Missing revenue questioned

| 19/06/2009

(CNS): The dramatic difference in the predictions made with regard to government earnings by the Financial Secretary’s Office given to the Legislative Assembly Finance Committee in March compared to those revealed last week have raised a number of questions about how those figures could have changed so quickly. CNS has also learned that Financial Secretary Kenneth Jefferson had confirmed as recently as 5 May at a Cabinet meeting that the predictions that government would have earned over $507 million at year end were accurate.

However, in an explanation for the increase in the budget deficit from the March prediction of CI$28.9 million by year to CI$74 million, Jefferson said that the projected earnings were now CI$17 million less than he had predicted based on the information, and the CI government was now expected to have a year end revenue of only CI$490 million. Despite the fact that on 5 May the earnings were still expected to be CI$507 million, the missing revenue in a few short weeks has yet to be explained.

The information for the new forecast was based on data from the same portfolios and ministries which now leaves the question as to what happened in those few weeks to offer such a different picture. Former minister and member of the previous administration, Charles Clifford, says he finds it very difficult to understand how the financial secretary could confirm the predictions in the LA on 23 March and then again at a Cabinet briefing in May only to offer such widely different figures last week.

“The financial secretary himself confirmed those figures were accurate up to 5 May,” said Clifford “He says that he now has new information but something very significant has changed. So how do we know what to believe?”

Clifford said that with such a wide difference in the forecast in such a short period it was clear something mischievous was happening somewhere and that an outside and independent audit should now be undertaken to find out why. “I think perhaps the auditor general might want to put a hand to this and organise an independent audit,” Clifford added.

Auditor General Dan Duguay told CNS that there was an obvious and significant difference that did require some explanation. “I think that the financial secretary should be given the chance to make a statement to explain the differences and reconcile the two different numbers for government’s revenue,” Duguay noted, but said it was probably premature to talk about independent audits.

During the last meeting of Finance Committee before the House was prorogued for the General Election, Members of the Legislative Assembly heard Jefferson explain that projected government revenue had declined form an estimate at the beginning of the financial year by around CI$21.1 million. It is now clear that the original revenue prediction of over CI$528 million was out by almost CI$40 million and represents a significant decline in government earnings.

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  1. Anonymous says:

    CNS: Any luck with getting a statement or the like from the Financial Secretary??


    I really do not want this issue to blow over and just disappear..Is there any other way of putting pressure on him so that answers (that actually makes sense) are more forthcoming?

    In order for us to truly move forward and tackle the many pressing issues that we have, we HAVE to understand where we are , what is our TRUE financial position? This is quite unacceptable and very reckless to me. If he is a qualified accountant whichI am sure that he is, his behaviour is a direct violation of all code of conduct and ethics that he should be held accountable to.

    CNS: Up to this point there have been no official statements from either the Financial Secretary or the PPM opposition.


  2. Anonymous says:

    I agree the FS needs to step down SOONER THAN LATER, the margin for errors are too large.

    This is unacceptable, Write it down the mighty Cayman dollar CI$ will be devaluing should these trends continue????

    Cayman has a  Aa3 or high grade ratings with Moody now but this kind of Inconceivable incompetence will surely send us to lower.

  3. Balanced says:

    Either way the Financial Secretary has a lot of explaining to do and we need to remain on this issue until we get a proper explanation. If PPM applied political pressure for him to not publicize the true figures or UDP pressured him to exaggerate the figures at the end of the day he displayed a lack of integrity for either choice. In addition, if he truly made such a colossal mistake in his forecasting well then he displays that he is incompentent and not fit for the job. So I will hold off further judgement until he makes a statement but right now I am leaning towards the direction that he should step down.

    This is such a serious issue because this affects us internationally. Whilst we bicker about the small stuff about PPM against UDP there are intl risk managers closely monitoring the situation and advising potential sources of "new" money to take their business elsewhere! In addition, the existing money is seriously considering whether it is time to make a switch. We are in a VERY competitive market and we better wisen up swiftly.

    We need to keep the pressure up on this issue because it is of the utmost importance to ALL of us who reside and call these islands home!!!


  4. Anonymous says:

    PPM and FS to blame

    I don’t think it takes a rocket scientist to understand that what really happened here. We had a government with an extremely aggressive spending agenda at the worst possible time and to compliment this we had a very passive FS who simply fell asleep at the wheel. While many will dabate the drastic change in revenues, the fact of the matter is we have all watch the financial world crumble right before our eyes, even the lay man could see it unfold, we went ahead with the aggressive spending, defying logic and good sense and this is the end result.

