MACI losses stir up LA

| 09/04/2014

(CNS): With losses of more than $1.2 million over the last five years, the Cayman Islands Maritime Authority (MACI) stirred up proceedings Wednesday, when the Legislative Assembly opened on Cayman Brac. Ezzard Miller called on his fellow members of the LA to reject its 2013 financial report, pointing out that year after year government was accepting increasing losses at yet another statutory authority, which at worst should be breaking even when it was originally created to make a profit. Pointing to the complete absence of any explanation for the growing losses by MACI, despite revenue increases, the North Side member said the report should be sent back and the directors held to account.

The report was tabled by the financial services minister, Wayne Panton, as proceedings began and although he mentioned the more than $377,000 loss which government will suck up, there was no detailed explanation given for it as he thanked the board for their “professional and steadfast service". However, when Miller got to his feet and called for the House to reject the report, that "professional service" was called into question.

He pointed out that although there were record level earnings on the 1,966 ships now registered with the authority of more than $8.4 million, expenses were more than $9.2 million. 60% went to wages for the 50 employees, with $476,000 alone on three managers. Over $600,000 was spent on travel and entertainment and Miller asked why no one was asking what was happening. Given the constant loses, Miller queried the sense in retaining the register as an autonomous authority.

“Members should be concerned and alarmed,” he said, pointing to the continuing habit of reports being tabled and accepted by the LA with no questions asked of boards or the well paid managers.

He said he had tried to look at the possible reasons, comparing the shipping registry to the General Registry, which manages hundreds of thousands of commercial entities and public documents with less staff, pays its management team less than half those at the shipping registry and brings in more than $200,000 for government every year.

Panton was quick to point out the losses had nothing to do with the current administration. He said the comparison to the General Registry was inappropriate as the regulation involved in the shipping registry’s work was technical and costly.

He said losses were down to a fall in the number of services or outputs that MACI performs for government, which Miller had revered to as a subsidy, amounting to almost $6 million over the last five years. He also pointed to pay-back on a lease when MACI moved to the new government building. However, that was later revealed to be incorrect as the authority had saved some five months rent for the relevant financial year, which was in the report as a benefit.

Panton assured members that the losses were being addressed and would fall next year. Also MACI, like all other government companies and statutory authorities, would soon be under review and called to account with the proposed public authority law. The minister underscored the importance of the registry to Cayman and its significance to its maritime history. He also noted that it generated significant work for the offshore sector, so while it might make a loss as an authority in contributed indirectly to the economy overall, as he dismissed Miller’s suggestion of rejecting the report.

The member for East End, Arden McLean, who had seconded Miller’s motion, said all it asked for was for the board to recognize the problem and offer some reasons and solutions and asked how three managers could be earning almost half a million dollars at a government authority.

“We need to keep a close eye on these authorities,” he said, adding that they treated government like a “money tree” but the poor performance was continuously endorsed. He added that the intent of the motion was to find out what had gone wrong at MACI to ensure it won’t continue.

Offering the turtle farm as another shocking example, he called on government once again to just give the facility away as even paying the loan back would be cheaper than the ongoing subsidy. 

The planning minister, Kurt Tibbetts, emphasised the importance of the forthcoming public authority bill that will make government companies and statutory authorities accountable but he said that while he could not support rejecting the report, the issue had now been aired and he trusted the minister to handle the issue.

The opposition leader also joined in the debate, which stirred up feelings in the LA about the lack of accountability that has surrounded public authorities. McKeeva Bush took aim at Panton for being quick to say it wasn’t his government’s fault, but Bush said the authority had lost money under both administrations and the problem went beyond politics. He agreed it was important to find out why. Defending the turtle farm, he emphasised its cultural importance and again lamented the lack of support for a cruise ship pier in West Bay, which he said would have changed the fortunes of the attraction.

