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You are here: Opinion Letters to the editor Rolling back the ‘Arm’s-length’ Policy: Govt & its companies in the power play

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Rolling back the ‘Arm’s-length’ Policy: Govt & its companies in the power play

Dear Editor,

Once upon a time, in the last century, what we know today as "government-owned companies" were departments of the government administration. Who remembers when Landsradio was a federal government department, run effectively from Willemstad, Curacao? Or, when GEBE was similarly a public utility company that could not function without directives from the then government of the Netherlands Antilles? Or when the Post Office and even the Princess Juliana International Airport was arms of government?

That seems like an eternity ago and thus to many, probably completely forgotten. But the actions and public statements of our current politicians and particularly the current government and Parliament would seem to want to dredge up those memories and return these "public" companies to their initial status of government departments.

The latest episodes of members of Parliament taking on government-owned companies such as the St. Maarten Group of Harbour Companies and GEBE and of the Prime Minister and (acting) Minister of VROMI engaged in a media spat with PJIAE NV demonstrate not only tension between the companies and their "Shareholder" but new intensions on the part of the latter with respect to the statutory structure of these companies.

To really understand this "stand-off" (Mexican or not), one needs to return to the reason why the government-owned companies were "privatized" to use a contemporary terminology, even though government retained all the shares. In other words, why did government decide to turn what were once departments into companies operating as private sector entities?

This was not because government – especially the then Executive (and Island) Council – felt that this would result in the greater efficiency, rather it was simply because the new construct would allow these companies to be able to secure loan from the national and international markets to finance their operations, instead of government having to continue to subsidize them. The island government back then could not contract loans and even today, because of government's financial position does not allow it to pour public funds into these companies.

The success of the new structure, paradoxically, may have triggered the present situation in which the government, including Parliament seems to be at loggerhead with its own companies. Whereas when they were government departments, the companies had to rely extensively on government subsidies, which the island government had to pressure Curaçao to obtain, several of them, since becoming N.V.'s (i.e. limited liability companies), have been doing pretty fine financially without government being able to dip its voracious, cash-strapped hands into their kitties.

But wasn't that precisely one of the reasons why they were set up to operate as private companies, so that they could be protected from government influence and especially from politicians who are always eager to raid their bank account?

Let's take the Princess Juliana International Airport Operating Company (PJIAE N.V.) as an example. Many would remember that the so-called Italian loan which the company had secured with the help of members of the island government (especially, the island's legendary, long-time leader, Dr.Claude Wathey), precipitated a series of events that arguably ended up in the higher supervision imposed on the island in the early 1990's .

The allegations of corruption, etc., related to the Italian loan, resulted in the most celebrated political trial the island had ever witnessed. Popularly referred to as the Gang of Four, this became the most expensive court case in the annals of the judiciary on St. Maarten.

One of the most important measures taken in the wake of the so-called "airport scandal" was the "arms-length" policy introduced by the island council to keep political influence far from the government-owned companies. However, it would seem that the stage set to roll back the policy.

Our Prime Minister, Marcel Gumbs, for example, in a recent press briefing regarding the delay in granting PJIAE N.V. the necessary building permit for it to move forward with the construction of the badly needed new FBO facility stated the following: "there are some companies that are at body length and that is not the intention". He then goes into an incomprehensible comparison with a supposed high wall built around the Vatican.

First of all, the honourable Prime Minister is insinuating that being at "body length" – whatever that means – is further than being at arms-length, then he probably has never stretched out his arms to keep anyone at bay. There could be nothing closer than being at "body length" as opposed to being at arms-length.

The announcement that government would soon be reviewing the structure of its government-owned companies does not bode too well for the original intention of keeping politicians at arms-length from them. Among other things, it could scare away investors, both present and future ones.

Marinka Gumbs

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