Published On: Thu, Sep 14th, 2023

Appeals court holds Ansary liable for Ennia debacle

WILLEMSTAD — The Common Court of Justice ruled on Tuesday that insurance company Ennia is entitled to at least 153.8 million guilders ($85.9 million) in damages, caused by its major shareholder Hushang Ansary and others. The case will be back in court on October 24, after parties have agreed on the appointment of an appraiser who will have to settle the dispute about the true value of Mullet Bay.

The pivotal role of Mullet Bay in the trial has to do with its much disputed value and its consequences for the financial position of Ennia. Among the charges against Ansary and his co-defendants is that they spent excessive amounts of money on dividend payments, bonuses, donations and the use of private jets. These payments are null and void if they result in negative equity for the company.

The book value of Mullet Bay plays a large part in determining the equity of the insurance company. Sun Resorts, the owner of Mullet Bay, put the property on its books in 2005 for its historic value of $2.2 million. After Ansary acquired Ennia in 2006, several appraisals boosted that value to $436 million. After the court in Curacao established the emergency measure (and thereby sidelined Ansary and Ennia’s management) appraisals by internationally respected appraisers came up with a totally different values: between $50 million and $96.4 million.

The court now wants parties to agree on the appointment of an independent appraiser to settle the matter of Mullet Bay’s value.

The 142-page ruling makes clear that the appeals court holds Ansary and some others liable for the damages their actions have caused to Ennia’s financial position. However, Ansary’s daughter Nina, who held several positions within the Ansary-companies, was acquitted of all wrongdoing.

The ruling offers a candid insight into the shenanigans that benefited Ansary and his cronies at the expense of Ennia. Especially the department that insures pensions suffered from it. Ennia Leven had 27,450 policy holders in 2018 and they threaten to lose 80 percent of their monthly payments if the company does not survive. To prevent this, the Dutch government has offered to finance a 600 million euro loan Curacao and St. Maarten will have to extend to Ennia.

That offer has met with criticism, because the loan would put the entrepreneurial risk at the doorstep of the governments of the two countries and it would also deny the responsibility of the Central Bank of Curacao and St. Maarten (CBCS) for the Ennia-quagmire.

In November 2021 the court in Curacao sentenced Ansary and his co-defendants to repay more than one billion guilders (close to $563 million) to Ennia, but the defendants appealed this verdict. (See for details this article: Ansary and Co sentenced to repay more than one billion guilders to Ennia).

The insurance company reproaches Ansary and others of making unjustified payments for dividends, salaries and bonuses and withholding investment profits from the company.

Already in August 2006, the central bank smelled a rat at one of Ansary’s subsidiaries: Banco di Caribe, which was at the time Ennia’s parent company. The bank wrote that there was a solvency deficit and referred among others to questionable investments in Stewart and Stevenson and Sun Resorts, the owner of Mullet Bay.

Two years later the bank reported that two insurances entities, Ennia Leven (life and pension insurance) and Ennia Zorg (healthcare) were in compliance with its regulations and that the companies had made “impressive progress.”

When the court finally established the emergency measure in July 2018, Ennia was servicing 50 percent of the insurance market in Curacao, St. Maarten, Aruba and Bonaire and 80 percent of the pension market in Curacao.

That not everything was as it should be became already clear in 2010, when a legal advisor reported that he had found “a very serious, worrisome and alarming situation” at the insurance company. “Seventy percent of Ennia’s invested equity has been given as a loan to Ennia Investments, interest is not being paid and there is no collateral whatsoever.”

In 2012 the central bank reported that the investments of Ennia Leven violated its own investment policy and the principles of prudent investing.

Four years later, in August 2016, the bank instructed Ennia Leven to sell Mullet Bay within three years.

All instructions and recommendations from the bank fell on deaf ears and this resulted in 2018 in the establishment of the emergency measure. A day later, Ennia Leven received a repayment of $100 million. Half of this amount came from Stewart and Stevenson, the rest from a private Ansary-account.

The appeals court ruled that, based on the facts, the defendants have caused damages to Ennia and that they are liable for it. It did not accept Ennia’s position of group-responsibility and therefore the liability of each individual defendant will be assessed based on their actions and involvement. “There are insufficient grounds for the conclusion that the behavior of individual persons (and legal entitities) occurred in the context of a group,” the ruling states.

Addressing the large payments in terms of dividend and bonuses, the court pointed out that there were justified doubts about the true value of Mullet bay. “This should have stopped the defendants from paying millions to shareholders while the Ennia Holding made a loss and while formal decision making was often lacking.”

Among the recipients of these payments is St. Maarten’s former Minister of Finance Richard Gibson, Sr.  Between 2006 and 2018 Ennia paid him 7.5 million guilders ($4,190,000). When he gave up his positions within the company in 2014 (because he was about to be appointed as Minister of Finance), Ennia paid him a bonus of 1,724,000 guilders (a bit over $963,000). Gibson was a supervisory director at Ennia Holding and Banco di Caribe and advisor to Ennia.

Between 2006 and 2018 Ennia paid its supervisory directors 18.6 million guilders ($10.4 million) while the industry standard is 4.4 million ($2.5 million)..


Related articles:
Curacao’s position on Ennia could cost St. Maarten a lot of money
Ennia dossier
Mullet Bay dossier