Meanwhile, the government’s veteran backbencher, Anthony Eden, who is increasingly ploughing his own political furrow, acknowledged that it was probably too late to send the report back but he said members could not put their heads in the sand and allow losses to continue, as he called for the public authority law.

The premier assured him and other members it had been drafted and was a long way down the road towards coming before Cabinet. (See related story: Premier-says-sacred-cows-will-be-auctioned).

He said the Maritime Authority could generate more income if it was able to attract commercial vessels, where the money was. He agreed with the leader of the opposition that the losses at MACI were fundamental and had nothing to do with any particular government but rejecting the report wouldn’t help.

Winding up the debate, Miller said he had never pointed the finger at any government but wanted the directors to be accountable. He raised concerns that the current board was more concerned with generating work for supporting financial services companies than getting MACI to break even or make a profit.

Disappointed by government’s dismissal of his proposal, he said it had missed an opportunity to send a clear message to tell the board to stop the bleeding. Miller warned that continuing to accept reports such as the one on the table was endorsing poor management.

Category: Politics

Comments (57)

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  1. Anonymous says:

    This is not the end of it.  Her Majesty's Revenue and Customs (HMRC) are now looking at the CISR, in particular the UK office.  They want to know why any bills paid to that office can only be paid un Euros or Cayman Dollars and not UK Pounds. There is a very strong suspicion of 'Tax Avoidance' which is being clamped down on in a big way.

    The CISR should prepare itself for a massive tax bill very shortly.

  2. Anonymous says:

    The general registry certainly brings in more than $200,000 to government each year. Try closer to $50 million. CNS please research and correct this. It is absolutely curious that any organization at the end of its first year in operation will make a relatively small loss and 8 to 9 years later, when its revenue has doubled, it is still making a loss. That is very unusual. Staff at MACI also get bonuses too and it is clear that these bonuses are not based on profits because they won't get bonuses since losses are made. Bonuses are probably based on revenues. So as revenue grows, bonuses are payable but at the end of the year an overall loss is made. It is good that mr Miller has exposed this. Only by such exposure might there be a chance of a profit in future years. Let us see what the new board of directors can do. Also strange that no statement made from MACI on all this bad PR. Remember too that there are other MACIs out there in the govt sector, those that make profits can do better and those that really can't help but make a loss can reduce those losses. It is crap that the public authorities will cure this situation and the sacred cows that the premier talks about will get fatter. Keep this up and Mac looking good in 2017.

  3. Foreign Devil says:

    The fat begins at the top, our MLA's have generously voted themselves huge salary and Benita package that has no relation to the work there do, so everyone else that feed at the public trough including the non working 9000 need to get a piece of the action.

    civilizations through history always goes into decline when the people of  that society reilise that they can vote themselves free money from the treasury.

    • Anonymous says:

      Can someone explain why on top of all these losses MACi has to have a big office with over 30 staff in London too? WTF!

    • Anonymous says:

      Is it true that MACI also has over 30 staff in London?  I heard this and couldn't believe it!

    • Anonymous says:

      What is “Benita”? A luxury yacht??!

  4. Anonymous says:

    The comparison between the services offered by CISR/MACI and the General Registry is ridiculously impossible – chalk and cheese.

    First of all, many of the services offered by the CISR are highly technical and are undertaken by highly trained and qualified individuals.  At the General Registry, there is an administrative task being done.  

    Second, the General Registry completes the work it is given by the private sector, in other words, the law firms, the accountancy firms, banks, etc are those who are doing the marketing of the Cayman Islands as a jurisdiction and for themselves.  The CISR is operating in a highly competitive environment and they need to be actively marketing their services in the global community.  They have done very well at this.

    Third, the CISR has extensive international guidelines that it must follow and it has done so to the point where Cayman is now listed as one of the top 13 flags in the world, based on its safety record and performance.  The General Registry is a record keeper and it fulfils its role well, but it does not operate in the same kind of environment as the CISR.

