Very mixed feelings prevail this week on Curaçao and Sint Maarten. On the one hand, there is great relief that the Dutch government is reaching out to 30,000 duped pensioners and policyholders of the Ennia pension fund. Due to years of malpractice under owner and businessman Hushang Ansary, the pension fund was emptied. The money is still missing and Ennia is struggling with major deficits. Policyholders risk losing 80 percent of their pension. On the other hand, the consequences of the loan are feared.
“The feeling is bittersweet”, says Giselle Mc William, leader of the opposition social democratic party Movementu Alsa Nashon (MAN). “The policyholders are grateful and relieved. The loss of pensions would have had a huge impact. But at the same time people think: another loan from the Netherlands, under strict conditions. What are the consequences of that?”
The announcement by outgoing State Secretary Alexandra van Huffelen (D66) of Kingdom Relations, in a letter at the end of August, to lend an extra 600 million euros to the islands, has a political component that is sensitive here. And that is: more supervision from The Hague on the financial housekeeping in Curaçao, Sint Maarten and Aruba. Since October 10, 2010, the three Caribbean islands have acquired a more autonomous position as separate countries within the kingdom.
Nevertheless, they need The Hague to close the gap with Ennia, the largest pension fund and insurer in the Dutch Caribbean. They themselves cannot borrow such a huge amount at affordable interest rates on the capital market. The outgoing cabinet uses this dependence as leverage to increase political control. The Hague wants thorough financial supervision and also wants the islands to curtail their expenditure. If they cooperate with this, they pay 3.1 percent interest on the loan. If they do not cooperate, they pay 8 percent interest, which would amount to an amount of 48 million euros.
‘Government debt too high’
But there are also other factors at play. The loan of 600 million means that the islands will have to go deeper into debt in the coming years. And that is met with objections, as reported The Financial Times Thursday, from the Board of financial supervision Curaçao and Sint Maarten (Cft). This council, which includes former finance minister Hans Hoogervorst (VVD), can independently advise the island authorities on financial management.
According to the Cft, the loan of 600 million ‘will result in a significant increase in the government debt and debt ratio (government debt as a percentage of GDP, ed.) for Curaçao’, which is contrary to the Kingdom Act on Financial Supervision. The government finances of the islands are not in great shape, according to the Cft, because they already had to borrow 1.17 billion euros from the Netherlands during the corona pandemic.
At the end of August, State Secretary Van Huffelen offered Curaçao, Sint Maarten and Aruba to repay these loans, which should be repaid from October, at a later stage, so that the island governments could continue to pay for the provisions for their residents. But there are also requirements for this: the islands must draw up a Multi-Annual Economic Framework that provides insight into investments and reforms. The Netherlands also wants an independent calculation of the refinancing in order to determine the debt burden per country.
Quincy Girigorie, leader of the opposition party Partido Alternativa Real (PAR) and former minister of Justice, is afraid that the loan will put too much strain on the economy of the islands. “We have many challenges here. In Curaçao, 43 percent of the people live below the poverty line. We need investments in healthcare and education. The growing debt burden makes it all look bleaker.” It is important to him that the loan conditions enable a healthy socio-economic development of the islands.
Politician and businessman from Iran
For The Hague, the priority is more supervision on the islands. That is exactly what was missing when Hushang Ansary started financially stripping Ennia from 2006. The 97-year-old businessman served as the economy minister under the Shah of Iran in the 1960s. He was also ambassador to the US. After the seizure of power by Khomeini, the entrepreneur left with a well-filled wallet for the United States, where he acquired a passport and maintained friendships with prominent Republicans such as Henry Kissinger and James Baker, and did a lot of business.
When Ennia came into his hands, Ansary promised to strengthen the capital position of the pension fund. He did the opposite: for years, Ansary transferred reserves from Ennia to his own companies. Ennia invested in shares of his companies and subsequently lost heavily. A purchase of a hotel on Sint Maarten, Mullet Bay, was also booked with Ennia for more than 400 million euros, while the market value was just over a tenth of that. All told, Ennia lost almost three quarters of his wealth to Ansary, about 570 million euros.
Despite various reports from whistleblowers and highly critical reports from DNB, it was not until 2018 that the Central Bank of Curaçao and Sint Maarten (CBCS) placed Ennia under guardianship and a civil case was filed against Ansary and his accomplices, including his daughter and three Ennia drivers. In 2021, the court in Curaçao stated that Ansary had to repay 500 million euros. To date, he has not returned anything. The verdict in the appeal that Ansary has lodged is coming Thursday.
The Minister of Finance on Curacao, Javier Silvania, recently called Ansary a “thief” on the radio. “That was an embarrassing performance,” says Giselle Mc William of MAN, “because his ministry has not yet filed a report for further prosecution of Ansary. And this minister himself had a conversation with Ansary last year. How is that exactly? This is a slap in the face to the duped policyholders.”
Financial dependence
Criminal charges or not, the first question is whether Ansary will pay back the money he siphoned off — and when. Until that is the case, the islands will remain in a difficult position of financial dependence on Ennia’s pension fund. In the coming weeks, the island governments must decide under what conditions they will accept the loan. “The government of Curaçao is not open about which option they will choose, but we expect that there will be a deal with the Netherlands at the end of September,” says Quincy Girigorie (PAR). “What is at stake is the socio-economic position of the islands in the short and medium term. That we remain able to fend for ourselves. As far as we are concerned, it should not be about financial supervision from the Netherlands, but we should look at broader cooperation. But the government here does not seem to be open to that at the moment.”
Next Wednesday, the Senate and the House of Representatives will meet about the loan to the Caribbean Netherlands. The State Secretary has urged the MPs to make a decision on this as a matter of urgency. For the affected policyholders of Ennia in the Caribbean Netherlands, there is currently no certainty in the long term.
A version of this article also appeared in the September 9, 2023 issue.
#Relief #concerns #Caribbean #Netherlands #loan #Hague #save #Ennia #pension #fund