SXMElections.com

THE HAGUE/PHILIPSBURG--The regulatory functions of the Simpson Bay Lagoon Authority Corporation (SLAC) should be transferred back to government to create a level playing field for the sector and avoid a distortion of competition.

This is one of the recommendations of the PricewaterhouseCoopers Inquiry Team that scrutinised the functioning of integrity in the St. Maarten government. The inquiry report, ordered by the Kingdom Council of Ministers through St. Maarten Governor Eugene Holiday, was released on Friday.

The Integrity Team observed that the 2009 acquisition of SLAC by the St. Maarten Ports Authority, a subsidiary of the St. Maarten Harbour Holding Company (SMHHC), appears to have given rise to a potential conflict of interest, as the SMHHC now controls a government regulator and also competes in the marine industry with local marinas.

SMHHC competes with local marinas through the rental of slip space. To access slip space in the Simpson Bay Lagoon, the average mega yacht pays SLAC a fee of US $500 to enter the lagoon and US $250 per week to dock, possibly de-incentivising yachts from coming into the lagoon due to the added cost.

SLAC was established in October 2002 as a regulatory body for the Simpson Bay Lagoon to protect the environment, promote business, analyse data to support sustainable management and provide advice relating to development activities. SLAC regulates the lagoon by collecting fees for shipping, mooring and docking of yachts.

According to the Inquiry Team, government-owned companies should not be regulating the industries in which they also compete. Therefore, a complete separation of ownership and market regulation responsibilities is required to create a level playing field for government-owned companies and private companies, and to avoid distortion of competition.

The Inquiry Team recommended moving SLAC's regulatory oversight function back into a government entity. The removal of SLAC's regulatory function will also help reduce public perception of conflict of interest.

Incumbent Prime Minister Sarah Wescot-Williams and Justice Minister Dennis Richardson informed the Dutch prime minister in a letter dated September 25, 2014, as a response to the integrity inquiry report that no decision would be taken for now on the recommended transfer of SLAC.

Wescot-Williams and Richardson stated that the Harbour Group of Companies would first be asked for a response after which the Council of Ministers would take a definite decision. They added: "Point of departure, however, is that a supervisor should not supervise itself."

The Integrity Team also chastised SMHHC in another area, the fuelling industry, where it competes with local companies through its subsidiary, the St. Maarten Harbour Fuelling Company (SMHFC).

This company does not pay the 5 per cent turnover tax on fuel sales that commercial marinas are required to pay, according to senior officials of government-owned companies who were interviewed by the Inquiry Team.

This possibly allows SMHFC the option to offer lower fuel prices than local competitors. It was noted that, in 2012, the SMHFC sold "well over five million litres of fuel" at a total value in excess of US $5.5 million, saving the SMHFC approximately US $275,000 in taxes, it was observed.

Furthermore, a government-owned company officially noted in an email to the Inquiry Team that the Ministry of Public Housing, Spatial Planning, Environment and Infrastructure VROMI could not find a hindrance permit for fuelling activities belonging to the SMHHC dating back to 2000, and that it was the employee's "assumption, therefore, that one does not exist."