    I think more information is required here, because the CISR is globally respected, revenues and the number of ships is climbing, so they seem to be doing something right.  I am sure there is more to the story.

    • Anonymous says:

      Why might I get the impression this post was approved by the General Manager of MACI?

      • Anonymous says:

        maybe because it is a reasoned and balanced response?

      • Anonymous says:

        So what if it was. It obviously presents facts in it unlike many other post here which don't. I would only think it fair if MACI was to respond to some of this foolishness.

  5. Yachtsman says:

    If MACI cannot turn a profit, why do we have it?  Does it help the Cayman citizens?  If not, WHY DO WE HAVE IT?

    • Anonymous says:

      yes, it does provide benefit for Caymanians – it offers white collar job opportunities to Caymanians who want to work in seafaring.  It provides a valuable and highly respected service globally.   It is generatng revenue and it has a long history of accomplishing good work.

       

  6. Papa Doyle says:

    A deeper look at MACI and what is really going on will cause alot of problems for many of its players and managers and they private business& assets they control and being run on "Gowerment" Time times up mista Minister  poor old Joey doing his time for his crimes while others smoking C-igars!

  7. Anonymous says:

    As usual Ezzard shooting his mouth off without first knowing all the facts. Maybe he should visit MACI and see what a good job they are doing or speak to some of its clients both locally and internationally and hear how professional the organization is. He must have forgotten that his father and uncles all went to sea some years ago and that Caymans strong Maritime history is slowly slipping away and that the guys at MACI are trying to ensure that the tradition continues just not in the form we may be accustomed to; of our people working on the decks of those same ships but rather behind the desk or surveying ships for some of those same companies today that his uncles and father may have worked for.mso why push to close them down? Why not take this opportunity and support MACI in its efforts rather than tear them down. 

    It is my understanding that MACI provides a service to the government for a fee and they don't receive any form of subsidy.  The year in question, it's services which the government purchases from MACI, was cut almost entirely some 2 months into the financial year without any consultation with MACI's board or management but were expected to deliver the same quantity and quality of service which they did.  I believe that the amount in which the government services were cut was some $1million, so to only have a deficit of $377,000 I believe is a testimate to the Board and Managemnt of MACI for only having a loss of $0.4 million and not $1. million.

    Why not highlight the fact that MACI has actually produced an annual report when so many other government entities haven't, of whichever might add that the auditor general has given a clean opinion on. 

  8. Trutsaya says:

    A lot of first class diners and 500 dollar bottles of wine in Monaco for these fellas. Great place to work if you want to live the high life. Enteraining billionaires is an expensive job but someone has to do it. On the tax payers dime makes this all the better.

    This department is in need of a serious revision. If it cannot break even or make money better start making cuts or do away with this failing venture.

    • Anonymous says:

      These statements are just completely untrue.  If you are going to make claims, make sure that they are accurate.  

      The Shipping Registry must be its own rainmaker – they have a target audience that is global and if they are going to get business, they have to go out and get it.  They have a budget for marketing and business development the same as any responsible company has and they must work within that budget.  It is strange to automatically assume that they are careless with that budget (which needs to be approved each year) or that they won't want to make those dollars go as far as they can.

      There is nothing to be read in the financial statements to verify your claims and if you want to make up stories, you should note that it is fiction and not fact, for fear that other people will take this information as true.

      • WalkerRanger says:

        "record level earnings on the 1,966 ships now registered with the authority of more than $8.4 million, expenses were more than $9.2 million. 60% went to wages for the 50 employees, Over $600,000 was spent on travel and entertainment. "

        The shortfall for the tax payers to suck up. Facts are facts. Company is operating at a loss and the growth although record is not enough to outpace expenses. I suggest they need to take a good look at their model because it is clear it is not working.

