WILLEMSTAD–The Chief Financial Officer (CFO) of ENNIA Caribe Holding (ECH) has worked out various scenarios that should lead to a conversion of the insurer’s inadmissible assets into assets that were acceptable in the solvency calculations, in accordance with the guidelines of the Central Bank of Curaçao and Sint Maarten (CBCS). That these scenarios did not have the desired result is mainly because ENNIA’s owner Hushang Ansary did not want to cooperate, the CFO stated, it could be derived from a Court decision last week.
ECH – with new directors appointed by CBCS after the emergency regulation of July 4 – had requested in this case that the Court dissolve the employment contract with the financial director, without granting any compensation.
Furthermore, ECH claimed payment of NAf. 99,562, with statutory interest, and called on the Court to order the CFO to pay the costs of the proceedings.
The amount includes the bonuses received by the CFO for 2015 and 2016, the authorisation of which was invalid, according to ECH.
In a counterclaim, the CFO demanded that ECH be ordered to pay the bonuses for 2017 and pro rata for 2018, with an order that ECH pay the costs of the proceedings.
As far as ECH’s claim is concerned, a definitive decision has yet to be made. The CFO’s counterclaim was rejected by the Court.
The CFO could be expected to be critical in assessing proposals and requests with financial consequences. He had to assess this in light of his responsibility for a healthy financial company, and not to take it indiscriminately. On the other hand, the actual context in which the CFO functioned must also be considered, according to the Court.
It has become plausible that shareholder Hushang Ansary has “a very significant influence on financial management” and that “already at the commencement of the CFO’s employment the insurers’ assets consisted mainly of receivables from other companies in the ENNIA Group,” the situation which was the ultimately reason for CBCS to intervene in 2018.
In the proceedings, ECH was of the opinion that the financial director, contrary to what might be expected of him, unquestionably and uncritically followed the board of directors’ desires.
But in the Court’s judgment, most of the examples cited by ECH are insufficiently convincing to be able to speak of culpable acts committed by the CFO.
In addition, according to the Court’s decision, the CFO has argued sufficiently concretely that he and his team have made efforts to realise the changes to the investment policy as desired by the CBCS. He argued, however, that he himself was not present at the consultations that were held regularly with the CBCS from 2016, while ENNIA Caribe Life (ECL) was under silent receivership, but said he was informed afterwards.
Although he worked out different scenarios thereafter, Ansary did not want to cooperate, and that is why the desired result was not achieved.
As far as the payment of bonuses is concerned, the financial manager did not act in accordance with his responsibilities, the Court said.
With the introduction of the silent receivership at ECL it was clear that since then prior approval from CBCS was required for all cash payments to directors and senior management, including bonuses in particular. But the CFO approved certain benefits.
“From the statements of the CFO, the Court infers that he apparently did not consider whether these payments were permitted in the context of the silent receivership, or whether these were justified in view of the financial problems within the ENNIA Group,” the Court stated.