Tibbetts denies deficit deception

| 08/07/2009

(CNS): The dispute between the previous administration and the financial secretary over the state of government finances for the year end 2009 rolled on today (8 July) following another lengthy statement by Leader of the Opposition Kurt Tibbetts questioning the explanation offered by Kenneth Jefferson in the Legislative Assembly last week. Tibbetts said that the FS had still not explained why he told Cabinet and Finance Committee there would be a $29 million deficit and total cash reserves of $126 million as at the end of June this year if he did not believe it.

He also denies Jefferson’s inference that attempts by the PPM administration to reduce the predicted deficit was an exercise in deception.

“As far as my administration was concerned, this was a legitimate effort to reduce the predicted operational deficit.  It was not some exercise in deception as the Financial Secretary seems to infer in his statement. At least, it was not so on our part,” Tibbetts said. “What he intended or perceived the purpose of the exercise to be is a matter which the Financial Secretary needs to explain, especially since he and his office played the key role in the exercise.”

The leader of the opposition has stated that at the end of that “difficult exercise, a revised budget position was arrived at which placed the projected deficit at $29M at the end of June, 2009 and overall cash reserves at $126M.” He said that although it was far from ideal it was based on the work that had been done and the assurances of the financial secretary, which, he added, was considered as the realistic position. “We had to face the fact that the government would be running an operational deficit at the end of the fiscal year and we would have to make this announcement to the country in advance of the impending General Elections,” Tibbetts acknowledged.

The leader of the PPM has accused Jefferson of being at pains, in his statement delivered to the Legislative Assembly on 1 July, to distance himself from this matter and of inferring that elected ministers fabricated the projections when he had told ministers that there would be a $68 million deficit. 

“This is both untrue and an abdication of his responsibility as Financial Secretary to provide the Cabinet, Finance Committee and the Legislative Assembly with sound, objective and truthful advice in relation to the finances of government,” Tibbetts said. He added that the veracity of the financial secretary’s claims must be considered against the background of what he described as incontrovertible facts.

“The projections and the attendant Supplementary Budget were prepared by the Financial Secretary and his office, not by the elected ministers,” said Tibbetts. “The projections and Supplementary Budget were formally presented to the Cabinet by the Financial Secretary to be approved for presentation to Finance Committee.  The Financial Secretary personally presented the Supplementary Budget to Finance Committee at its meeting on 20th and 21st March, 2009.  The Revised Forecast Financial Results for 2008/9 presented to Finance Committee by the Financial Secretary on 20th March, 2009, stated among other things, that at the end of June, 2009 the Operating Deficit for the government would be $29.4M and that the closing Cash Balance would be $125.5M.”

Tibbetts noted that in the FS’s presentation to Finance Committee, he told members, among other things, that it was a realistic budget. At the time Jefferson had said: “The budget which the Government prepared and presented in April 2008, I believe, I am confident was a realistic budget.  It reflected what the Government could do with the revenue expectations it had for this particular year, and indicated that the surplus expected for that year was approximately $14M ($13.8M).”

The financial secretary had gone on to say that there would be a deficit and told Finance Committee that there were many meetings held with chief officers, chief financial officers, where they were grilled over revenue expectations, the cost expectations, and therefore the March supplementary budget was realistic.

Tibbetts recalled again the 5 May cabinet note that the financial secretary presented to the elected ministers to which he had attached a Financial Report for the period from 1 July, 2008 to 31 March, 2009. “In this report the Financial Secretary set out what he claimed was the actual financial position of the government as at the end of March, 2009,” the leader of the opposition said. “The note stated that the net deficit for the 9 month period to 31st March 2009 was $18M and that the cash position or reserves of the government as at that date was $110M.”

Tibbetts said the financial secretary also advised Cabinet that the projections on which the supplementary budget was based were holding true. However, the financial Secretary told CNS last week that he was not on the Island at that time and had not prepared the note or told government on 5 May that the $29 million deficit was still a realistic proposition.

In his latest statement, the opposition leader went on to say that the financial secretary did not advise his administration that there were any concerns about the deficit being substantially greater than had been projected during Finance Committee in March. Tibbetts stated that the information the financial secretary presented on 2 June, one week after the new government was sworn in, showing that over the course of the single month of April 2009 the actual deficit had risen by what Tibbetts described as a whopping $20M from –  $18.8M to $38M — was information which he never shared with the PPM administration.

