Archive for April 20th, 2010

AG:Accounts a national crisis

| 20/04/2010 | 33 Comments

Cayman Islands News, Grand Cayman Island Headline news, Cayman government finance(CNS): Full update – The auditor general has warned of “tremendous consequences” if the dire situation regarding government’s accounts is not addressed immediately. Describing the situation as a national crisis, Dan Duguay said that some two years since his first review of the state of public financial accounting little has changed, despite government spending more then $1million on an accounting task force to try to get the accounts up to date. Some organisations have made no improvement at all, even falling further behind. Others, he says, have made minor progress. But while a number of government entities have caught up with their financial statements, few have filed an annual report. 

Duguay said this “national crisis” was having an impact on the country’s reputation, but above all the government was not being accountable to the people when the Constitution and the laws demanded it, a situation that he said was simply unacceptable.
Following the OK from the chair of the Public Accounts Committee, Ezzard Miller, who said he had done all he could to expedite its release by chasingmembers of the Legislative Assembly  to make sure they had their copy first, Duguay was finally able to release the much anticipated State of Financial Accountability Reporting 2010.
Speaking about its contents, Duguay said he really hoped that government would take the recommendations he had made as seriously as the situation warranted. He pointed out that since the last report in 2008, which first revealed the situation, no one had taken responsibility to correct what he called an appalling situation.
“Officials could not provide me with a comprehensive roadmap for how they believe financial accountability reporting will be brought up to date. I found that only a few statutory authorities have shown some improvement,” Duguay added.
Despite government spending almost $1 million in this fiscal year in an effort to address the problem with a private sector task force, the auditor general said his office had still not received the 2004/05 draft set of statements and the supporting financial records necessary for him to audit the government books from the Ministry of Finance (formerly the Portfolio of Economics).
In other words, there is still no accountability in government spending since 2003/04, the last time the Caymanian public was able to see what their government had earned and spent, and the entire government accounts were now a further two years behind from when he first revealed the serious lack of accountability to the Caymanian public in 2008.
Duguay pointed to some improvement among individual government entities, but not as much as he had hoped. He said eight of the 25 statutory authorities and government companies had improved in regard to the financial statements. In addition ICTA, CIMA and CINICO were all generally up to date, Duguay said. However, all the others either did not improve or, in the case of Cayman Airways, got worse.
Applauding the efforts of the eight which had improved, he said much more work still needed to be done as only the three noted above have actually tabled recent reports in the Legislative Assembly . He said 73 sets of financial statements had been prepared and audited by his office but they had not been appropriately tabled so they were not public documents.
“This lack of transparency and public scrutiny is an effective avoidance of accountability by government officials and I consider that completely unacceptable,” Duguay said.
The auditor also warned that in many cases where he had audited statements he was unable to offer an unqualified opinion. In other words, his audit found the information in the statements to be inaccurate or lacking in information, or that areas of the accounts were unreliable. He said in other cases there were such significant deficiencies he could only offer an adverse opinion, which meant the accounts were completely unreliable.
With ministries and all government entities for the most part still well behind in their accounts, Duguay noted that the task force might be better served if they began working on the more recent financial record.  The information they were currently working on, he observed, was now so old it could be considered almost meaningless.  
Duguay said that officials in government have informed him that they believe the governance framework is broken and that the legislation and regulations around public management and finance are an impediment for them to take corrective action to restore financial accountability, which is why there has been so little improvement since his first assessment of the situation.
The auditor also raised concerns that no one in government seemed to have taken the lead in addressing the problem since the July 2008 report was published. He said he thought government would have adopted a comprehensive plan for the restoration of financial accountability and periodic reporting to the Legislative Assembly, but government has still not responded to the recommendations in his last report.
Duguay included the press release in this latest document which was issued by the financial secretary to the 2008 report, which only offered reasons for not doing the accounts and not how the accounts would be addressed. Duguay added that government had never undertaken a review to find out the reasons why financial accountability was not working. “There was no plan developed,” Duguay added, saying no one took leadership and essentially left all of the government entities to develop their own plans.
Meanwhile, the PAC at the time of the report did not hold a meeting as recommended by Duguay to question chief financial officers and it was not until the new committee wasformed under Miller that the document was examined by members. However, when the meeting was convened there were no witnesses and the PAC agreed to wait until the next report before calling the CFOs to account.
Duguay noted that there have been no consequences for government officials involved this who have failed to account to the people of Cayman. The auditor said that if government departments do not prepare their budget financials the consequence is that they do receive any funding. “There is no such consequence for not reporting financial results,” Duguay stated in the report. “Consider how much more accountable government … would be … if there was such a tremendous consequence for not meeting the requirements of PMFL for financial reporting.”
The office of the auditor general has made four recommendations which it says provides government with a way to move forward. Firstly, the auditor general has recommended that someone is appointed to take leadership and responsibility for the crisis. Secondly, a strategic direction is established which would determine the value of trying to do accounts which are six years old against the benefits of concentrating on current activities. Thirdly, Duguay suggests that the government framework be addressed and a central direction for the financial function introduced, as Duguay said it seems unclear to senior government officials that they have this authority. Finally, Duguay emphasised the importance of oversight by the Legislative Assembly as representatives of the people.
Duguay has also included responses from the Ministry of Finance in his report, which will be on CNS later today, revealing the problems that the task force has encountered since it began its work.

