Supervisory directors have serious responsibilities
PHILIPSBURG — The fraud that has recently come to light at the harbor as well as at the airport begs the question what the role of the supervisory boards has been in these matters. Or rather: what their role should have been. Robbert Delissen of the Dutch law office DelissenMartens described the responsibilities of supervisory directors in an article on his website.
“A supervisory director has a large responsibility and he must be alert on developments in the company,” Delissen wrote.
A supervisory director must act with the insight and carefulness that may be expected from a director who is prepared for his task and who executes his duties meticulously. Delissen lists seven situations, derived from jurisprudence, where supervisory directors act against their responsibilities.
Not being involved with the company is the first one that comes to mind, closely followed by failing to keep asking questions about important issues. A supervisory director who does not pay attention to conflicts of interest, does not supervise violations of the bookkeeping obligation and does not pay attention to the timely publication of annual financial reports also does not meet the standards.
And there is more: these directors have to intervene if something threatens to go wrong. If they intervene too late, or not at all, they don’t do a proper job. They must also be sufficiently critical of business- and acquisition-plans proposed by management and they must see to it that statutory requirements are observed. The last blemish on a supervisory board is, according to Delissen, if the directors have insufficient know-how and quality.
Delissen furthermore notes that proper reporting of meetings with management and board are very important for liability claims.
DelissenMartens is specialized in corporate law. The law office can assist supervisory directors during discussions with trustees and creditors in situations where they are held liable. People who feel that they have suffered damages because of acts of a supervisory board can also get advice about the possibilities to hold one or more supervisory directors liable for these damages.
Delissen’s explanations make clear that supervisory directors are not alone when it comes to liability. After all, the composition of a supervisory board is the result of actions by the shareholder. In the case of the port, the airport and for instance GEBE that is the minister responsible for the relevant portfolio.
But how alert are supervisory directors willing to be? The problem is that they get paid for sitting on a board and if they are going to be too critical they will be sidelined or kicked out, thus losing part of their income.
One may well wonder how the airport could pay serious money to a small company it had never used before without the supervisory board being aware of it. The same is true for the fraud that happened at the harbor, where forged invoices were always kept below the threshold that requires approval by the supervisory board.
Such rules almost beg to be abused, so maybe it is time to scrutinize the rules and regulations that govern government-owned companies and to change or eliminate the ones that open the door for corruption and fraud.
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