“To put this in perspective, the Financial Secretary is saying in his statement that although during the entire nine month period from July to end of March the cumulative deficit was $18.8M, the deficit for the month of April alone was $20M.  This defies belief.  It is inconceivable and the Financial Secretary has not explained how this could happen.  Instead, he seeks to divert attention from this issue by stating that this indicates that the $29M deficit projected in March was unrealistic,” the leader of the opposition added.

“I believe that that the above facts must cast real doubt on the veracity of the Financial Secretary’s statement of 1st July.  They must also, regrettably, raise questions about the accuracy of the various predictions and projections made by the Financial Secretary regarding both revenue and expenditure.  That is so not just in relation to those projections on which my administration relied, but also to the present projections on which the present government is currently relying.  This is an extremely worrying state of affairs and one which must be addressed urgently for the sake of the country.”

Tibbetts said that the present state of both the world and the local economy presented real challenges and well before the meeting of Finance Committee in March 2009, the PPM administration was keenly conscious of the challenges and that was why in October efforts were made to reduce operational expenditure.

He said he had issued a policy directive to the civil service to restrict the hiring of new staff and reduce expenditure by 6%. He said these were elected government initiatives and no action was suggested by the FS, who in October 2008 predicted an operating deficit at the end of June, 2009 of $16M. Accusing the FS of omitting critical facts Tibbetts said Jefferson was trying to pin responsibility for what he claims to be the financial position of the government entirely on the former elected ministers.  

“If he is to be believed, it is tempting to ask why we need a Financial Secretary at all,” Tibbetts added. “More than 50% of the operational expenditure of government goes to pay for the civil service; salaries, health care, pensions, etc.  These costs are therefore not very flexible and will only decrease if the number of civil servants is reduced or salaries are cut.  Conversely, these costs will increase if the civil service grows. Under the present constitution elected ministers have no administrative authority and therefore cannot control decisions relating to the hiring of civil servants without the agreement and support of the Chief Secretary as Head of the Civil Service and the Chief Officers in the ministries and portfolios.”

Tibbetts stated that despite the provisions of the Public Management and Finance Law, elected ministers have little control over operational expenditure which, in addition to the costs relating to the civil service, includes the purchase of supplies and services to keep the engine of government running.  These decisions are by and large within the province of Chief Officers.

“When the decision was taken in October, 2008 that operational expenditure had to be reduced it was important that this was implemented immediately, hence the reason it was effected by a process of directives to the civil service and a public announcement. If, as the Financial Secretary has suggested, we had waited and instead of issuing the directives had opted for the process of revising the budget provisions and calling a meeting of Finance Committee and of the House to reduce the overall budget, many weeks, indeed possibly as much as 2 months, would have elapsed before the decision would have had any effect.”

He said it would have taken time because of the work that would have been required by the Portfolio of Finance and Economics and the preparation of a revised budget for a meeting of Finance Committee.

Last week the Financial Secretary claimed that he warned the PPM in October 2008 that unless the matter was taken to the Legislative Assembly “there was a grave danger that without a cost-reduction Supplementary Budget exercise (by Finance Committee), the promised reduction would be spent as time went by in the financial year.”

Tibbetts suggested that the FS had put this forward as one of the principal reasons why the operational expenditure was not significantly reduced as a result of the directives given by Tibbetts’ administration.  “Quite frankly, this is nonsense,” Tibbetts claimed.  “Is the Financial Secretary suggesting that merely reducing the budget appropriations through Finance Committee would have the effect of containing operational expenditure by the public service?  If so, then how does he explain what occurred since the budget was reduced by Finance Committee on 21st March, 2008 and the position at 30 June, 2009 during which period he says a further $19M in unauthorized operational expenditure has been incurred by the civil service?”

Tibbetts said the new government had without questionchosen to present the current financial difficulties of the government in the worst possible light in order to discredit the administration.  “That is not unusual.  But what is unacceptable is that they appear to have found a willing ally in the Financial Secretary in carrying out this exercise.”

Tibbetts then suggested that the 1 July statement by the FS raises more questions than it answers and that there remains much for the him to account for in relation to the advice and guidance which he gave to the PPM government over the past year.

“It is critical that the government develops a better system of projecting both revenue and expenditure. I do believe that the advent of an elected minister with responsibility for finance under the new constitution will go a long way to introduce the level of accountability necessary to ensure good governance in a democracy,” Tibbetts added in his statement.

The PPM Leader said it remained a mystery why the FS chose to make the statement after and not during the recent debate in the Legislative Assembly when the new government sought and obtained approval for appropriations totaling $573M for the first 4 months of the new fiscal year.

“Might it be because he did not wish to have his statement made the subject of scrutiny and debate in the House?” Tibbett asked, adding that he believed the Jefferson still owes the country and the previous administration an explanation for the huge variance in the projections which hegave to Cabinet and to Finance Committee in March of this year and the position which he has now stated. 