    People need to understand that this is not about UDP or PPM, its about our children and grandchildren who will have to foot the bill, they are the ones who will suffer the consequences of this recklessness.

    • Anonymous says:

      I quite agree but what do you do?

      You stop voting for uneducated, lying, ignorant MLAs, simply because you like them, live near them, get free fridges from them, or (worse still), are related to them and start looking to elect people who have the skills and business acumen to manage a country sensibly, effectively and honestly for a change.

      As long as Cayman allows itself to be run buy Muppets, our children will be the ones who suffer the most (look what has happened to those poor people in the Turks and Caicos Islands)!


  5. Anonymous says:

    Financial projections are political. Politicians demand and use them as tools to score political points. It is as simple as that.

    Anyone who believes that the financial projections which come out of government these days are not heavily influenced by the political demands of the government of the day probably believes that the Tooth Fairy is the main source of revenue for the country.
    Therefore let us not be too hard on civil servants. Civil servants say what they are told to say by the politicians that are in power at the time. Those that do not tend to become either unemployed or relegated. They are the easiest people to scape-goat in our current system of government.
    If civil servants don’t say what they are told to say by the elected or unelected Party officials or the people who contribute to the Party, they are simply removed/silenced one way or another. There can be no independence or objectivity in a civil service as long as they are punished for not following the Party line. This is particularly the case when the most senior civil servants condone or even seek to gain personal advantage out of this system.
    Today the public should look at government projections as having a large component of propaganda. Once we have an elected Minister of Finance as part of the new Constitution, projections will become pure propaganda, tailored only for the benefit of the Party, and certainly not to benefit or inform the people of Cayman.
    • anon says:

      Financial projections are

    • Anon says:

      "Financial projections are political. Politicians demand and use them as tools to score political points. It is as simple as that".

      No, it is not as simple as that. Large government expenditures have to be based on realistic projections or the consequences can be dire. At some point there is an accounting. No political points are scored if it appears that you have been reckless with public funds. You lose credibility with the public and with the international credit rating agencies. It therefore makes no sense to suggest that this was some deliberate subterfuge on the part of the previous govt. to score political points. 

      It also makes no sense to suggest that the FS said what he was told to say. I am sure he is at least sensible enough to know that when his projections are shown to be grossly inaccurate his own competence will be called into question. Elected govts. come and go. Who would risk their professional reputation to appease a govt. clearly about to exit?

      I therefore believe that the FS honestly, but mistakenly, believed his own projections but he subsequently he has come to realize that he failed to take certain things into account.           

  6. I WANT MY SHARE!! says:

    ‘Oh where oh where has ALL the money gone?’

    1. Syed took his share and gone in hiding
    2. Joey took a share without telling anyone, but paid it back
    3. SPIT took their share
    4. Henderson got his share
    5. The company retained to clean up the country from overseas…flew off with their share
    6. The big black hole where the Helicopter landed in swallowed up it’s share
    7. The KARE Group & Dr. Henry (the fluke) who did the National Assessment of Living Conditions
           – scooped up their share 
    8. Cayman Airways always has to have their share
    9. The Cayman Airways German consultants caught the BA Flight with a briefcase full of their 
    10. The Botswain Beach turtles, realtors, lawyers, & sharks all swam around in their share
    11. The Insurance companies fleece everyone for more than their share
    12. The pensioners will never see the day again to get back any of their share

    (repeat chorus)

    1. Judge Levers awaiting her share
    2. Burmon Scott is going to definitely get his share if I have to go and pan handle at the post
         office with my guitar to help make up his share – he is going to get it!
    3. Kernohan & Jones are both suing for their share
    4. The new UDP Govt cronies who got them elected is busy calculating their soon to come
    5. Rudolf Dixon still gets his share, while waiting to see if he has a right to more of the share
    6. Tom Jones better get his share, or our children will be sharing umbrellas as roofs for their new
    7.  Capt. Underpants is waiting in the wings to get his share when the anti-gay CI community
         gives him his first knock down/show down.
    8.  The last two HSA Directors share is still pending, and with each day they getting interest on
           their share
    9. The F.Sec has no clue what happened to the share cuz his calculator broke when trying to
         add/take away the shares
    10. The Auditor General knows what happened to the share, but he can’t get anywhere!!!

    (repeat chorus twice to fade)


  7. Anonymous says:

    Mr. Clifford thank you for challenging them on this issue. I know it must be lonely out there but they say the true test of a man’s character is not where he stands in times of comfort and fortune but where he stands in times of challenge and difficulty !

