Does the Dutch Central Bank have any control over Ennia? Why do they interfere? Ennia is a Curaçao corporation and not a Dutch one, isn’t it? Inadequate internal and external supervision or not. These were the questions asked during the discussion of recent weeks. It was a hot topic in both the local as well as the Dutch newspapers. What does external supervision actually mean? How far does Dutch financial supervision reach? Are you allowed to conduct supervision in another country?

External supervision is everywhere. Because of the detachment and objectivity, it guarantees our (financial) security and our health. Meat in the supermarket has been inspected by an external supervisor. If the meat is tainted, it will not be on the shelves. Our local airline Insel Air is under external supervision of the Curaçao Civil Aviation Authority (CBA) and American agencies such as the FAA. What gives this foreign agency the right to say something about Insel Air’s aircraft? Very simple: if those aircraft and the Curaçao supervision of it do not meet American conditions, the Americans will allow our Insel Air aircraft to fly, but not across American territory, and they are certainly not allowed to land there.

It also works like this in our financial sector. The Netherlands are now very close. In the BES Islands, the Dutch Central Bank is the external supervisor of the financial institutions. These include banks, insurance companies and pension funds. Several Curaçao financial institutions have an office in Bonaire. In some cases, like the bank MCB, it is an independent corporation. The Dutch Central Bank conducts supervision of these corporations. The supervisor has the right to ask the Bonaire (= Dutch) corporation questions, also questions related to the ’holding company’ in Curaçao. Ennia, however, does not have an independent corporation in Bonaire, but a so-called branch. This office is not an independent financial institution, but an ’Ennia Desk’ in Bonaire. Who supervises that desk?

After the dismantling of the Netherlands Antilles in October 2010, there was an arrangement between the Netherlands and Curaçao that these branch offices in the BES Islands would not be under external supervision of the Dutch Central Bank. Instead, the Central Bank of Curaçao and St. Maarten (CBCS) would continue to monitor them. The Dutch Central Bank would not conduct independent (so-called prudential) supervision of these branch offices. Therefore, a legal basis was not created for it either. However, the law in the BES Islands has recently changed. The Dutch Central Bank now does have the right to ask branch offices such as those of Ennia questions. These can also be questions about the business activities in Curaçao. These questions do not have to be answered by the branch office (or the main office), however, the Dutch Central Bank then has the right to close the branch office.

The conclusion: the Dutch Central Bank does not have direct external supervision over Ennia or any other financial company established in Curaçao. However, if this company has or wants to have a branch office in the BES Islands, the Dutch Central Bank has the legal right to ask questions about the branch office and the Curaçao holding company. Consequences (for the branch office) can be attached to the nature of the answer or the lack hereof. So, with a detour there is indeed external Dutch financial supervision of Curaçao financial institutions. Just like the American FAA indirectly has something to say about (the supervision of) Insel Air in Curaçao. If you do not do things the way we want you to, you cannot land on our territory.

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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