LECTURE ON GOOD CORPORATE GOVERNANCE IN CURACAO

April 15, 2010 4:57 AM

Corporate Governance Adviser must be a strong and independent watchdog over the executive also

On April 13, 2010 a seminar on Good Corporate Governance with respect to Curacao-owned enterprises and foundations was held in Curacao.

I was one of the keynote speakers and delivered my presentation in the Dutch language (click here for the presentation or click here for the coverage of the event by the Antilliaans Dagblad).

I argued that government-owned companies should be left out of the political sphere as much as possible, so they can benefit from a commercial, businesslike and market-oriented exploitation. That way they also run less of a risk of being used as milking cows or political toys.

Corporate governance is important in that sense, because the activities of these companies often affect the general interest and they must therefore be transparent and controllable. In my opinion, legislation and regulation are the answer where the public interest is involved, rather than government executing shareholder rights. I strongly suggested independent, non-political management and supervisory boards and even making the publication of annual accounts mandatory.

One of the central challenges is how to restore the Island Government’s integrity. In the past decades, it has become a bad habit for the Island Government to replace managing directors and supervisory directors each time when the island government changes party. The new corporate government code aims at preventing the government from wielding too much influence on the operations of companies.

Speaking about the Island Government in its capacity of shareholder of government-ruled companies, such as the airport, harbor, telecommunication and others, I mentioned as “plus points” of the new regulations: better procedures concerning the decision-making process and more transparency (advices of the Corporate Governance Adviser will be put on a website). The Island Government will now be forced to motivate any critical objection that deviates from the advice of the Corporate Governance Adviser (i.e. the Stichting Bureau Toezicht en Normering Overheidsentiteiten; SBTNO).

However, the question is to what extent politicians can withstand the old temptation to appoint their friends or other persons they consider loyal to their party. The only obstacles are a Corporate Governance Adviser (SBTNO) which is looking over their shoulder and a candidate who must be put to a test based on a commercial profile sketch. Therefore, the Corporate Governance Adviser must be a strong and independent watchdog, also over the executive.

With the new Corporate Governance ordinances in hand the Judicial Courts are now also equipped to better evaluate Government decisions to fire and appoint Board members of government-owned companies. I am not only calling upon the Courts to stop political favoritism whenever they get the opportunity, but also the people of Curacao. Public awareness and the public (including the media) acting as a ‘watchdog’ are key to the success of the new legislation.

Karel Frielink
Attorney (Lawyer) / Partner

15 April 2010