Matrix partner to face music

| 02/08/2009

(CNS): The local principals that partnered with Matrix International to create the Cayman based company which was awarded the government scrap metal contract are being called to the Public Accounts Committee (PAC) this week. They will be expected to answer questions surrounding the firm’s failure to fulfil its contractual obligations with the government, but PAC indicated that it will not be able to do much with regard to the company’s alleged failure to pay local contractors who worked with Matrix when they removed one shipment of scrap metal in 2007.

During the two day PAC meeting in the Legislative Assembly last week the committee members spoke with the Auditor General, Dan Duguay about the special report he completed in August of last year and his office’s findings over what had happened with the Matrix contract. Duguay told the committee that although the government had received over $300,000 from the deal, Matrix had defaulted on the contract and a good of scrap metal still remains on island. He said that there were problems with the tendering process and ultimately no real assessment had been made as to how capable Matrix was of doing the job.

“We should have looked much more closely at the firm’s ability to actually undertake the contract,” he said adding that it was evident once Matrix began the work they were not able to complete it.

 UDP committee member, Dwayne Seymour noted that a major problem with this contract was the fact that local heavy equipment operators who had entered into sub-contracts with Matrix had still not been paid and the outstanding sums were said to be almost the exact same amount as the sum government had been paid.

“I don’t think we can table this report until we get to the bottom of that,” Seymour said.

However the chair Ezzard Miller, (Independent Candidate for North Side) noted that while that was a real and serious issue it was beyond the remit of the PAC as those contracts were private sector deals and that if they were to call witnesses, whichhe believed the PAC should, they were not in a position to question people on a private sector deal. He also noted that those local contractors were still involved in their own legal dispute with the principals.

Miller however pointed out that there must have been local partners involved that the PAC could still call to get to the bottom of why the contract was not completed and learn some lessons regarding the tendering process. He also noted the need to call the civil servants who were involved to establish why the necessary due diligence had not been done on the firm before it was awarded the contract.

Seymour however, felt that the government still owed some obligation to the contractors as it had made the decision to do business with the firm which in turn left local business out of pocket. “How can we protect the Cayman business man in the future, is something we need to find out,” he added.

Miller warded however that while it was important the local partners were called to answer for what went wrong PAC could not jump into the legal private dispute.  

Duguay said his office would do its best to contact the Cayman partners as he believed they had the information on file and CNS understands that the local principles involved with Matrix were Billy Bodden and Andrew Bodden. The overseas owner was BV Young Ltd which is jointly owned by two Canadian truck drivers, brothers Bruce Young and Vincent Young.

The Matrix contract first caused considerable controversy at the end of 2007when the firm which had promised the CI government over $1.2 million for the scrap metal on islands as a result of Hurricane Ivan and general build up since then ran into serious financial problems. The government had looked to be getting a reasonable sum and getting the island clear of the growing scrap metal problem. However, Matrix soon ran into financial difficulties when a court dispute with a shipping firm went against them. Although Matrix made one shipment of metal and gave government $300,000 the company did not pay a number of contractors or ever take any more metal away.

In January 2008 one of the brothers Vincent Young told Cayman Net News that he was trying to get things sorted and would pay back everyone he owed. “I will not return to the Cayman Islands until I have the money to pay everyone,” he said. “I have never not paid a bill.” However, CNS understands that the local contractors are still owed around $220,000 for the work they did for Matrix international during the short time they were here.

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  1. Anonymous says:

    "The only reason to justify the 60% rule is so that the "company" can not evaporate overnight leaving Cayman and Caymanians in the lurch."

    Actually the only reason for it’s existence is so that a Caymanian gets 60% of every business for free.

    It’s called "rip off the foreign investor".

    And no, the liabilities are trapped in the company, absent personal guarantees given to those whose lawyers know to ask for them, so the people with the free 60% have no liability whatsoever.  

    Corporate law is a wonderful thing.  Welcome to the lurch.

     

  2. F. Harbottle says:

    "The majority of Matrix International is still on Island and holding 60% of its liability.  Or is the 60% rule just some form of "skin tax"?  Of couse it is not!  The only reason to justify the 60% rule is so that the "company" can not evaporate overnight leaving Cayman and Caymanians in the lurch."

    You have no concept of what a shareholding in a company is or what the word limited liability means do you?

  3. Anonymous says:

    "I don’t know about this case specifically, but as an entrepreneur with businesses in 2 countries I would never venture into this realm to do business.  Just the requirement that I "donate" to a Caymanian 60% of the shares of any company I set up for on-island business kills any possibility that I would do business here, but that’s not the end of it.  Trying to staff a business here is a nightmare, and getting the government or its agencies to do what they are supposed to do when they are supposed to do it is actually more improbably than not.  The inefficiencies inherent in the whole concept are overwhelming.  It’s just not worth it."

    Absolutely right.  The 60% rule and the abiliity of a competitor to object to a trade and business licence for a new start-up are costing ordinary Caymanians jobs and increasing the cost of living by blocking competition.  The economy isnot a zero sum game – if it grows everyone has more opportunities.

    • Anonymous says:

      As 60% is bigger than 50%, I would say this is a Cayman company, not a Canadian company.  This must be good news for everyone who has "lost out". The majority of Matrix International is still on Island and holding 60% of its liability.  Or is the 60% rule just some form of "skin tax"?  Of couse it is not!  The only reason to justify the 60% rule is so that the "company" can not evaporate overnight leaving Cayman and Caymanians in the lurch.

