By Frank Kunneman
Internationally recognized general rules of good governance such as “no political interference in government-affiliated entities” also apply to our Central Bank. This is laid down in the so-called Central Bank Statute. These are, so to speak, the statutes of the Central Bank, but laid down in law to underline their importance.
Recent publications in the media give rise to fears about the appointment strategy at the CBCS of our new government. Government statements in the media raise questions. Terrifying questions.
The AD (local Dutch newspaper) of 9 July states that the Minister of Finance of Curaçao has said that he will not follow the recommendation of the Supervisory Board for (re-)appointment of supervisory directors. According to him, the Curaçao government would like to appoint “its own” people. The government website stated on July 20 that the commissioners of the CBCS would be “thanked” for their services and that new nominations would be worked on. According to the AD of 21 July, the recommendation of the Supervisory Board was rejected by the government.
You may think, “Oh, what the hell.” Assuming the media coverage is correct, I have to kid you: this matters a lot. What the government apparently wants is not possible at all. It is against the law. So, it affects us all. Our government must follow the law.
The CBCS is the Central Bank of Curaçao and Sint Maarten. So, the Central Bank of two countries. The commissioners are appointed on the recommendation of the government of each of the countries, jointly by the countries (Article 25, paragraph 4, last sentence of the Central Bank Statute). The government of Curaçao can nominate three of the seven commissioners. It cannot independently appoint “its” supervisory directors.
Moreover, the government cannot make a nomination without a so-called “recommendation” from the Supervisory Board. That recommendation was already made by the Supervisory Board in April 2021. Now it is almost August. And make no mistake: that recommendation is not “without obligation”. Our government cannot make a nomination without a recommendation from the Supervisory Board.
If the Curaçao government makes a nomination for the appointment of “its” supervisory directors without an underlying recommendation from the Supervisory Board, then the government of Sint Maarten is legally obliged not to cooperate with that appointment because an essential legal requirement is missing.
Why is the law so complicated? The answer is simple. Precisely to prevent governments from thinking that they can let their “own” people with their own political color rule the supervisory board. The supervisory board of an institution that is essential to our country, such as the Central Bank, must be able to exercise its supervision completely independently. The procedure is therefore mandatory by law that (1) the Supervisory Board makes a recommendation to the government, (2) the government makes a nomination based on that and (3) the countries jointly appoint. There are no other ways.
Moreover, the independence of the supervisory directors at the Central Bank is legally enshrined in Article 18 of the Central Bank Statute. That article expressly prohibits the governments of the countries from giving instructions to commissioners. Once a commissioner is appointed on the recommendation of the countries, he only serves the interests of the Central Bank, not the “own” interests of the ruling parties. Article 25 paragraph 10 of the Central Bank Statute also states in so many words that the members of the supervisory board must be independent.
Why “own” supervisory directors? I honestly can’t imagine that our minister would have said that. “Own” does not exist. The Central Bank belongs to all of us and even to two countries. So what should the government do? Just follow the law.
~ Prof. F.B.M. Kunneman is a senior partner at law firm VanEps Kunneman VanDoorne and professor of Corporate Governance at University of Curacao. He leads the team that advises on corporate governance. He has been writing and teaching on this subject for decades. ~