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Concerning Abacus: Tails you lose, heads I win

| 20/04/2010 | 17 Comments

The news broke last Friday that Goldman Sachs, the banking giant whose CEO recently declared that his company was about doing God’s work, had been the subject of fraud charges filed earlier in the day by the Securities and Exchange Commission.

The charges allege that Goldman Sachs made material misstatements and omissions in connection with a synthetic collateral debt obligation “CDO” Goldman Sachs structured and marketed to investors in 2007.

The name of the particular CDO is ABACUS 2007- AC1. It is alleged that the marketing materials failed to disclose that a large hedge fund (Paulson & Co Inc), with economic interests directly adverse to investors in the ABACUS 2007-AC1, played a significant role in the portfolio selection process. Incidentally, John Paulson, the CEO of the hedge fund, is celebrated for having personally earned $2.0 billion in 2008 and $2.3 billion in 2009.

To put it bluntly, the investors, as is generally the case in the casino game that is held up as high finance, were being played for stiffs. The greed game they had willingly decided to play goes simply like this: “tails you lose, heads I win”.

What, you might ask, does this have to do with us ordinary mortals in the Cayman Islands?

The Transaction Overview of the Offering Document (page 20) provides an explanation. ABACUS 2007-AC1 is incorporated with limited liability in the Cayman Islands. The Class D Notes are governed and construed in accordance with the Laws of the Cayman Islands.

Such a vehicle would have delivered less than $25,000.00 to the public revenues of the Cayman Islands. The SEC allegations suggest that investors were relieved of over $1.0 billion and that the Paulson hedge fund’s opposite CDS positions yielded a profit of approximately $1.0 billion. (Thereis a 99% chance that the Paulson positions were similarly facilitated by entities incorporated with limited liability in the Cayman Islands, Exempted Companies.)

A gamed transaction in excess of the $2.0 billion and the house (that’s us the offshore facilitator) is happy to put its reputation on the line for less than $50,000.00!

Are we really so naïve to continue to believe that $25,000.00 is adequate compensation to the public purse for the provision of an enabling environment, wherein so called reputable institutions can arrange for investors to be gamed for billions?

Are we truly satisfied that the reputational damage that is wrought on this little island by the globalrevelations of our involvement in such despicable acts by greedy self- interested financiers is worth the transient material illusion of development that it has brought us over the last two decades?

We continue to hear the self-interested captains of the financial industry and their choir boys and girls warn us that the industry is contributing to the local economy at an absolute optimal level. They continue to chide the public sector for its profligate ways and suggest that the real fix to our current financial and economic woes is to be found in finding ways for the immediate curbing of public sector expenditure.

Maybe rather than reducing the public service we the ordinary folks should be clamouring for the hiring of a few more good people who really understand what goes on the name of high finance and have them deal with the white collar scoundrels as they should really be dealt with.

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Female road victim critical

| 20/04/2010 | 61 Comments

Cayman Islands News, Grand cayman Island Headline News(CNS): Police have confirmed that a female visitor to the island is currently in hospital in critical condition with life threatening injuries as a result of an accident on the West Bay Road yesterday evening (Monday 19 April.) Police said that just after 7:00 in the evening the woman, who was a pedestrian, was hit by two cars as she tried to cross the road by the Strand Shopping Centre. The victim has reportedly received multiple injuries and is currently being treated in the Critical Care Unit at the George Town Hospital.

