26 February 2018

What makes the corporate governance of government entities in the Dutch Caribbean so bad? A lack of flexibility. Corporate governance is never static. You can never say: “we have our corporate governance in order”. You must remain alert, adapt and develop continuously. The responsible politicians usually don’t do that. They see government-related entities as a given (as their backyard or playground) and not as part of a social process with well-defined responsibilities. These are companies that have their own social meaning and dynamics.

Organizations are always developing. People are coming and people are going. The organization is growing or shrinking. The organizational structure changes over the years. The people within the organization are also constantly changing. They become older and wiser (or just older). They get promoted (or they don’t). The management boards and supervisory boards change composition. The group dynamics and culture of the organization change. The outside world of which the organization is a part is also constantly changing. The economy is doing better or worse. There is more or less competition. Applicable laws and regulations are changing. Better techniques are introduced. The expectations of customers and clients change. Communication methods change. Finally, the insights about good corporate governance and how to exercise it are also subject to change. Corporate governance codes are only a recent phenomenon. Twenty years ago, hardly anyone knew what a whistleblower was. Sexual harassment took place on a large scale in the business world, but nobody really cared – except for the victims. Tendering regulations and procedures haven’t been around that long. Nobody knew what a code of ethics was. In short, corporate governance can only be a continuous process and is never a result.

It’s unwise to take a static position if you’re part of a dynamic process. There’s a pretty good chance that what was once normal will no longer be normal at a certain point in time. As a responsible board member or shareholder, you need to be flexible about this. If it was once normal to replace all management board and supervisory board members in government-related entities every time a new government came to power, this may no longer be the norm at a given time. The new normal will then become that you’ll have to judge management board and supervisory board members based on their capabilities and actions and not on their political color.

The core elements in this process are awareness and flexibility. You must be able to see and feel what the new trends, culture and ideas are. In doing so, you must be open to the fact that these trends, culture and ideas may be different from what you are thinking yourself or what you feel comfortable with.

“Thus, ‘Old school’corporate governance must continuously be replaced by ‘New school’ corporate governance. ”

Thus, ‘Old school’corporate governance must continuously be replaced by ‘New school’ corporate governance. An election merry-go-round (Aruba) is Old school. Manipulating or sabotaging appointments in a government-related entity by shareholders (Bonaire) is Old school. Appointing your political friends in supervisory boards (St. Maarten) is Old school. Allowing Management Board and Supervisory Board members in government-related entities to make giant mistakes at a cost of dozens if not hundreds of millions to society and letting these people get away with it (Curaçao) is Old school. Those are things of the past.

It’s a shame if the legal system has to be used to correct Old school behavior. We should all be able to expect from our governments that they’ll play a proactive and leading role in the process that is called good corporate governance. That means to always be aware of the new ‘normal’ and to adjust laws, regulations and behavior accordingly. That’s what modern governments are doing elsewhere. So why aren’t we?

This blogpost is also available in Papiamentu. Click here to download a pdf version.

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