“This is even more necessary since he later confirmed those earlier projections in a Cabinet Note dated 30th April which he presented to Cabinet on 5th May.  Even now, after all this time he has still not provided a satisfactory explanation,” he declared.

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  1. Anonymous says:

    Mr. FS Jefferson,

    If this mess was an "Exercise in Deception" as you’ve implied, then the person that is actually responsible for the accounting and prediction of such numbers have to be a "Conspirator" in this exercise in Deception.

    Do we live on different planets?

    Mr. FS do us all a favor and cut the BS and step down or aside, which ever way it would be better for the country.

    You have failed in carrying out your office, there is absolutely no room for this type of Incompetence, if you knew that the figures didn’t make sense, why would you go ahead a confirm something different to the country. 

    I suspect if PPM was is power now, you would still be discorting things, it a shame that you as one of our top civil servant can’t call an ace an ace.

    Please step down!


    Concerned Caymanian


  2. PPM = Failure says:

    Guys we really shouldn’t be surprised that the PPM is blaming the FS.They’ve never taken responsibility for anything!

    1. Mystery Helicopter – ‘Kernohan misled us’
    2. No audited financials – Ozzie says ‘that’s the fault of civil servants’. Even though his PAC hadn’t met in a year!
    3. Biggest deficit in the History of our Nation – ‘We have a derelict Financial Secretary’

    The PPM has no idea how to prioritize spending and we must now pay for the mistake we made in 2005. And for the record I am not a UDP supporter because they have some incompetent memberswithin their camp as well… No Education Elio and Joke Joke Seymour to name a few. But I am willing to give the UDP a chance considering the state of our country under the ‘leadership’ of the PPM.

    That being said I am a bit upset with the FS for not letting the public know that the PPM was spending emergency funds without approval. Are their no penalties for this? He must have been under some real fear of losing his job but that is unacceptable.

    Oh and just a thought…. if the FS is a UDP ally wouldn’t he have informed the UDP/opposition at the time that the PPM was spending emergency funds without approval? I’m sure that would have been something that Mac would have loved to use on the campaign.

    • Anonymous says:

      What I find tragic in this whole situation is that our Government now has to go cap in hand to the UK Government to get its budget approved.

      I thought their mess was even greater than ours.  How ironic!

    • Anonymous says:


      You seem to confuse the issue of the PAC meeting with the requirement  for govt. departments, statutory authorities etc to produce audited financials. Obviously (from the fact that Mr. Miler has had 4 such meetings) the mere fact that the PAC has a meeting does not of itself cause audited accounts to be produced. The PAC can only review  accounts once they are produced and audited. There is no question (except to a hopelessly biassed mind) that this is the fault of the civil servants and public servants involved (and ultimately the FS) and not the fault of the PAC or the elected Govt.    

      As regards the FS being a UDP ally, as I recall the UDP were saying for months before the election that the country was "broke". Where did they get this information from?   This is a very curious coincidence given the FS’s now overtly political stance.  


  3. Anonymous says:

    Kurt and the PPM need to resign in shame NOW!  They constantly harp about being misled, misinformed, unaware, blah blah blah.  Weren’t you leader of Govt?  Shouldn’t you know how much money there is before you spend it?  The more you keep with this line of defense the more ridiculous it becomes.  What a fiasco.  And he has the nerve to talk about McKeeva.  At least Mac didn’t leave the country in its worse shape in Cayman’s history.  Now the PPM supporters go on about how it was all due to the world recession.  If you recall, Kurt also said that would not affect Cayman so how can one now blame it on the recession alone?  He screwed up big time and now all of us will pay and many of our children are suffering.  Hope you are all proud of yourselves now.  Exactly how much more do the PPM supporters need to see before they open their eyes?  Work for unity instead of continuing this stupid UDP bashing.  The election is over.  Could it just be that they are simply all made of the same crappy material, just plane dumb?

  4. Anonymous says:

    Kurt needs to own up on his impotent leadership style. Kurt has always acted like he’s been the victim of unforseen events. He can’t hide his governments complete indifference to the real problems of Cayman such as a disenfranchised labor force, a disenfranchised native population, an economy built on sand (literally) and the fact that his MOT ran his office based on a playbook written in 1991 when Cayman was still an alluring attraction and quite quant.

