Ansary and Co sentenced to repay more than one billion guilders to ENNIA
PHILIPBURG -- Majority shareholder Hushang Ansary has to repay insurance company ENNIA more than one billion guilders (close to $563 million) to compensate for a string of financial irregularities that negatively affected ENNIA and forced the Central Bank to take control of the company via an emergency measure back in 2018.
The Court in First Instance in Curacao rendered its verdict in this case on November 29. Ansary is not the only one on the hook for repayment. Others held liable by the court are his daughter Nina (director and shareholder in Parman Capital), Abdallah Andraous (Chief Financial Officer at Parman Capital and director of Parman International and Resorts Caribe, former director of ENNIA Holding, ENNIA Investments and the insurance companies and former member of the holding’s investment committee), Gijsbert van Doorn (former Chief Executive Officer of ENNIA Holding, the insurance companies and member of the investment committee, and former director of ENNIA Investments) and Ralph Palm (former director of ENNIA Holding and member of its investment committee, former director of the insurance companies and ENNIA Investments).
The court held all defendants liable for eighteen different violations. In some cases, several defendants are held jointly liable (meaning that if one of them pays, the others are left off the hook), but Ansary is held liable in all eighteen cases. In four instances, Ansary is held solely liable for a total amount slightly north of $5.2 million.
The defendants have to repay ENNIA Investments and the ENNIA insurance entities for irregularities with the purchase and sale of Stewart and Stevenson, dividend payments, donations, the costs of advisors, payment to staff that was not on ENNIA’s payroll, excessive payments to supervisory directors and the use of private airplanes.
The court ruling runs 88 pages and gives a detailed insight in the way Ansary and others robbed ENNIA of millions of dollars and how they made ENNIA look financially healthy by manipulating the value of Mullet Bay in St. Maarten.
Ansary bought ENNIA in 2005 through his company Parman International. In the same year, Parman obtained 50.1 percent of the shares in Banco di Caribe. In 2010 jurist L. Voigt wrote to the management of ENNIA about a report from the Central Bank that stated that the company “largely, if not predominantly” violates compliance legislation. Voigt also noted that ENNIA’s investments did not deserve the qualification “prudent.”
Later Voigt reported that 70 percent of ENNIA’s invested capital had been granted as a loan to the Parman Group without any collateral. He also described the value of Stewart and Stevenson as questionable. The Standard & Poor credit rating for this company is listed in the verdict as CCC.
Another reason for concern was that ENNIA had invested - all based on decision taken by Ansary - 650 million guilders ($363.1 million) of its assets in just two companies: Stewart and Stevenson and Sun Resorts (the owner of Mullet Bay). In June 2018 ENNIA Investments signed an agreement with Stewart and Stevenson. St. Maarten’s former Minister of Finance Richard Gibson Sr. and Abdallah Andraous signed the agreement on behalf of ENNIA. Ansary signed for Stewart and Stevenson.
The agreement committed ENNIA to an investment of $250 million. On the same day the agreement was signed, ENNIA sent $100 million to Stewart and Stevenson.
By that time the Central Bank had had enough and it revoked ENNIA’s insurance license on July 3, 2018. A month later, the emergency measure was established. A day later, the $100 million came back into the account of ENNIA Life: half from Stewart and Stevenson and half from a private account of Ansary.
Between May 2002 and June 2018 there were eleven different appraisals for Mullet Bay. The value varied wildly from $35.4 to $436 million. An appraisal conducted for the Central bank in September 2018 returned a value of $50 million and a second appraisal (January 2021) almost doubled the value to $96.4 million.
In 2005 Mullet Bay was on the books of Sun Resorts for just $2.2 million, but in 2006 the value skyrocketed (at least on paper) to $337 million. In October 2010, ENNIA Holding held 93.3 percent of the shares in Sun Resorts and Mullet Bay represented 55 percent of the value of all assets of the insurance company.
Between 2011 and 2015 ENNIA paid 33 million guilders ($18.4 million) and $76.4 million in dividends to its shareholders. Between 2010 and 2014 ENNIA Investments and ENNIA Holding granted 20.7 million guilders in donations to recipients that had nothing to do with the insurance company or with the communities where it is active. Among the recipients were the Museum of Fine Arts, the James Baker Institute (an American think tank on the campus of Rice University in Ansary’s place of residence Houston), the Ansary Foundation, St. Maarten’s Cesar Foundation and President George Bush Jr.
ENNIA claimed it was furthermore made to pay for people who were not working for the company. Among them are Andy Wescot (3.5 million guilders - $1.95 million) and Clarence Derby (3.8 million guilders - $2.1 million). The payments to Wescot came however from the National Investment Bank and not from ENNIA, the court ruled.
These numbers pale compared to the 18.6 million guilders the ENNIA Holding paid to a group of supervisory directors. By far the largest beneficiary was Richard Gibson Sr.: 7,771,303 guilders ($4.34 million).
Between 2007 and 2017 ENNIA paid on average annually 2 million guilders ($1.1 million) for the use of two airplanes from the American company NetJets, a Cessna and a Bombardier.
“There is no evidence that the use of private planes was at any moment in the interest of the management of ENNIA,” the court ruled. “That shareholder Ansary lives in the United States is in any case insufficient reason.”
The court found that ENNIA Investments paid “unnecessary high costs” for the use of private planes. Reasonably acting directors would not have made such excessive payments.
The complete court ruling presents a mindboggling picture of the financial manipulations at the expense of ENNIA. Read the complete text (in Dutch) here: https://stmaartennews.com/wp-content/uploads/2021/12/Vonnis-Ennia-29-november-2021-geanonimiseerd.pdf
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