    Thank you sir.

  8. Anonymous says:

    Well about time the PPM woke up!!! Damn, they all disappeared post the election.

    Kurt Tibbetts – turn your phone back on please and the rest of you answer them. We need a decent opposition for ANY government. The people have still elected you to public office so just because you are not in the leading government does not mean you are not collecting a salary and still being paid to do a job.

  9. Anon says:

    The FS apparently thinks that saying that projected earnings were now CI$17 million and projected expenditure increased by CI$17 million is sufficient as an explanation. The fact is that no unforeseeable significant event occurred between 31st March (let alone 5th May) and the date of the LOGB’s statement that would account for changes of this magnitude. The FS is in the position because he is supposed to be a financial expert who can make realistic projections. Projections are not a snapshot in time and should take into account contingencies including such matters as the possibility of cost overruns. We know from the common experience of building a house that a contractor estimate of CI$200,000 will probably mean CI$250,000 at the end of the day for a completed house. It is reasonable to expect estimates to deviate from the actual by up to say 25%.  However, if the contractor ultimately gave you a bill for CI$510,000 you would probably end up in court. Similarly, no one one would would have been surprised if the deficit was announced in June to be $36m. However, a leap from CI$29m to CI$74 in a matter of weeks is unfathomable.

    This coupled with the failure to obtain audited financial statements from the various govt. departments and statutory authorities (which is squarely the FS’s responsibility) must call into question whether the FS is up to the job. The public should leave the partisan politicking out of it and demand satisfactory answers and a full independent audit.       

  10. Joe says:

    This type of incompentence is one of the reasons why there should have been more added to the new constitution.

    Like for example the seats of Atttorney General, Cheif Justice, Financial Secretary, Police Commissioner, Chief Immigration Officer and others should all be voted on by the people and not by appointment.  Therefore having these people accountable like our MLA’s every 4 years to the people I believe would keep them inline and accountable for their actions.

    Ken was a good behind the scenes man and should have stayed there, how can we have our Financial Secretary confirming that earning perdictions was accurate on May 5th and then retracting a month later to say that they are not.

    I am wondering if Big Mac has put his hands on this one to try to make the previous Government look bad, I am wondering if he (Big Mac) realizes that the Banks who lends our Islands monies, look at this type of incompentence and say "that we can’t even get thier financial predictions right how can we lend them anymore money"

    Come on Ken If your right don’t back down to the Big Mac, get your act together or step down. 

    • Anonymous says:


      Can you ask Kurt to get any supporters the PPM have left to take down the circus sign on the esterley tibbetts highway?

      The elections were finished a month ago!

  11. Anonymous says:

    That’s right Chuckie keep them on their toes….someone needs to do it……do not give them an inch !

  12. noname says:

    Finally someone from the PPM is speaking out about this issue. Where in the hell has the PPM been ?

    Now more than ever we need a vocal and visible Opposition !!!

  13. waiting says:

    I never thought I would say this but …………….. I agree with Chuckie.

    Either the PPM were lying when they gave out their figures before elections, or.

    The UDP is lying with these new figures, or

    We have a Financial Secretary that will tell whatever Government in power whatever they want to hear so that they can go aou and say thet the Financial Secretary told me so.

    You know what the old Caymanians say ……. Figures don’t lie, but liars does figures.

    I will bet the popcorn and sodas while we wait to see who is indeeed right

  14. Anonymous says:

    The PPM started their campaign late.

    I wonder what will come out of this loss?

  15. Anonymous says:


    [Clifford said that with such a wide difference in the forecast in such a short period it was clear something mischievous was happening somewhere and that an outside and independent audit should now be undertaken to find out why. “I think perhaps the auditor general might want to put a hand to this and organise an independent audit,” Clifford added.]
    There is little doubt that someone, be it; the PPM, UDP or Financial Secretary have been mischeivious. If not "mischevious" meaning they did so with "intent to deceive", then certainly one must question the ability of our leaders & advisors to forecast correctly.
    Let’s not throw out good money looking for bad. Don’t waste time & money with an independent & costly investigation. Instead, demand that the grossly overdue government financial statements are submitted by the relevant departments, without further delay. These statements can then be reviewed by the Auditor General, at no additional cost to the Treasury.
    Don’t leave it to the Parties to tell us who’s to blame, let the numbers speak for themselves. But demand that those numbers be submitted, afterall Caymanians, this is your money they are spending!
    • Anonymous says:

      The department can supply their statements, but who will "check the inventories with the physical merchandises"?  To follow figures on paper is not enough.