    Lets face if there was any problem revelaed during Kurt’s administration it was most certaintly not his fault or any of his ministers. Give god thanks for wiping out the Brac and not Grand Cayman because if that monster had washed up on 7-mile the disaterious eneffienceny and lazy work done under PPM (not a fan of UDP by any means either) would have resulted in deaths. The neglect Kurt and most MLA’s incur on their native land is shameful but what’s even more crazy is that the people who can actually vote effect no change on their leaders. Iknow it is not in the genetic code of Caymanians to protest in the streets but if there were ever a time for it! Rise up people and shut down the craziness until the government admits all its sins for the past 10 years and opens the vaults that hold all the unpublished reports documenting the criminal negligence that has robbed Cayman from all those who will never get to know it before it was paved over in blood money from the Bernie Madoffs to all the Pablo Escobars of the world. Shut it down until every child gets a real education and free college while your at it. With out an education, well lets just say Cayman has enough auto shops, cell phonestores and bank tellers.

    Kurt and his smoking section only cronie ministers got complacent and ruined any chance of making Cayman a sustainable island for investmentors, the enviornment and for the under employed youth. Instead of building cheap and easily accesible facilities for youth programs Alden built LSD inspired school buildings that were easy targets for government waste. The government scoffs at wind and solar power on an island that is always windy and almost always sunny. Instead they invest more money in diesel powered generators which just happen to be about the worst way to generate power on a large scale. Mt. Trashmore is still the highest point on the island when it spontainously combusts it becomes the brightest. Many a cruiser can not believe that it is really all our trash. No wonder Cayman is merely a pit stop for cruisers who by many accounts regard the island as simply "boring" compared to their other destinations like Jamaica, Cancun and even Haiti! If Haiti has a more interesting cruise product than you, time to call it a day when the US ends its asinine embargo on Cuba. But fear not good people because McKeeva is about to finish the job and ruin the island for the next decade or more. Get ready for more cars, bigger power bills, less things to do on island and more racial tension.

    There is no foresight because if anything changes all the power players will lose what sway they have and they just want to keep things as they are until they die and pass their concrete legacy on to their children. Kurt face it. You sucked at your job, the new guy sucks just as bad maybe but he talks better. Your boring, long winded, insincere and wear too much gold to act like you know what people in Dog Town go through on a hungry Christmas morning. Quit politics and pull a Jimmy Carter and start helping your people by building them homes before Jamaicans stop coming to Cayman because its too dangerous to live and work there.

  5. Anonymous says:

    Kurt, you ran our country into the ground, and now you’re looking to blame your staff. 

    That’s leadership. <<<NOT>>>  What a disgrace.

    It’s obvious you either had no idea what was going on around you or you were grossly reckless as to the finances of our country.  That is, presuming you didn’t do this intentionally.  Either way, you had no business trying to run the financial affairs of a country, and I pity the Caymanians who have to look at themselves in the mirror and acknowledge to themselves that they voted you in last time so you could do all this.

    Please stop trying to win the next election.  The sun has set on your little empire of destruction.  You personally own this, and you can’t pass it on to someone else.  It was your responsibility and YOU FAILED. It’s over.  You are done. 

  6. Anonymous says:

    Cayman is presenting to the world a picture of a country that few would look to inject capital into. 

    Be it the current financial debacle, or the ongoing problems and investigations into both the criminal justice system and the courts, who in their right mind would look to invest the $$$$$$$$ here.

    The probelms, and investigations, into both  jurisprudence and  law enforcement had already seriously  compromised the reputation of these grand isles  …. and now it is falling on its own sword by presenting to the world a country in finacial  and poitical uncertainty.  To add insult to injury, the politiians are now  advertising to the entire financial community that whether perceived or real their is something seriously wrong here in Cayman…

    Anyone who beieves that the signing of twelve treaties will somehow elevate Cayman’s standing as a legitimate OTC , once again, is not in living in the real word……………….

    Stop the infighting and get back to business !!!!!!!!!!!!!!!

    their is nothing learned from the second kick in the head from a a donkey



  7. Anonymous says:

    Call a spade a spade! I am neither PPM or UDP, but the PPM Government spent the money without a vision for tomorrow and didn’t expect to be voted out as I do believe they were counting on being returned and then to play catch up! Now its "blame the FS". People people we are all in the most critical time of our survival, quit the blaming game and channel that energy in constructive resolutions! Its time to move on and meet the immediate challenges of our time!

    • Anonymous says:

      "Now its "blame the FS". People people we are all in the most critical time of our survival, quit the blaming game and channel that energy in constructive resolutions! Its time to move on and meet the immediate challenges of our time!"

