THE HAGUE/PHILIPSBURG--St. Maarten's government-owned companies are almost non-compliant where it comes to corporate governance, integrity and transparency requirements.

 

That is the conclusion of the Integrity Inquiry into the Functioning of the Government of St. Maarten, a report that was released on Friday and which was ordered by the Kingdom Council of Ministers in September last year through St. Maarten Governor Eugene Holiday. The harbour company didn't cooperate with the integrity inquiry.

 

The inquiry team of the New York based accountancy firm PricewaterhouseCoopers (PwC) looked at the four largest government-owned companies, St. Maarten Harbour Holding Company (SMHHC), the Princess Juliana International Airport Operating Company PJIAE, St. Maarten's utilities company GEBE and the St. Maarten Telecommunications Company TelEm.

 

Five elements were used for the integrity architecture assessment of these four companies: commitment and devotion of resources, integrity compliance programme, procurement (public tendering), governance and oversight, and transparency.

 

The so-called maturity of these elements based on global standards was deemed "low," except for the element governance and oversight which was rated medium. The inquiry team concluded that the overall integrity architecture maturity for the four government- owned companies was low.

The inquiry team noted in its report that the SMHHC did not provide any documentation which was requested from the company. Therefore the inquiry of this entity was limited to information obtained through interviews and documents provided by third parties. GEBE didn't provide its full cooperation either. "Several documents requested from GEBE, including any anti-corruption or procurement-related policies were not provided to the inquiry team, and therefore a complete analysis of GEBE's integrity framework was not conducted."

 

According to the report, the government-owned companies are "key contributors to the stability of the local economy and public infrastructure," it was stated. Yet, these companies have major gaps in their integrity architecture.

 

In general, the companies showed a lack of compliance with existing regulatory and corporate requirements, a lack of well-functioning integrity compliance programmes, and a lack of transparency and reporting mechanisms.

 

The inquiry team attributed some of these shortcomings to a "lack of policies, procedures, transparency and commitment from senior management." It also appeared that "several" of the government-owned companies didn't adhere to the same laws governing the operations of private companies, it was stated in the report.

 

"Examples of observed non-compliance include avoidance of corporate governance rules by subsidiaries of the government-owned companies, no profiles for Supervisory Board members and an absence of the required interaction with the Corporate Governance Council."

 

Integrity compliance programmes in many cases missed components like a Code of Conduct, anti-corruption policies, and adequate and documented procurement, payment and whistleblowers policies.

 

Where it came to transparency it was concluded that the companies were largely non-transparent to their stakeholders, including government, third parties and the general public. Only one company, PJIAE, disclosed its financial results and company objectives in an annual report, posted on the company's website.

Of the other three companies, the inquiry team was unable to locate the disclosure of financial results, company objectives, the remuneration of the executive management and Supervisory Board members. Neither GEBE, nor TelEm were transparent with their business activities and financial health. Operational or financial results were not published.

 

The inquiry team was especially critical of the Harbour Group of Companies. "The SMHHC appears to be non-transparent with its business activities and financial results. " Individuals who spoke with the team of researchers mentioned that their repeated attempts to obtain SMHHC's financial statements were unsuccessful. It was noted that the general public should be able to obtain this information from the company by law. It was observed that, "The SMHHC discloses very little information in general about the 13 companies that form the group through its website or any other means."

 

Information was neither provided on several large infrastructural projects that were completed by the government-owned companies, mainly on bidding and award procedures. "Limited reporting decreased the accountability of these companies to their stakeholders and contributes to the perception of corruption."

 

The report listed various observations that indicated irregularities took place at the government-owned companies. According to the report, the government-owned companies appear to have travel and expense policies which create opportunities for abuse by staff.

 

It was noted that the staff of one, unnamed company, appeared to have received daily cash allowances for meals prior to travel but purchased meals using corporate credit cards while on the trip.

 

In 2014, the Supervisory Board of Directors and senior management of one of the companies travelled to Miami for a board meeting. They received cheques prior to the trip for allowances for meals between US $150 and 175 per day, but during the trip the group spent more than US $6,000 on meals charged to corporate credit cards or paid for by wire transfer requests, according to documentation analysed by the inquiry team.

Records reviewed indicated that these officials also appeared to have bought gifts and personal items during the trip, and appeared to have charged to the corporate credit card an expense for US $5,200 to watch an NBA basketball playoff game.

 

The report cited various recommendations for the government-owned companies to achieve a better integrity architecture. One of the recommendations was to institute an Office of Chief Compliance Officer which would closely work with the Integrity Project Management, another recommendation specifically for government. Only PJIAE currently has a compliance officer.

 

Some of the recommendations included: government should assert itself as sole shareholder and enforce that the government-owned companies comply with laws governing private companies, implement and enforce corporate governance rules, require independence of the Supervisory Board of Directors and have profiles formulated for them, install and enforce an integrity compliance programme, institute and enforce a Code of Conduct for all employees, institute whistleblower policies, establish standardised procurement guidelines, establish strict and explicit policies and prevent that employees can make double expenses, require disclosures, conduct checks for non-compliance through an internal audit and have regular, independent assessments.

 

(The Daily Herald)

 

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