Police said that the first vehicle was heading south on West Bay Road when it struck the woman, causing her to fall onto the windscreen of the vehicle and then threw her into the air, then into the path of oncoming traffic in the north bound lane. The victim is visiting the islands from the United States.
This morning the hospital issued a blood donation appeal from the hospital as a result of the victim’s need for blood and an already dwindling supply. The hospital’s medial director, Dr Greg Hoeksema, said that following the media publicity this morning for the blood there had been a tremendous response from the community and he extended his thanks to everyone who came to donate.
He said the hospital blood banks were already getting low and alerts had been forwarded to regular donors but a more urgent request was being considered when the accident occurred last night, draining the remaining resources.
Anyone who can donate blood types A positive, O positive and O negative is asked to call 244 2674.

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Cops make drug & gun bust

| 20/04/2010 | 0 Comments

Cayman Islands News, Grand Cayman Island headline News, Cayman crime, Cayman Islands Royla Police ServiceCNS): Police have six people in police custody following a major operation in the eastern districts of Grand Cayman today (20 April). Five Caymanian men and one Jamaican man are currently being held at the George Town Police Station in connection with a drug and gun bust. A police spokesperson said a substantial quantity of ganja, along with cocaine, hash oil and three firearms were recovered when the men were intercepted, having apparently abandoned their boat, which sank as they tried to make a landing on the local shoreline.

One firearm was taken from one of the males on arrest and two others recovered together with ammunition after an air and sea search, which located the boat and the residue of its illicit cargo.

Police said this was a substantial seizure of firearms and drugs which would have found its way into the criminal networks of the Island. CNS understands the operation took place in the Bodden Town area.



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Women to blame for earthquakes, says Iran cleric

| 20/04/2010 | 3 Comments

(The Guardian): A senior Iranian cleric says women who wear revealing clothing and behave promiscuously are to blame for earthquakes. Iran is one of the world’s most earthquake-prone countries, and the cleric’s unusual explanation for why the earth shakes follows a prediction by the president, Mahmoud Ahmadinejad, that a quake is certain to hit Tehran and that many of its 12 million inhabitants should relocate. "Many women who do not dress modestly … lead young men astray, corrupt their chastity and spread adultery in society, which increases earthquakes," Hojatoleslam Kazem Sedighi was quoted as saying by Iranian media.

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Debate on Internet’s limits grows in Indonesia

| 20/04/2010 | 0 Comments

(New York Times): Displeased that a statue of a 10-year-old Barack Obama was installed in a park here, Indonesians took their protest not to this capital’s most famous traffic circle but to Facebook. More than 56,000 online protesters later, city officials gave in to arguments that the park should be reserved to honor an Indonesian. This example of high-tech grass-roots organizing was the direct result of the explosion of social networking in Indonesia. But the boom is prompting a fierce debate over the limits of free expression in a newly democratic Indonesia, with the government trying to regulate content on the Internet and a recently emboldened news media pushing back.

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Hospital makes urgent appeal for blood

| 20/04/2010 | 38 Comments

(CNS): The Cayman Islands Hospital in George Town is calling on donors of O negative, O positive and A positive blood to donate blood today- Tuesday 20 April. The hospital has an urgent need for these blood types and any people who can give are asked to contact the HSA as soon as possible. A health official explained that incidents resulting in hospitalization within the past 24-hours have drained the supplies of blood leaving the hospital in urgent need. Individuals who are willing and able to donate should contact blood the Blood Donor Services Department at 244-2674 or 244-2677.


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Weatherman predicts cloud heading to Canada

| 20/04/2010 | 0 Comments

(BBC): A change in wind direction by the weekend could help blow Iceland’s volcanic ash cloud away from Europe, a BBC meteorologist says. However, the change could see the cloud move to affect Canadian airspace instead. North-westerly winds over the Atlantic have blown ash from the erupting volcano over the UK and Europe this week. But Matt Taylor warned ash blown away from Europe could cause problems for Canada instead.

 "Weather conditions should be more favourable by the end of the week," Matt Taylor said. "The wind should change to the opposite direction: it could start to disperse some of the stuff that has been blown over from Iceland."

But a respite for the UK and Europe means bad news elsewhere as the prevailing wind is more easterly north of Iceland.  "It means that ash will circulate over north-east Canada and the North Atlantic," Mr Taylor added. However ash will continue to fall on Europe. "It is up there in the atmosphere, and factors like gravitational pull and rainfall will bring it back down."
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Cline says EIA will be made public

| 20/04/2010 | 9 Comments

Cayman Islands News, Grand Cayman Island Headline News(CNS): Although the government and the proposed cruise port developer have only just signed the MOU, the environmental impact assessment has already begun, and once it is complete  government will release its findings, MLA Cline Glidden says. While there is wide political support for a development of cruise berthing facilities there are still a number of people who have concerns about the impact the project will have on Cayman’s marine environment, Seven Mile Beach and the islands’ capital, George Town. The EIA must now be completed before the MOU 90-day period elapses, which, according to government and the developer, will mitigate any negative impacts caused by the project.

