As an econometrist, Jeroen Kremers loves numbers — more specifically: correct numbers. Based on that love, he built a considerable career, first as a director and then also as a supervisor, especially in the financial sector. He became known to the general public after 2020 as a State Agent at KLM: on behalf of the Ministry of Finance, he monitored compliance with the support agreements there for three years. His devastating conclusions were not appreciated by everyone. A conversation about deals with frustrations, excessive regulation and how to deal with them as a supervisor.
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First, KLM. Frustrating when a client does nothing with your findings?
“Strictly speaking, my assignment was: Monitor on behalf of Finance whether KLM complies with The Hague's terms and conditions for lending. Something that had never been done like this before. Enforcement was not my job, that was with Finance. Minister Hoekstra added something to my initial assignment: report regularly on what you find; we can then send those reports to the House of Representatives. My reports quickly showed that the airline did not comply with the conditions — even though they themselves reported each time that everything was fine. Of course, finances were formally concerned, but in the meantime, they also kept the boat off when it came to enforcement.”
“The top of Finance suggested to me: we could also see if we can get away with it in the House. Then, besides KLM, a second field of tension arose for me. After all, I suddenly had to protect my own reputation — the one pair of glasses that make you see the world is that of your job, that's all true, the monitoring went smoothly. But of course, there are also spectacles from the taxpayer and the House. They actually found what happened scandalous. That shouldn't be my fault.”
“In draft, my reports went to both KLM and Finance for any comments. At Finance, they then lay there for weeks, until the day before a long recess, or at the end of a day of important other news — the famous cover-up.”
“But I didn't let myself be cheated. And neither does the Chamber. When another report was released just the day before a debate, I took plenty of time to speak to MPs and the press. After all, public reporting was also part of my assignment. The House was furious and well informed, as Minister Kaag knew that the day after.”
Is such a report, or your position at the time, the right tool in such a situation?
“My mission has been well evaluated by the consultants at EY. My conclusion, taken over in the evaluation: from now on, let an organization, not a person, supervise these types of complex situations. Surely a person is vulnerable in such a tough role. The ILT — the transport and environment supervisor, who also monitors aviation — could do it. And structurally, I would advocate for a government bank that professionally designs and enforces such support operations and conditions, following the German example. We don't have such a national investment bank in the Netherlands, but it needs to be built.”
The financial sector received all kinds of codes and forms of supervision after the last derailment in 2008. As a supervisor, how do you view this development?
“All those codes are not my guide, honestly. Ultimately, it's about professional content and integrity. If I have to start using codes to do the right thing, we're far gone.”
“Of course, there are also good aspects to regulating supervision. The circle in which people were recruited to supervise financial institutions was, before say 2008, also very small. In a supervisory body, you need to have different people and ideas; if all members are too uniform, that won't work.”
“But there is a risk of widening the circle too mechanically. I myself once put together a Supervisory Board that was very diverse but had little experience. I thought I would coach those newcomers myself. But when the situation then becomes difficult, it can be disappointing, as it turned out. Then it turns out that not all backs can stay straight when it comes down to it. People were devoted to their well-paid seats and were guided by it. I didn't expect that.”
“Now I'm a commissioner in a club with people with experience and different characters, but who all knew each other well. So you could say, even with some old boys/girl vibes. But if the group knows each other and there is trust, you can also have more together because you know you can count on each other. You can talk to each other.”
This increasing emphasis on risk & control in the financial sector may also be a physical fear of too much freedom, too much entrepreneurship.
“At the beginning of this century, under Gerrit Zalm, I myself was responsible for the development of the AFM's behavioral supervision and DNB's prudential supervision. A logical dichotomy, with two nice supervisors. But supervision has gotten out of hand since then, due to the relentless call from politicians (and from Europe) for more supervision. There is too much, especially too much formalization. Rules prevail, rather than principles. As a result, financial institutions sometimes talk more about what the supervisor will think about it than what we think of it ourselves. I've sometimes considered recording meetings with voice recognition. As soon as someone used the word DNB more than three times, they would have to pay. A kind of “DNB emission rights”, haha. But seriously: the pendulum could go back a bit in the direction of personal initiative and personal responsibility, without all that focusing on outside rules and recording everything in detailed policies, minutes, etc.”
