The challenge of corporate governance is to ‘grow up’

"The challenge we collectively face today is to 'grow up' and meet international standards of good corporate governance, commensurate with the country status we have achieved.”

That was part of the message Corporate Governance Council Chairman Louis Duzanson delivered in a seminar on Friday.

The seminar entitled "Dealing with the Code" was organized for the council in collaboration with professional services firm PricewaterhouseCoopers and law firm VanEps Kunneman VanDoorne.

Duzanson told the gathering at The Westin St. Maarten Dawn Beach Resort and Spa:

"Good corporate governance, again I repeat, is not difficult. But we need to want to meet these standards, for the benefit of our community and for credible sustainability of the government-owned companies. Good corporate governance also means that government-owned companies will become more attractive for financers and eventually investors – not an unimportant effect."

He added, "Let's therefore agree that pursuing international standards of good corporate governance is a sign of maturity of our community, commensurate with our country status, and that the Corporate Governance Council is a catalyst for innovation in the way we deal with government-owned companies and government-controlled entities.”

"The gap between where we are and where we profess we want to be is huge. The effort to bridge the gap will be a challenging, but rewarding adventure. This will demand setting standards and agreeing to procedures, executing those to get up to par, and then maintaining the discipline. Once the gap is bridged, and we should be reasonable in setting deadlines for this objective, the maintenance will be a matter of going-concern management. It is doable, if we want to."

Good corporate governance entails that clear areas of responsibility are attributed to the various bodies of a corporation, which are executed with integrity, transparency and accountability, without potential conflict of interest, he explained.

The beginning

The introduction of a Corporate Governance Council in St. Maarten was tied to the attainment of country status and considered indispensable to avoid what was popularly referred to as "vriendjespolitiek" – favouritism or nepotism – that was perceived to be rampant in the Netherlands Antilles and in particular in St. Maarten, he noted. "The practice of frequently changing composition of Supervisory Boards, coinciding with every change of political wind, enhanced this perception."

In all countries with government-owned companies, the governance challenge is that they may suffer as much from undue, hands-on and politically-motivated, ownership interference as from a totally passive or uninterested government as shareholder, he added. This challenge has been recognized internationally and has resulted in the formulation of the Organization for Economic Cooperation and Development (OECD) Guidelines on Corporate Governance of State-Owned Enterprises in 2005.

Duzanson said, "Our legislative framework and the installation of the Corporate Governance Council is a good start to becoming compliant with international standards of good corporate governance as set out by the OECD. But the devil is in the details, or better, in the day-to-day adherence and final execution. The question is if we are ready, able and willing to take it seriously and create value for the benefit of all. The members of the Corporate Governance Council are, but we cannot do this on our own."

Little interaction

The Corporate Governance Council has "no office, no secretary, no budget, and so far very little interaction with government. This will be addressed; we are confident of that," Duzanson assured. "But the fact of the matter is that we met with opposition from various, sometimes unexpected sources, often the result of misconception about our role, sometimes because of hidden agendas. After all, the Corporate Governance Council was a condition 'sine qua non' for 10-10-10. So if in frustration we had given up, how would that have affected the 10-10-10 deadline? We decided to embark on our journey and were not prepared to give up that easily," he added.

So far the council members have applied their collective skills and competencies to prepare as best as possible for the time that government is ready to provide the infrastructure and resources to support them. "We kept going to ensure that the marginal advice that was requested would be handled in an efficient, structured and timely fashion. Five members, their own time, their own personal computers, their brains, their own expenses [...] As a team, we committed to stick together despite the adversity, and to perform the tasks entrusted to us as best we could, even though government was not yet ready or equipped to deal with the council," the chairman said.

The council formulated the key values that it would pursue in the execution of its tasks: Discipline, Responsiveness, Integrity, Quality Service, Transparency, Accountability and Responsibility. These values have been articulated on the council's letterhead, and a simple logo that the members believe embodies the values – a clear and transparent "water swoosh" – has been adopted. "Water can bring important change: it can make a seed grow; it can clean dirty hands [...]"

Duzanson continued: "We believe that it is good corporate governance to have a code of conduct that sets out the principles and behaviours you stand for. We invite those entities that fall under the scope of the Corporate Governance Code to go through this process and articulate their principles and behaviours, and not only share them with their stakeholders, but live up to them. It is a moment of reckoning, applying a hygiene factor to doing business, which is good corporate governance."

The council has also developed a code of conduct and a plan of action that it is ready to act on, once there is an approved budget, office and secretary. "In the meantime, we continue to advise government as requested. We hope to do far more, to live up to the expectations that arise from the legislative framework.

"We are fully aware of the fact that, due to the rationale set out before and the historical and political context, the Corporate Governance Council is perceived as interference with matters of state by an external body. Contrary to that perception, the Corporate Governance Council is not an external organ. The Council is an independent advisory organ of and for the government of country St. Maarten, and as such functions on behalf of country St. Maarten.

"It does not compete with government, but is there to support country St. Maarten in its quest to fully live up to the responsibilities of country status," the chairman explained.

Representatives of government-owned companies' and foundations' boards and management, private firms and other businesses were part of the seminar. Also in attendance were Acting Governor Reynold Groeneveldt, President of Parliament Gracita Arrindell, Finance Minister Hiro Shigemoto and Tourism and Economic Affairs Minister Franklin Meyers, along with several parliamentarians and other government officials. Duzanson was one of three speakers at the seminar. Frank Kunneman of VanEps Kunneman VanDoorne dealt with the legal aspects of corporate governance, while Petra Pupping discussed the financial responsibilities of companies in accordance with the code.

Source: “The Daily Herald” dated 6 November 2010



Picture above from left to right: Miguel de Weever (St. Maarten’s Acting Secretary General of Economic Affairs and Tourism), Sherry Hazel (St. Maarten’s Acting Secretary General Financial Affairs), Hiro Shigemoto (St. Maarten’s Minister of Finance), Reynold Groeneveldt (St. Maarten’s Acting Governor), Franklin Meyers (St. Maarten’s Minister of Economic Affairs, Tourism and Communication) and Kendall Dupersoy (Supervisory Board Member of TELEM GROUP).