Published On: Mon, Oct 5th, 2020

The ENNIA-saga: How Ansary fought the Central Bank every step of the way

PHILIPSBURG – After ignoring instructions from the Central Bank of Curacao and St. Maarten for years, the court in Curacao placed insurance company ENNIA under the rules of the emergency measure in July 2018. The measure gave the Central Bank full control over all relevant decisions and took away this power from major shareholder Hushang Ansary, supervisory boards and directors.

Attorneys Karina Keizer and Sabine Altena describe in their petition to the court in great detail how this situation came into being – and how Ansary fought the Central Bank every step of the way.

ENNIA had a serious solvency deficit and the CBCS was also concerned about “worrisome withdrawals” of ENNIA’s assets by Ansary. On July 3, 2018, the Central Bank revoked ENNIA’s permit to operate as an insurance company. ENNIA appealed the decision, went to court and lost the case the next day.

CBCS did not only revoke the permit: it also asked the court to proclaim the emergency-measure. The court granted this request on July 4; it applies to the ENNIA’s insurance entities, to EC Investments and – two days later – also to EC Holding (ECH).

Before the emergency measure, ECI and ECH were not subject to supervision by the Central Bank. After July 4, The Bank was authorized to take all measures it deemed necessary in the interest of ENNIA’s creditors.

The main concerns about ENNIA’s financial health concerned its obvious solvency deficit and what is called the high “concentration-risk.” Life insurance companies usually spread their risks in their investment portfolio and ENNIA stuck to this policy as well – until Ansary took over back in 2006. The insurer’s main assets were Stewart and Stevenson, an American company active in the oil industry, and the heavily overvalued Mullet Bay in St. Maarten.

The emergency measure did not fall from the sky. The CBCS had already informed ENNIA in 2010 that the solvency rules for life insurance companies were about to change and that the company ought to do something about its investment policy and its solvency deficit. Ansary just did not want to hear about it.

On October 1, 2016, The Bank placed ENNIA under silent trusteeship but even this measure did nothing to improve the situation. On May 30 and December 21, 2017, the bank noted in letters to ENNIA that there were no significant improvements and that the silent trustee could not execute the necessary actions because he had no influence on the decision making process of ECI and ECH. The letter of December 21, 2017, contained the ultimate warning: The Bank announced that it considered heavier-handed measures, including an emergency-measure, to get a grip on the situation.

During the first half of 2018 CBCS was still in talks with ENNIA, represented by Ansary. While ENNIA’s annual accounts were controlled by Baker Tilly, Ansary denied that there was a solvency deficit and he labeled the annual accounts as “fraudulent.”

“Ansary was only prepared to cooperate with plans that would result in a further deterioration of the situation and in direct damage to policy holders,” the attorneys note in their court-petition.

In a footnote, they write that Ansary wanted to weaken the position of Banco di Caribe and EC Life through dividend payments, artificially lowering of the technical reserves and depreciating interest revenue.

But the talks did nothing to improve the situation or even the relationship between the Central Bank and Ansary. It became increasingly clear, the petition states, that Ansary had no intention to bring the company in line with applicable law. And so it happened that on the last day of the talks, on June 22, 2018, Ansary shouted: “Okay, then you just start the emergency regulation.”

A day later Ansary withdrew $100 million from ENNIA by transferring the money from ECI to Parman Enterprises based on what the attorneys describe as “a sketchy investment agreement.” Soon afterwards, there was another withdrawal of $150 million.

Former ENNIA-directors attempted in vain to frustrate the CBCS-interventions by challenging the decision to revoke the company’s permit. “They denied that ENNIA was in serious financial trouble and lied to the court about its company-structure,” the petition states.

Ansary continued to fight the CBCS even after the pronouncement of the emergency measure. Parman International went to court to challenge the revoking of the permit and the emergency measure.

Ansary tackled Merrill Lynch, where he created doubts about the legality of the emergency measure in the United States. That move made it impossible for ENNIA to access its assets at this bank and it put its liquidity position at serious risk. CBCS had to start a lengthy and expensive acknowledgement procedure.

The United States Bankruptcy Court of the Southern District of New York ruled on December 20, 2018, that the emergency-measure is recognized in the States based on Chapter-15 legislation. Parman International first appealed the ruling, then thought better of it and withdrew the appeal.

CBCS then asked the court permission to access ENNIA’s assets of approximately $240 million that was held in Merrill Lynch accounts. The court granted the request on January 29, 2019.

Parman International in the meantime had gone to court on August 13, 2018, to challenge the Central Bank’s decision to revoke ENNIA’s permit. This case is still pending.

The attorneys write in their petition that, even if Parman would win this court case, it would not affect the emergency measure. “ENNIA gets its permit back only after the emergency measure has been revoked and when the company has sufficiently recovered.”

On October 25, 2018, Parman made another move: it asked the court to order CBCS to withdraw the emergency measure and to suspend all measures it had already taken. On January 1, 2019, the court dismissed these demands. Parman again filed an appeal and later withdrew it.

Special report: Former Minister Gibson among recipients of excessive payments from ENNIA


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