Get an Imtech. Surely that did not go bankrupt because of the financial statements. The source of all the misery was bad governance, even fraud. In short, what risks do we cover exactly with all that supervision?
“Once. Fraud, hubris, a failure to properly assess the competition, self-overestimation — these are the real risks that are kept out of sight in the event of short-term numerical fetishism and compliance formalism. Once upon a time, I had to deal with a regular external audit of my performance as a member of the Supervisory Board. The auditors knew beforehand that things were wrong: they had concluded that from the minutes. I then politely asked if she didn't also have the talks that I have been able to take with those involved about culture, policy and strategy. That was not possible, minutes were necessary and sacred. Unbelievable that only formal reporting is used. Not to say that rules and procedures are not also useful — but aren't we all getting too far? Aren't we building too many silos to cover risks — when, as a supervisor, you just want to be able to look across the columns. Doing the right thing should really be more important than doing things right.”
Under what circumstances do you step down as a supervisor?
“Leaving is something that must be extremely rare. If you quit, it should preferably also have an essential effect on the situation that has arisen. And if that's not possible, you can decide to leave if you really can't relate to the organization you control anymore. It is possible that a decision comes to the table that you fundamentally cannot support, or that you no longer feel at home in the mores of the organization. I can name an example of the first variant, that was my retirement from the Board of Supervisory Advocacy. This led to a lot of publicity and ultimately a Minister Weerwind who was called back by the House with his weak plans for supervision in that sector. Preventing those plans was my goal, so fine. But again: quitting — even in that situation — is not something you do until you have tried all the other means. That can be an intensive and time-consuming process, but it can be part of it.”
How important is it for decision-making that it “stays fun” on the board? You sometimes hear: it must be a team, such a Supervisory Board.
“Turn that around: if it's structurally not fun, something is really wrong. It's about respect, valuing each other, creating solidarity in order to achieve something. For mutual trust. But the content and results are ultimately leading, of course, not the right atmosphere. We once did a crisis exercise. You can see that people can then completely fall out of their roles — a chairman who, for example, is not good at deciding under pressure. Roles and formalities only reach so far. More important is trust in each other's abilities and good values. If you trust each other, you can safely disagree and fall back on each other in times of crisis. I sometimes ask a fellow commissioner: do you mind that we're now deciding something you don't agree with? Such a question helps transparency, ensures the honest conversation. By the way, you'll get to know each other over time anyway, which is not what I think shared dinners or days out are crucial. In any case, there are a lot of contacts outside a meeting, which is important.”
Can the sometimes overwrought expectations about supervisors be met?
“I don't know that. Of course, in addition to the content, it's ultimately also about intuition, about assessing how people are in the competition. You have all kinds of tools to address themes, collect your impressions. Once upon a time, I started my first commissioner on behalf of Finance, among many experienced heavyweights. The director found all my questions in the Supervisory Board bullshitty. After a while, the annual results came. I said: I don't approve because my questions haven't been answered. The rest were upset, how can you do that? I want to be better informed, I said — that's all, and I am sending this signal knowing that the Supervisory Board will approve the annual results. A year later, the regional vice-directors came to us: we do not want to continue with this director. The rest of the Supervisory Board thought they could still glue it. That was wishful thinking, the director did not have the right attitude — not to the Supervisory Board and not to the staff, as it turned out.”
“When I said goodbye years later, the chairman of the Supervisory Board said: “you were the first to catch sight of the failed leadership, Jeroen”. Good, of course, but actually, your work as a supervisor is sometimes very simple: if you don't get a normal answer to a normal question, something is wrong. With those kinds of signals, you can't say later as a commissioner: we couldn't have known this. You should have known! You always have to be proactive and look for the way things are.”
