How are you? My boss is fine! Good! But who is the boss? Who holds power in Curacao? The prime minister? The people? The PS party? The Pais party? The MFK party? The casino owners? The local banks? The Netherlands? The business community? The mob? I don’t know.

Constitutional law
From a legal perspective, our parliament is the boss in Curacao. And all of us, the “people”, elect parliament. So all of us together are the boss. We have a so-called parliamentary democracy in Curacao. In that democracy, the (elected) parliament is the highest power. The government as executive power is subordinate to parliament. If the government no longer has the trust of parliament, the government has to go. In other words, parliament can always “vote down” the government. In that case, new elections follow. All of us together then determine what happens again.

Beside parliament and the government, we have an independent judiciary enshrined in the constitution. This fundamental division of power (legislative, executive, and judiciary power) goes back to the ideas of eighteenth century philosophers and the French Revolution. This eighteenth century philosophy is still very much alive in Curacao in the division of powers enshrined in the constitution.

Parliament does have the highest power, but not unlimited power. The power of parliament is simultaneously formed and limited by our constitution. This constitution is the Constitution of Curacao. The most important channel through which parliament can exercise its powers is making legislation, according to the Constitution. Making this legislation is also bound by rules. So parliament does not have the possibility to adopt laws with any content. Parliament cannot just adopt any law.

A law that unjustly discriminates, for instance, cannot be adopted by parliament. Such a law is in conflict with international convention provisions applicable to everyone. Laws that would give certain bodies in our country unlimited power are not permitted by law and consequently cannot be adopted by parliament, even though parliament is our highest power. After this lecture on constitutional law, you undoubtedly wonder what all this has to do with corporate governance!

Private law
The shares in our state-owned entities (corporations such as UTS, Curoil, Aqualectra) are held by the government. The Curacao government exercises shareholders’ powers in these entities. Now it becomes interesting from a corporate governance perspective. You then shift from the constitutional law domain to the private law domain. State authority does not apply there. Ownership and agreements, contracts, apply there.

So parliament, although the highest power in our country, can exercise control over how the government exercises its private-law powers in the state-owned entities, but parliament does not have direct control over these entities themselves. It cannot direct these entities. The (private-law) bodies in these entities have been charged with this direction by law. Think of the Shareholder, the Supervisory Board, and the Management Board.

This creates the special situation that the highest body in our country, parliament, only has a very limited and indirect possibility to direct the state-owned entities. Parliament can check how the government uses the shareholders’ rights the government has. Nothing more and nothing less. If the shareholder only has limited rights by law or based on the articles of incorporation, parliament cannot exercise other or more rights in that state-owned entity through the government.

Control
If you privatize government duties, you lose control. This is not a bad thing, for you are supposed to get back flexibility and market orientation. So more return and consequently added value for the citizens. If you want both, market orientation and still political influence, you hit the gas and the brakes at the same time. That is not effective. And it costs us all, the electorate, an incredible amount of money.

Every boss has to know his limitations. If not, history has shown, the world in which he had a function as a boss will reject him. Exit boss. New boss.

Do you have a question about corporate governance yourself? Please e-mail it to governance@ekvandoorne.com and perhaps your question will be discussed in the next blogpost!

 

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