      You are missing the point. The elected govt., the legislative assembly and the public (not to mention the international rating agencies) must be able to rely on the FS’s statements and projections of our financial condition as reasonably accurate. If the FS is saying that he can be influenced by the political manoeuvrings of the govt. of the day to fudge the figures then we have a continuing problem with the FS since his new figures may also be fudged particularly as he is now overtly political.  This is one of the "challenges of our time" that we must meet.    

    • fuzzy says:

      To :Call aspade a spade.YES PPM spent the money ,repeat spent the money .Not lost or stole .They spent the money to keep the economy going ,which has been the practice during an economic slowdown in the Cayman Is.McKeeva is doing the same thing now ,He’s calling it a stimulus package.Lets see how many school ,playfields or roads it builds in 4 years time.

  8. PPM = Failure says:

    Anyone find it funny that there is no explanation as to why the PPM spent emergency funds without bringing the issue to the Legislative Assembly?

  9. anonymous says:

    In response to the first posting by ‘Caymanians for Transparency’……I would suggest that yours is the silliest of postings….there is absolutely no depth here…just silly ranting…..take time to actually read the facts and think about the big picture.  Under the PPM administration the Country had a surplus for three years, then along came a global financial crisis (you heard of that? do you know what it means?) which has affected the whole World! Do you think that we were going to actually be the only Country in the World to not be affected? Give me a break! But for those of you who think the new Government is going to be our saving grace…hold on I say….cuz unna going be surprised.  The PPM has not been given credit for all the good they did….Kurt, please keep at this and expose the truth…..the FS needs to take responsibility for the role he has played in this mess!

  10. Anonymous says:

    ok the money was spent at least we have proof where the money is…if PPM sat and did nothing for four years the money would be there they contributed to the Country tremendously! Is it a crime to spend money on the country? GO PPM KEEP THE PRESSURE ON!

  11. Anonymous says:

    Honestly, I think all of the so called "official members" in government need to have their actions or lack thereof questioned. Recently there is much concern and rightly so.

    There is the situation with the Attorney General who chose not to act or to even give an explanatory statement to us, the people of this country, for his inaction about the BT politicians failing to meet constitutional requirements during the recent elections. If the Attorney General who is supposed to be upholding the law of this country can be allowed to behave in such a way then there is no wonder that the FS is following suit.  By the way, wasn’t the AG the FS’s best man at his wedding? Almost could swear thats what I heard but maybe I heard wrong. Umm .. just thinking …

  12. Anonymous says:

    Kurt continue to be on the FS like white on rice because as you have said he seems to forget what his role is.

    The government of the day has ro rely on the accurancy of the financial information provided by the financial secretary, who should be a netural member and report the figures whether projections or actual as he sees them and provide recommendation where he sees fit with the necessary backup inofmation to support the recommendations whether it i to increase and/or decrease a bugetted item. 

    Keep the pressure on Kurt……don’t give up!! 



    • Anonymous says:

      There are certainly valid and legitimate questions to which the FS has not given satisfactory answers. He has practically suggested that he knowingly misled the legislative assembly because he believed that this was what the govt. of the day wanted. This is compounded by the fact that he is now overtly political and is apparently banking on the fact that he will be protected by the UDP govt. If that is the case, how do we do we can put any credence on what he is saying now? It is clear that we need an independent audit to determine the truth of the matter. When he was leader of the Opposition Mr. Bush wrote to the Governor to demand a Commission of Enquiry in respect of a sitting Minister. There is no reason why Mr. Tibbetts as Leader of the Opposition cannot write to the Governor to demand an independent audit and review of the FS. This is not merely an issue of the past but fundamentally affects us going forward.     


  13. Anonymous says:

    PPM supporters should be real proud of Mr. Tibbetts and his cronies now.  Instead of acknowledging that they made serious mistakes they take time to prepare and deliver this lengthy speach trying to shift responsibility.  Who spent the money Mr. Tibbetts?  Was it Mr. Jefferson?  All PPM elected members should resign immediately and the FS should too for not being more public about this before the crap hit the fan.

  14. Caymanians for Transparency says:

    Mr. Tibbetts,

    Your Government spent and spent and spent even when you were told it was going to result in the current situation. You spent as if there was no recession, “money can’t done”. Your roosters have come home to roost.

    Please stop this “he said, he said”…..you and Mr. McLaughlin ‘ran’ this country and it is clear both of you were out of your depth. It happened on your watch. If your Government did not go on the “largest capital spending” spree in the history you would not be in this position.

    You lost the elections, the country is in a mess from one end to the other,..please resign and go away now.

    (ps I am not UDP but a voter who cares to get the mess cleaned up so we can move forward….so please PPMers no silly postings…the elections are over)