Kingdom Council of Ministers releases PWC integrity report: “Start the fight against corruption”

POSTED: 09/29/14 12:34 AM

St. Maarten – Initiate the fight against corruption, create and launch a strategic communications campaign and increase transparency and public access to information. These are the first three recommendations that appear from the 250-page integrity report the Kingdom Council of Minister released yesterday. The New York based consulting firm PricewaterhouseCoopers International’s forensic services department produced the report. Its lead authors are senior researcher Sunita Saligram and Sam Nazarro, a former investigator at the American Justice Department who once won the Assistant Attorney General’s award for distinguished service for dismantling the New England La Cosa Nostra.

The investigators spoke between February 26 and August 1 of this year with a wide range of sources on the island and they also studied media reports and other sources. While the report is not designed as a criminal investigation, it contains plenty of examples of breaches of integrity that warrant further local scrutiny.

The report outlines the “integrity architecture priority milestones” in a graph that splits up a possible course of action in three phases. The first one is to demonstrate immediate accountability, the second one is to establish preventive measures and the third one is to increase enforcement capacity, to improve the institutional framework and to introduce preventive controls to enable compliance. As things go with reports from consulting firms, that is quite a mouthful. The more practical components of these recommendations make more sense to the layman.

After the first three steps mentioned in the opening line of this article, the consultants recommend the deployment of a special investigative and prosecutor task force with cooperation from the Netherlands to focus on criminal case backlog. The next steps – not necessarily in that order – are instituting a code of conduct, and establishing the Integrity Bureau as a fully operational, independent anti-corruption and integrity commission.

Furthermore, the report concludes, the government has to administer timely disciplinary sanctions on employees who engage in integrity breaches. A universal cross-ministerial anonymous complaint hotline and the establishment of an independent gaming board with a financial oversight mechanism of casinos are both also part of the first phase of the recommendations.

In the second phase, the report recommends the creation or amendment of ordinances, regulations and policies following guidance from global standards and leading practices. Developing effective, interactive and standardized integrity trainings is the second part of this phase.

In the third level of recommendations, the report calls for increased skilled staff at the National Detective Agency, a specialized anti-corruption and organized crime unit within the Prosecutor’s Office, and improved training in specialized anti-corruption investigative techniques. Interestingly, the report furthermore recommends lengthening the term prosecutors serve in St. Maarten to encourage continuity and understanding of local characteristics.

An interdisciplinary licensing authority and a revised prostitution licensing policy are also part of this phase. The report recommends increasing the number and quality of resources to combat potential human trafficking effectively, increasing the discipline of permit and license processing through an automated application management system and creating a centralized immigration database.

The report also contains recommendations regarding government-owned companies, and for good reasons. The investigators found several agreements between the government, two government-owned companies and an outside company “that appear to create an unfavorable situation for one government-owned company that is losing millions of guilders a year as a result. The agreements have locked this company into: expensive leases; the sale of one utility at a market price below the national average; and an inflated purchase price of another utility. Additionally, one beneficiary of this agreement appears to be a shell company with two to three employees that channels profits back to its parent company based in the U.S., according to the agreements analyzed by the Inquiry team and research of open sources and syndicate databases.”

The report recommends that the government asserts itself as the owner of the government-owned companies and that it implements and enforces corporate governance. At the same time, the supervisory boards of these companies should be independent and the regulatory functions of the St. Maarten Lagoon Authority Company ought to be transferred back to the government. Supervisory board profiles must become mandatory.

In the second phase, the recommendation is establishing a leading practice integrity program at each of the companies with a Chief Compliance Officer. A code of conduct applicable to all government-owned companies, whistleblower policies and complaint mechanisms, standardized procurement guidelines, documented expense policies and a mechanism to repay daily cash expenses are also needed.

The third phase focuses on increased transparency and continued compliance with internal audits, mandatory disclosures and third party assessments of integrity program compliance.


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