      • Aron Salomon says:

        This is one of the most incredible "I clearly do not have a clue what I am talking about but it is not going to stop me" posts on CNS for quite a while.  And that is saying something.

        i) "As 60% is bigger than 50%, I would say this is a Cayman company, not a Canadian company" I always find the place of incorporation a good place to start.  Call me old school. 

        ii) "This must be good news for everyone who has "lost out"."  Well I suppose it will take less time for the letter to come from a liquidator to tell creditors they are getting nothing.  Maybe I am a glass half empty kind of guy.

        ii) "The majority of Matrix International is still on Island and holding 60% of its liability."  : Where do I start?  I mean really?  Utter gibberish.  Ask my great-great-great-great-grandfather for an explanation.

        I admire your optimism.  I will give you that.

         

         

  4. Anonymous says:

    "In their defence I have to admit that the Youngs may also have been victims of Cayman bureaucracy. "

    You think?

     

    I don’t know about this case specifically, but as an entrepreneur with businesses in 2 countries I would never venture into this realm to do business.  Just the requirement that I "donate" to a Caymanian 60% of the shares of any company I set up for on-island business kills any possibility that I would do business here, but that’s not the end of it.  Trying to staff a business here is a nightmare, and getting the government or its agencies to do what they are supposed to do when they are supposed to do it is actually more improbably than not.  The inefficiencies inherent in the whole concept are overwhelming.

    It’s just not worth it.

  5. John Evans says:

    Any investigation needs to go back to what happened before the contract was awarded.

    Lyndon Martin and I handled the initial investigative reporting into the Matrix fiasco.
    We discovered that the government, in the guise of the then-Minister responsible and the senior civil servant involved (a Canadian national), had been offered an alternative to bringing in outside contractors to clean up the post-Ivan scrap. Unlike the Matrix tender, this proposal was backed up by practical experience and a proven track record. It offered to generate a permanent re-cycling facility for the Cayman Islands, which would generate both a sustainable source of income for the islands and employment while dealing with all scrap metal (and potentially all other recyclable materials) for the foreseeable future. However, this detailed proposal, which included a DVD of the company’s on-going operations, was completely ignored – no one even had the courtesy to acknowledge it.
    While we never established any evidence of wrong-doing, the choice of a Canadian company with no prior experience in this specialised field raised more than a few questions. In particular why a local contractor’s bid, which appeared far more viable, had been rejected.
    In the end Matrix simply never got off the ground, possibly because the people involved had no idea what they were doing. I can remember on many occasions dropping by their site at Mount Trashmore (I was eventually banned from the area) and finding the place deserted.
    In their defence I have to admit that the Youngs may also have been victims of Cayman bureaucracy. There was a lengthy delay between the tender being accepted and the contract being finalised, according to Minister of the day that was because due diligence had to be exercised. The Youngs also found that many ‘easements’ they had been informally promised during negotiations before the contract was signed,particularly those relating to trade and business licensing, work permits and import requirements for heavy machinery, never materialised. This compounded the initial delays with the contract and the whole operation ground to a halt.
    Whatever, from the work Lyndon and I did on this it was clear that, for reasons that are unclear, the government of the day threw away a chance to create a revenue-earning recycling operation and, nearly five years after Hurricane Ivan, has left the Cayman Islands still trying to clean up the mess.
    • Anonymous says:

      The senior civil servant involved (a canadian national). Wow.

      Just wondered.

      • Anonymous says:

        "The Senior civil servant etc"

        I’m not sure that we should place 100% faith in anything John Evans writes but let the record show that in civil service terms, the senior (ie responsible) civil servant in the Ministry concerned was the Permanent Secretary/Chief Officer Carson Ebanks, a true born Caymanian. The Canadian referred to was a "point man", not someone authorised to make final decisions and-er-his Head of department was and  is also a true born Caymanian.

        • Anonymous says:

          I dont know who John Evans or the senior civil servant is.

          But, I am willing to bet that nothing will come of this except that Ezzard and the UDP may use the 300,000 that Government got to pay off the Local Contractors.

          End of story. The Canadians and Arden will live happily ever after.

          I do think however, before Government uses any of the money they recieved to pay the local contractors, they should pay for the Car Crusher that Government bought and let the Canadians destroy. They owe that obligation to the tax payers of this country.

           

  6. Anonymous says:

    Ezzard is not likely to persue any claims against the local side of this mess.

    They happen to be his constituents and may also be his supporters so why should he persue them.

    The one who should have to clear up this mess is Arden McClean who allowed it to happen in the first place.

  7. AJ says:

    From what I understand of the news article, the local private companies are already in a legal private dispute to recover their losses.  Ezzard is concerned with the governments side of the contracts, what went wrong as a whole and how to fix the problem so that it doesn’t happen again.  Seymour wants to get involved within the legal private dispute with the local companies.  I say try to fix your own problems before you try to fix anothers.  Ezzard seems to be on the right track of trying to figure out where and how the problem started before they figure out who owes what to whom.

  8. Anonymous says:

    Sounds like Ezzard doesn’t want to help the local contractors, but the UDP Seymour is pressing for local contractors that lost out on this deal to have their day. Keep up the good work UDP and get rid of Ezzard asap.

    • clearviewer says:

      Ezzard is using common sense and not chomping at the bit with hear say, he needs to be fair whether it is UDP or PPM  that has a part in the business, like he said  the pac is not going after the private sector NOW, clearly you can see what that  means,  BUT  I wonder how his east end buddy Arden, feel now that he is head of the pac and can shed some light on that mess.