Central Bank Board split over bond loans

August 29, 2012 2:37 PM

WILLEMSTAD — The Supervisory Board of the joint Central Bank of Curaçao and St. Maarten (CBCS) is still uncertain about the legality of the – then Antillean – bank's intervention by means of a bond loan for Curaçao utility company Aqualectra.

This appears from the draft report drawn up by the General Audit Chamber of Curaçao in July. Acting chairman Renny Maduro still criticises this matter and wrote in a recent report to the governments of Curaçao and St. Maarten as shareholders that the Central Bank had contravened the law.
 
The Audit Chamber was also unable to verify whether the bank had abided by the rules regarding the bond loan. The issue drove a wedge between the three board members of Curaçao on the one hand and the three of St. Maarten on the other.
 
The Chamber had received a written request on June 7, 2011, from the Chairman of Curaçao's Parliament to conduct an inquiry into CBCS, in accordance with a motion adopted by the legislature on May 31. The Chamber looked into the set-up of the system of supervision at the bank, rules for personnel, a possible pension scheme of director Emsley Tromp and the bond loan for Aqualectra.
 
According to the Chamber, getting cooperation from the Central Bank did not go smoothly, as it wasn't granted inspection of certain unclassified files and didn't receive answers to important questions including what stipulation of the bank's articles of association had formed the basis for it to act as "agent" in the bond loan for the utility company. Nor was the Chamber told how much the bank had been paid for its work on this.
 
Acting as agent regarding bond loans to a limited liability company wasn't mentioned on a list of permitted tasks in the former articles of association of the Central Bank. According to the Audit Chamber, the question therefore remains whether the bank abided by the law regarding Aqualectra.
 
However, the articles of association dating from 2010 state that CBCS authority includes "mediation with issuing, buying and selling of treasury notes and bonds issued by one of the countries."
 
The Audit Chamber inquiry further shows that the system of supervision by the Central Bank on the financial sector is sufficient overall, although it didn't receive all relevant information and a detailed policy on the matter isn't available. However, supervision of the bank itself leaves room for improvement.
 
Regarding the pension scheme of Tromp, the Chamber concluded that there was a question of capital management in Tromp's private matters.
 
The Amigoe newspaper got hold of a report that acting chairman Maduro had sent to the Councils of Ministers of Curaçao and St. Maarten in early June. Apparently this is the reason for the rift within the Supervisory Board.
 
The members appointed by Curaçao refuse to get around the table with Tromp as long as he doesn't withdraw so the bureau "INSTIfin" can conduct an independent investigation. However, those from St. Maarten don't agree.
 
Maduro's report was a reply to Tromp's response on a previous analysis by the acting chairman. The latter said Tromp had misled the board when he had informed it on October 12, 2011 that the bond loan of December 2009 for Aqualectra had been discussed with and approved by the bank's investment committee.
 
Regarding the bond loan of US $150 million earlier this year for the harbour of St. Maarten, Maduro said Tromp couldn't explain which stipulation or investment policy justified CBCS' issuing the so-called "repurchase facility." According to the acting chairman, there are reasons to suspect that Tromp and possibly other managers of CBCS, without knowledge and approval of the board, approved actions that contravene the bank's articles of association as well as existing regulations and procedures.
 
Maduro said CBCS had made itself appear to have committed crimes outlined in Articles 2:322 and 2:331 of the Penal Code. Article 2:322 states: "He who issues bonds or is entrusted with or assists in placing bonds, and entices the public to register or participate by deliberately suppressing or mutilating true or conjuring up false facts or circumstances, will be punished with at least a four-year imprisonment or a fine of the fourth category."
 
Article 2:331 states: "The manager or board member of a corporate body who deliberately assists with – or gives permission for any action contravening legal stipulations of the articles of regulations causing serious disadvantage to the corporate body, will be punished with at least a one-year imprisonment or a fine of the third category."