Archive for June 5th, 2012
World Bank banned CHEC
(CNS): The Chinese company that the Cayman Islands government is negotiating with over the development of cruise berthing facilities has been banned by the World Bank because of fraud and corruption. The parent company of China Harbour Engineering Company (CHEC), China Communications Construction Company Limited (CCCC), has been barred from being involved in projects financed by the global bank since 2009 under its fraud and corruption sanctioning policy. The revelation was made by the Jamaica’s Contractor-General, Greg Christie, who has raised concerns about developments in that country which were given to the Beijing based firm.
Cayman Islands Premier McKeeva Bush, who is facing opposition from the UK's Foreign and Commonwealth Office over his decision to negotiate with CHEC outside internaitonal procurement standards, has insisted since he moved into exclusive talks with the firm last year that it is thebest company for the job.
However, the revelations about the World Bank's ban on the firm adds fuel to the mounting controversy in the region regarding the firm and its involvementin various Caribbean capital projects. The bank has stated that any firm directly or indirectly controlled by CCCC is ineligible for any World Bank financed contracts related to roads and bridges during the period 12 January 2009 to 12 January 2017, which automtically extends to CHEC as it is a major subsidary of CCCC.
In its efforts to combat corruption in public sector contracting the bank prohibits member countries from awarding World Bank-financed contracts to any of the firms or individuals that it has sanctioned. Christie has questioned whether the government in Jamaica had identified CHEC’s debarred status.
“Now that it is known that the World Bank, in the judicious application of its anti-fraud and anti-corruption policies in public contracting, has had cause to sanction and to debar CCCC and CHEC from receiving World Bank financed contracts, the obvious question that now arises is whether this is something that the government, as a matter of good, prudent and diligent business practice, intends to be guided by in the award of its own contracts that are financed from non-World Bank sources,” Christie said, adding that the revelation must be set against the backdrop of other controversies surrounding CHEC.
According to the Jamaican media, China Harbour Engineering Company (CHEC) has rejected the concerns, stressing that it was not involved in and had never been involved in any activity that has attracted sanctions by the World Bank.
It said the issue related to 2003 and involves the China Road and Bridge Group, which was later taken over by CCCC in 2005. CHEC claimed its parent company came under the debarment in 2011 based on changes made at that time to the World Bank system.
The Cayman premier signed an MOU with CHEC last year and has been in negotiations ever since to build two finger piers in George Town with an extensive upland development, a well as a pier in West Bay and the redevelopment of the jetty in Spotts as a bad weather alternative for cruise ships to anchor
The talks have been embroiled in controversy because of concerns about the firm, the way it was selected by the premier and exactly how the escalating cost of the project will ultimately be met. CHEC has agreed to design, build and finance the project and recoup its investment over a period of fifty years but it is not clear what share of the port fees, which normally go to the public coffers, will be redirected to CHEC.
‘Gasboy’ still being abused
(CNS): Full story — Government has done very little to mitigate the risk of abuse of its fuel card system, Auditor General Alastair Swarbrick has found in his latest report, despite the revelations in 2010 by his office about the potential loss of some $500,000 per year to the public purse. In the latest report on the GASBOY fuel card system, published Tuesday morning, many of the problems first identified by the internal audit unit and exposed by the former auditor general have not been addressed. Swarbrick said that although the five agencies included in the first audit have made progress, the recent examination of a further twelve government entities has found many of the same failures and mismanagement.
He said he had found 97 gas cards still assigned to ex-employees within ten of the departments audited, some 65 cards assigned to employees who have no business need to have them and 28 employees with more than one fuel card issued in their name.
“I am disappointed that appropriate action has not been taken across government in the last two years to develop better practices for the distribution of fuel,” said Swarbrick. “The opportunity for abuse of the system is still a significant risk today.”
The report found that the overall control of the environment has not improved, leaving the system vulnerable to abuse and fraud.
However, Swarbrick did point to some significant improvements in the first five agencies reviewed in the original report. These entities were the highest consumers of fuel and most had acted on the recommendations of the previous auditor general, Dan Duguay, by addressing the surplus cards in circulation, documenting policies and procedures for fuel management and improving controls.