  9. Anonymous says:

    Umm!! let’s see!!! maybe politicians should talk about their pay packages now and when they retire. We will be increasing revenues again on every blasted thing in Cayman just to maintain their present salary and retirement packages… they need to talk about that instead of hitting on the Maritime Authority  CI with utter rubbish…

    I truly wish that politicians will visit with authorities in Cayman and then compare then to overseas territories to see what is accomplished in Cayman before they voice their opinion on things they know not what they speak!!!! As far as I’ve hear this was a government department before it changed to an authority, why didn’t they bring up this nonsense when it was a department?

  10. Knot S Smart says:

    The loss at the MACI is frightening, but the meager profit of $200,000 from the General Registry is even more startling.

    From our thriving offshore industry with more than 30,000 companies and other entities here, our government is only making $200,000 per year?

    So between the two we are paying more to collect the funds than we get from the collections? Did I read that right?

    The management of both of these entities need to be contracted out to private management groups with renumeration on a percentage of collections basis…

  11. Anonymous says:

    MACI cannot make a loss UNLESS it is run with no regard for the real world.

    Think about it, and bear in mind there are plenty of registries making money elsewhere.

    Its function is to provide a computerised list of registered vessels, and paperwork for the vessels owner. Simple and cheap. 

    Over and above this there are rules, regulations and vessel standards to lay down and revise, this work is hardly onerous and largely copied from existing registries.

    Then there are the costs of vessel examination and survey, all of which are borne directly by the vessel owner.

    And finally, the collection of fees, a simple task since non payment will result in loss of registry for the vessel.

    So, how do you run up this kind of deficit, and repeat it year after year?

    Another easy task is to look at the books, if of course there are any reasonable records to look at.

    And that last bit tells the real story, almost all Governments departments are staffed and run with no regard for cost, function, good management, record keeping, and in general the real world. True, this sort of separated commercial function is one stage removed from the real process of government, but losses at this level suggest more than just "a bad year", they suggest either wrong doing, or total disregard for the public purse, time to get real!  

    • Anonymous says:

      It is true that every company (private or public) should be always aiming to be profitable, but think about the global economic conditions that CISR has been operating in for the last 4 or 5 years – I don't think it is such a leap to consider that the financial crisis had a detrimental impact on the shipping industry globally and that there are likely a whole lot less ships being built.  This of course is going to have an impact on the Registry.  I think it is also possible to speculate that with the increased globalisation and demands for goods across all oceans (particularly to and from China) that the shipping industry may we be on a nice little upward curve.  

      Many companies go through negative years and continue to survive and then thrive.  What about the idea that the managment of CISR have mitigated the circumstances as best as possible and that without their guidance it could have been much worse?

  12. Anonymous says:

    Agree with Miller and others here again….in that many Authorities are simply NOT held to account! And unfortunately the same is true for CIG and most of it's companies!

  13. Anonymous says:

    Wow, for once I agree with Ezzard and Arden. What next, flying pigs?

     

  14. Anonymous says:

    The only people that make a profit are the lawyersat the CI Govt.'s expense.  Sad.

  15. Anonymous says:

    Shocking!  Considering the high roller type of travel the directors are always on they should be making millions!  What a disgrace.  The PPM should make no excuses by letting their buddies get away with this!

  16. Goober says:

    Sounds like same old same old to me.  Nice try, Ezzard.  It's hard to get the porkers out of the trough!

  17. Anonymous says:

    No reaason not to demand an explanation why they can't break even. This is a luxury item and should not cost Cayman a dime.

  18. Anonymous says:

    You tell them Mr. Miller, ++++++++++++

     unfortunatly the governments (elected and un-elected) we continue to pay are only concerned with sound bites and refuse to be morally and ethically accountable.

    Theworse is yet to come,

    caus no one takes accountability serious. Just talk and more talk talk, it wa'nt me, oh boy, when are we going to get pass that.

  19. Anonymous says:

    maci is run as a little empire and they answer to one really, pay themselves huge salaries, loose money and galavant the globe in first class. 