According to the terms of the MOU, the developer must identify a suitable company and then begin the environmental impact assessment within 60 days. However, Glidden, who has been the premier’s direct representative throughout the negotiating process, told the media last week that the MOU partner, Dart Enterprises Construction Company (DECCO), has already begun the assessment.
The MOU states that the purpose of the EIA is to “assist in the design of the project with a view to minimising and mitigating wherever possible any negative impacts on the natural environment”. It does not state, however, where or if a line would be drawn on environmental damage.
As yet, the name of the firm conducting the EIA has not yet been revealed and the terms of reference are understood to fall considerably short of those proposed by the DoE during the previous administration’s MOU with Atlantic Star.
Until now DECCO has not officially consulted the DoE regarding its EIA, but Glidden said that the developer was not in a position to do so until the MOU was signed but now that is the case DECCO will be able to discuss the project with the government department responsible for protecting the environmental interests of the Cayman Islands . However, Cameron Graham, CEO of DECCO, said that the firm was “comfortable with the results so far” of the EIA.
“The next stage is to engage with them,” said Glidden. “In the absence of the MOU, DECCO was not in an official position to consult with the DoE but now this document gives them the authority to go talk formerly with them.”
While the right to protection of the environment is cited in the country’s Bill of Rights in the new Constitution, that part of the document does not come into effect until 2012, by which time government hopes to have completed the cruise berthing project. Nor does Cayman yet have a law to protect the environment as the National Conservation Bill has still not been brought to the Legislative Assembly.
However, Glidden said that the developer recognises that this is a critical part of the project, which is why it had already been started. The West Bay MLA also committed to releasing the document to the public once it was completed.
While there are particular concerns in the community about the direct impact on the marine environment and local beaches, there are also other issues as the project requires some reclamation of land in order to complete the piers and upload elements. Glidden stated that as little land as possible would be reclaimed and by using pilings to construct the piers and not solid concrete they would be open and therefore, he said, this would not restrict ocean flows.
The $150 million plan may also see the downtown area of George Town Harbour pedestrianized and port cargo traffic diverted. Glidden said they were presented by some challenges because of that cargo traffic but there was hope that it could be predestrianised, creating a more pleasant experience for tourists and rejuvenate the capital. Glidden said that DECCO had already contracted traffic management consultants as part of overall $150 million project.

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Still no conservation law as minister signs pledge

| 20/04/2010 | 8 Comments

(CNS): Although Minister for the Environment Mark Scotland signed the Chamber’s Environmental Pledge to commemorate Earth Day, there is still no sign of the National Conservation bill. Since coming to office the minster has said he will address the outstanding law. However, CNS understand that despite being in consultation throughout most of the last administration, Scotland has again circulated the bill in order to make changes. While the environmental pledge is a Chamber of Commerce initiative intended to encourage the commercial and public community to better sustain resources and protect the environment, the conservation bill is the only thing that can legally protect the environment.

As the right to environmental protection is now enshrined in the Constitution as part of the Bill of Rights the government must have a conservation bill on the statute books before November 2012 when the bill will be enforced.
Meanwhile, as the country waits on government to take legal action to save its precious natural resources hundreds of people were voluntarily doing what they could to help on Saturday morning with hands-on action at the Earth Day clean-up. Despite the rain, people were out bright and early to take part in the annual Chamber of Commerce Earth Day Roadside Clean-Up on Saturday.
Collecting strewn garbage and debris from around roadsides and beaches, the teams did their bit to make Cayman a cleaner and safer place for all of us, including our wildlife. After the work was done, a hot breakfast awaited everyone at Public Beach thanks to LIME and Rotary volunteers, who helped serve it to some very wet participants. Thanks to the RPCU and DEH staff, the collected garbage was collected in a timely and efficient manner.
“Today was a great success” said Wil Pineau, Chamber CEO. “It’s a wonderful thing to see so many members of our business community, church groups, and schools coming out in their clean-up teams and making such a difference to our Islands. Even in the rain we have had a great time. Having garbage lining our roads and beaches is a terrible message to visitors and investors to our Islands. We live in one of the most beautiful places in the world – let’s respect that fact and take good care of it.”

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