According to the work of the internal unit, the police, the Public Works Department, the Water Authority and the National Roads Authority all made efforts to address the problem. However, despite frequent requests for information, the Department of Environment Health failed to respond and the audit office was unable to establish if any measures had been implemented to stop the abuse, Swarbrick said.
The DoEH is the largest consumer of fuel of any government agency and although the department did not cooperate with the auditor general, according to its spending figures, since the last report it had reduced its fuel consumption by over $11,000. Between January 2008 and March 2009 the DoEH spent $48,714 on fuel, but between July 2009 and June 2010 that had dropped to $37,554.
The latest report shows that across government fuel spending has fallen by over $475,000. Although this was close to the figure which was estimated to be the amount being lost as a result of abuse and mismanagement in the original report, Swarbrick said the fall could also be as a result of other issues, such as fluctuating fuel costs as well as better controls by the top five users.
But Swarbrick pointed out that the same problems remained among the other agencies which were not previously assessed, even though many of themare in the same ministry as those in the original audit. Swarbrick said it was disappointing that the recommendations had been ignored by other government entities despite the widespread knowledge in the ministries of the recommendations.
“It is clear no one took responsibility in the rest of government to implement the recommendations,” Swarbrick said as he added that government had a duty to prevent abuse of public funds. “Action wasn’t taken across government, so there is still a significant risk.”
However, he said he was encouraged that the deputy governor has now made a commitment to take the lead on the issue and tasked all chief officers to implement the recommendations ahead of the introduction of a new system of fuel management expected to be in place by the end of next month.
Eco-bill still in limbo on world environment day
(CNS): In his message to mark World Environment Day UN Secretary-General Ban Ki Moon spoke about the need for a paradigm shift towards a more sustainable world. Here in the Cayman Islands however, there is still no legislation in place to protect the natural environment. As the world gears up for the sustainable development conference in Rio, myriad unique and endangered species of flora and fauna remain at risk locally as yet another government fails to enact the necessary legislation. As the world moves to discuss the importance of sustainability in future development, Cayman’s development laws cannot even protect essential mangrove buffer.
Since 2000 successive governments have promised but continued to fail to enact any kind of meaningful legislation to protect the environment. The most recent law the National conservation bill remains in limbo after enduring several years of consultation. Although government finished its last round of public discussion more than 18 months ago, it has not yet decided how to move forward with the critical legislation.
The minister responsible, like others before him had stated that the law was a priority for his ministry when he was elected to office in May 2009 but three years later the bill remains stalled. In January this year Jennifer Ahearn, the chief officer in the ministry, told CNS that the ministry was deciding whether to change the bill based on the input received during the last consultation period, or to let the bill go forward as drafted.
“Discussions on that have not yet happened,” the chief officer admitted at the time.
Meanwhile, the director of the Department of Environment (DoE) has persistently warned of the pressing need for legislation the clock is ticking on the islands’ precarious environmental resources.
Gina Ebanks-Petrie has repeatedly stated that at the very least environmental considerations need to be given equal weight in planning and development decisions as other factors such as socio-economic impacts. The proposed bill has been much misunderstood, and the department’s director has said that it would not enable the seizure of people’s private land by government. The only land that can be preserved for environmental purposes under the draft bill is that belonging to the crown. Ebanks-Petrie said it will not stop development but merely requires the country’s natural resources to factor equally in development decisions.
From the silver thatch palm and the banana orchid to Cayman’s unique bats and reptiles,few of the islands’ indigenous species currently have any kind of legislative protection.
Despite wide support across the community for the legislation, with media straw polls persistently showing around three quarters of the population in favour of passing the current draft law, the government has still not been persuaded of the urgency required regarding the legislation. The draft bill has been re-written several times but a vocal minority has been able to hold the bill hostage.
Cayman is now only five months away from the implementation of its Bill of Rights as set down in the 2009 constitution which refers to environmental rights. Unless the law is passed, the environment will not be protected in direct contravention of section 18, which states that government should adopt legislation to protect wildlife and local biodiversity.
Reply to 101: Learning Lessons
101 is eager to ridicule our two political parties, to say there is nothing to choosebetween them and to throw both in the bin. I do not think 101 can be faulted for wanting to get rid of UDP government. It is clear to all of us that the UDP offers one thing only – Bush rule. We have all seen Bush rule in action, and there is no reason to think that it would improve if Bush were re-elected as premier.
