Investigation Authority of the Court of Audit of Curaçao

In a recent case the Supreme Court had to rule on the scope of the investigative powers of the Court of Audit of Curaçao. The parliament of Curaçao had requested the Court of Audit to investigate the policy of telecommunications service provider UTS, of which 87.5% of its shares are owned by the Country. UTS opposed the investigation because it believed the Court of Audit would act outside its statutory duty and competence. From Article 68 of the Constitution of Curaçao it follows that the task of the Court of Audit is to examine the revenues and expenditures of the Country. In short, the task of the Court of Auditors can be seen as a control over the management of public funds.

The question is whether the Court of Audit is also competent to investigate a private company, which in principle does not manage public funds, but whose shares are 87.5% in the hands of the Country. Both the Court of First Instance and – in the appeal – the Joint Court of Justice ruled that the applicable regulations did not result in the Court of Audit being competent to investigate the policy of UTS.

In its ruling the Supreme Court points out that the National Ordinance on the Court of Audit distinguishes between entities with accounting obligations and entities with reporting obligations. According to the Supreme Court, this distinction can be traced back to the distinction between the public and private sectors. In general, entities with accounting obligations are part of the public sector and entities with reporting obligations are (largely) part of the private sector. The fact that there is only a duty of information on the latter and not an accounting duty can be traced back to the fact that they make use of, or are maintained by, public funds, but that they do not manage public funds. They therefore do not have to account for the use of these funds, but only to provide information about them.

The scope of the investigative powers of the Court of Audit, with respect to private companies, in which the management of public funds is indirectly involved, is limited to the reporting obligation of such company. An investigation into the policy of such company does not fall under this authority. According to the Supreme Court, the Joint Court of Justice rightly held that the powers of the Court of Auditor vis-à-vis UTS are limited to the interests of the Country, in this case the exercise of the shareholders’ rights. An investigation into the policy of UTS is therefore not possible.