curaçao and St. Maarten and of Bonaire, Saba and St. Eustatius (‘Hof’) will have to be asked to provide for a temporary appointment. This has occurred more often in the past because the parties involved could not agree on the (re)appointment of the president or one of the supervisory board members.
Sixth: The four-year term of appointment of supervisory directors encourages political influence (derived from Article 25).
The term of appointment of supervisory board members is four years. In the current composition, a large part of the supervisory board members is appointed or reappointed at the same time. This construction encourages political influence. To illustrate, the current minister of finance of Curaçao is currently involved in the appointment of the chairman and three members of the Board. This gives this minister the opportunity to put a disproportionate stamp on the composition of the Board. The law should therefore include a regulation that allows for gradual replacement of supervisory board members, and that prevents a (too large) group of supervisory board members from being replaced at the same time after four years.
Seventh: The job specification of the Supervisory Board leaves room for improper interference in supervisory tasks of the CBCS (derived from Article 26).
The statutory job specification of the board is brief. Moreover, no delineation of the supervisory task of the board is given. It is essential that the supervisory board members do not interfere with the prudential or conduct supervision that the CBCS carries out on the supervised institutions. It should be unthinkable for the supervisory board or individual supervisory board members to be aware of or interfere with specific files and ongoing supervisory matters. The law contains too few safeguards to prevent this undesirable behavior.
Eighth: There are insufficient safeguards for (political) independence of the president, directors and supervisory board members (derived from Article 30).
The law contains too few safeguards to avoid the (appearance of) conflict of interest. The regulation in Article 30 of the Central Bank Statute lacks essential (substantive) provisions to ensure the independence of the president, directors and supervisory board members and to intervene when there are conflicting interests.
Ninth: The Central Bank Statute is not linked to the Corporate Governance Code and Book 2 of the Civil Code (“BW”).
A major omission in the law is the lack of linking provisions in the text of the Central Bank Statute to the Corporate Governance Code and the Civil Code. Although the explanatory memorandum to the Central Bank Statute refers to the Code, this is not sufficient for applicability. Core provisions from Book 2 of the Civil Code, which ensure good governance and supervision within a company, should also be prescribed and applied for CBCS.
Justus van der Lubbe
CEO of insurance company Inter-Assure