    • Anonymous says:

      You've hit the nail directly on the head, that's all it is, a private empire staffed with friends and loyalists. The private homes rented for boat shows in Monacco and jet setting across the globe first class while being paid huge six figure salaries are just the tip of the iceberg when it comes to the wasteful spending going on at MACI. They are the poster child for why we desperately need overarching legislation.

      • Anonymous says:

        and anudda ting -dont forget the staff are all friends, loyalists, long time associates and Brackers.

        No body crackin open this one!

  20. Anonymous says:

    Is there anything Ezzard doesn't say is wrong.

    • Diogenes says:

      Please explain how what he is saying here is wrong.  So you think that the average salary in a simple shipping registry should be over $100K across all staff, from the most junior person in the office on up (quite why you need 50 people to run it anyway is beyond me) or that it should run up a $600K entertainment and travel bill?  Its not the net loss you need to worry about – these people are blowing through $8 million in revenue without any apparent concern.   We should all be appalled.  I often think Ezzaard complains about things unreasonably, but this looks spot on, and a lame " we will fix it due course" is pathetic.  Haul the CEO in and ask him to justify the spend.  If he can, then fine, but at first sight this looks like a runaway gravy train.

  21. Anonymous says:

    Too many managers busy running their own businesses and earning huge salaries for doing nothing.  Stop the bleeding, stitch the wound now, not later.

    • Anonymous says:

      I thought Franz was going to nip this in the bud. These high paid government workers opperating their lucrative businesses. Some competing against our very own government.

    • Anonymous says:

      You hit the nail on the head.  Too many “managers’ doing nothing other than running their on businesses whilst being paid by Government to do nothing.

      All of the Directors both in George Town and the UK have other business that they run. Someone must question what role the board plays to make sure the Authority is run effectively. If it was a proper company the board would have sacked the CEO years ago.

      As another person wrote here; there is no reason why the Shipping Registry should run at a loss. 

      Administering registering ships is only and administrative function and at best there can only be around 200 new registrations a year, it is hardly a labour intensive process and with less than 2000 ships in total the annual administration is can’t be more than 2 person job.

       

      It is the surveys on ships that brings in all the revenue for the registry, from what I have heard all the surveyors are self employed anyway and all the registry does is to put a margin on top of their fees then charges the ship owner, somewhere in the region of 300%. How can they fail to make a profit with margins like that!

       

      Sounds to me that the CEO and this band of directors have had it too good to too long and now there game is up.

  22. Anonymous says:

    The elephant in the GOAB is a civil service where staff at all levels are allowed to engage in outside business and other activities while collecting a full government remuneration and benefits package when they should be focusing on their day job.

    The more we spend on the civil service, the worse it seems to get.

  23. Anonymous says:

    The honourable members should review their own bloated pay packets before they go after the MACI high income earners.

     

    Please lead by example if you want to cut bloated pay packets.

  24. Anonymous says:

    Thank you Ezzard, Arden and Tony for having the sense and courage to do something about the usual crap of waste and accepted losses. Where is the accountability?

  25. Anonymous says:

    Holding some one accountable? I bet they're really worried.   NOT!

  26. Anonymous says:

    If they check the salary of the Managing Director and the rent paid to the private sector until the same Managing Director was FORCED to move into the new government building, they may account for the losses. But they wont, because MACI is PPM territory. Just ask McKeeva Bush.

  27. Anonymous says:

    The draft Public Authorities Law was fought tooth and nail by certain statutory authority heads and the office of the Attorney General/Legal Department when it was first drafted in the early 2000s, the first because it intruded on their way of operating and the latter because it was "not needed". The truth is coming out about the huge salaries paid in these places.

  28. Anonymous says:

    How many employees from this Authourity travelled to the Miami Boat Show, Monaco Boat Show, Cardboard Boat Show etc and what was spent there I wonder….