On top of his failings as a ruler and the question whether we want a ruler or a government, there are strong suspicions of large-scale corruption, made worse by his explanation of the Thomas affair. So it would indeed be a grim day for the Cayman Islands if voters chose four more years of Bush rule.
On the other hand 101’s suggestion that a PPM government would be no better than Bush rule is facile and unworthy – if this is meant to be a realistic assessment of the situation. The explanation may be that the Viewpoint is really propaganda for an independent candidate.
In order to slam the PPM government of 2005-09, 101 repeats the UDP propaganda about financial mismanagement. This was the propaganda that won the election for Bush and his team in 2009. But I suspect 101 understands that the truth is not so simple. And I hope 101 recognises that it is important for the country’s future that the truth be understood and the lessons of the financial crisis learned.
The PPM government was elected in 2005 on a manifesto that made plain that it would give first priority to the country’s education system. Our existing system was suffering from neglect, it was inadequate and over-stretched, and this was having very serious long-term effects. The government set out to overhaul the system, change attitudes to education and provide the best facilities that the country could afford. Thus far I do not think anyone would fault the government.
The mistake was in not making their own assessment of what the country could afford. The financial secretary gave the project his thumbs-up and there was no reason to doubt his assessment. Under the Constitution (then) it was the financial secretary’s responsibility to make the assessment, and he had the data and the expertise to make it. We still do not have reliable figures but we do know that the financial secretary made a radical reassessment after the 2009 election. And from his explanation to the LA it emerged that he had a very restrictive view of what his responsibility entailed. He just passed on figures given to him by others.
It does not matter now whether the FS was wrong about his responsibility. I am not talking about blame but about the lessons the financial crisis teaches us. One of the most important lessons is that in future the elected government must ensure that large projects are undertaken only with a reliable assessment of affordability – and of feasibility, cost, impact and benefit. Those who make the assessments and advise on financing must take responsibility for what they say; and the elected government must satisfy itself that the assessments and advice have been given properly and carefully, with due regard for margins of error.
I am not suggesting that the elected government should ignore what the civil servants are saying. Far from it. We have seen in recent years the mess that is created by a premier who thinks he knows best on all subjects.
This is only one of the lessons that the financial crisis should have taught us. Another, underlined by the Miller/Shaw report, is the absolute necessity of bringing the operating costs of government under effective oversight and control. This was the responsibility of the civil service itself. When the Cabinet was told there might be an operating deficit for ‘08/’09 it immediately put pressure on the civil service to cut costs. But with hindsight we can see that this was not enough. With the new Constitution the responsibility for government finances is in the hands of the minister for finance.
Another lesson is that raising taxes to make up the government deficit can do more harm than good. The key thing in a financial crisis is to support and encourage private business, especially our pillar industries, and to restore confidence. This was emphasised in the PPM’s 2009 manifesto. It is increasingly recognized by governments around the world as the global crisis continues.
I think it is fair to say that the Bush government has ignored all of the lessons. The premier sees such lessons and the ordinary principles of good governance as obstacles to be evaded when doing what he wants. So we have the embarrassment of the UK forcing our premier to sign an agreement to observe some fundamentals – not that there is any sign that he truly accepts any of them. He prefers confrontation.
In my opinion voters need to choose a team, one that could form a government with its leader as premier; and it should be a team that believes in good governance, shows that it understands the lessons of the financial crisis, and will restore confidence and the rule of law. That is the only way voters can obtain a government that will take care of them and the country.
The PPM is assembling such a team. That has been the main mission of the PPM since the first members came together ten years ago. The PPM team will certainly include new faces; it already has a new leader. I hope voters will examine the team and its manifesto with care before making their decision. Of course the performance and achievements of the previous PPM government should be scrutinized, but where mistakes were made the question should be whether the lessons have been learned.
101 exhorts voters to vote for individuals regardless of party affiliation, if any. This is how we voted in 2000, and it led to the first Bush government. A lot of people used some of their votes this way in 2009, and it gave us the second Bush government. Let us not make the same mistake in 2013. Another lesson.
Independent candidates should be pressed to say who they would vote for as the next premier. Voters should choose their government, not leave it to the MLAs to make deals and compromises to suit themselves.