     

    • Anonymous says:

      How much is MACI promoted overseas on those tours.

    • Anonymous says:

      Do you not think travelling to boat shows to promote your Registry (the same way other registry's such as the Marshall Islands, BVI etc. do) is not important? Maybe I'm wrong but I would have thought marketting yourself in such venues would be seen as quite important, especially when you're holding yourself out to be one of the biggest (if not the biggest) player in the pleasure yacht registration industry…

      • Anonymous says:

        Good excuse I grant you, but the devil is in the detail. We read above of multiple travellers all in the expensive seats, houses rented in Monaco, and restaurant and bar bills of magnificent proportions.

        Its simple, would you allow this if you owned that business? Of course not. Yes, it is necessary to attend and be seen at these events, its a question of degree, how many people, which events, why is a rented house necessary. The people at these events are there to work not party, they do it because they can get away with it, and all by itself that proves they are not the right people, and their managers are not managing, and for avoidance of doubt, the ultimate managers of these Government sponsored businesses are the CIG themselves.

        Now madame Governor, is it not time to boost the excellent Auditor, and send him in? Ask for a rapid report, open for all to see, and require action if there is wrongdoing.

        • Anonymous says:

          Unfortunately you can't use the comments above as presentations of fact – this is people speculating and getting all fired up about stories they make up themselves.

          The $600K line item is for travel.  It does not say anywhere that this was all just BD travel.  Do the surveyors not need to go to the ships and inspect them?  How much of this money was costed back to the client who pays for the travel?  people are taking a small bit of information and speculating the rest.  

        • Anonymous says:

          Maybe you should take the time and read the auditors general report for MACI and see that he had signed off on a clean report.

        • Anonymous says:

          What is wrong with you people who have not traveled!!!! In order for you to get a decent room in Monaco its about Euro 283.00 plus tax!!! Converted to CI would make each room more expensive…. a freaking house is LESS EXPENSIVE!!!! STUPID PEOPLE!!! get your facts straight before posting.

      • Diogenes says:

        Its a question of degree – $600K is a lot of cash for a couple of boat shows.  How many people went, what was the money spent on?  And if the end result is that you lose money and the taxpayer has to pay to keep the Registry open so foreign boat owners can avoid tax and regulation, pray tell why do we even have one?  National pride in havig a shipping register because wehave always had one?  Of course, if we could run MACI for less than $8 million, it would make sense – but no one seems to want to ask exactly what the cash is being spent on and if 50 people at these levels of remuneration are really needed.  I can tell you, if I ran my firm that way my shareholders would want a very serious conversation with me about it, and if I couldnt provide reasonable answers….. 

        • Anonymous says:

          MACI and its emloyees visit a very limited number of boat shows throughout the year. The individual employees who travel for MACI are registered surveyors and majority of them have enegineering degree back grounds. The 600k spent on travel is used throughout the year. The surveyors more often then not spend more time travelling then they do at home. The travel is part of their job. To the vain onlooker this is pressumed to be done in luxury as the clients of the company themselves own "luxury yachts" and other large vessels. When surveyors travel they do not pay to entertain the owners of these yachts or parties resonisbible for the yachts management. More often than not the yachts will go over a year without their owners setting foot on their deck. Working for the MACI as a surveyor is far from the glamerous job that is percieved to be. Members of the public need to be aware that a 600k travel expense incurred over a year is fractional in comparison with other government companies. If members of the Cayman public have complaints about excessive amounts of money being spent on travel. Eyes need to be turned towards the politicians of the country of which we live in. All of whom take lavish trips abroad deemed to be "stately" visits with the majority being unecesary. If citizens want to know where their money is going they need to look at the people in charge of running the country and their expenses rather than the small authorities trying to turn a profit in a struggling economy. 

      • Bling Man says:

        Yah.  Ya wrong.  Ya just nah unnerstnd why it wrong.

    • Anonymous says:

      1 person travelled