Port struggles with debt

| 23/10/2014

(CNS): Although the Port Authority, one of Cayman’s most important statutory authorities, has increased its revenue and cut expenses, it struggles with long term debt and funds for capital investment. Moving from a loss of $1.8 million in 2010, according to a report from the Office of the Auditor General (OAG), the authority cleared over half a million dollars at the end of the 2012 fiscal year but its debt liabilities and a need to replace and repair equipment is causing the port problems. The auditor also noted some concerns about the management at the port that is making matters worse, such as mounting legal fees to fight FOI requests at the direction of the board and the mismanagement of crane repairs.

The port is making annual debt payments of some $2 million and spent $1.2 million during 2012 as a result of poor project management and assessment of damaged equipment.

The OAG also reported that at the end of June 2012, the port’s liabilities exceeded its assets by more than $3.5 million. In light of this as well as debt payments, a reduced volume of business and limited room for fee increases, Alastair Swarbrick has raised concerns about the port being able to continue operating without financial support from government in the future. 

In addition to the port’s financial troubles, there were also a number of governance problems, and Swarbrick qualified his opinion on the port’s 2012 accounts. He said this was because of a number of problems over conflicts and related party transactions. Swarbrick’s team found that the authority did not have the systems and practices in place for senior management and board director to comply with good governance principles.

He raised a number of other concerns, including the port’s failure to comply with its own regulations because of a deal with the Florida Caribbean Cruise Association’s regulations preventing fee increases.

The report pointed to failures in the project management of the refurbishment of cranes. A failure to properly analyze the situation relating to problems with two cranes led to costly mistakes. Another $500,000 spent on consultants relating to the port development, which the port had recorded as an asset, were reclassified as an expense, the auditor explained. The money was wasted after the government was forced by the UK to abandon previous attempts at finding a developer in less orthodox ways and follow the process set out in the law, and so could not be claimed by the port as an asset.

On top of the various other governance issues he noted, such as ineffective inventory management practices leading to risks of loss or fraud, a lack of sound monthly financial analysis, the writing off of some assets without board approval and a failure to monitor employee time, Swarbrick also highlighted the port’s bill for lawyers.

The authority spent over $100k in 2012 and was at the time planning to spend even more in the 2013 fiscal year on legal advice, compared to just $27,000in 2011. The auditors found that with the exception of a claim for damages, the money was going on lawyers to stop documents being released under the freedom of information law at the direction of the port’s board. Swarbrick said he was taking a closer look at that during the auditing of the port’s accounts for 2013 because much of the issue would impact that year, but he warned that undertaking such action given the state of the port’s finance was a concern.

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Comments (94)

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  1. Paul Maplongka says:

    I was down at the Port Authority customs clearance area. I saw a lot of familiar faces. After hours standing in line, it was finally my turn to get called to the solitary agent.

    I asked him why everything was so slow and inefficient. I did explain that I had done a lot of clearance around 2004-5 and I remember that the system was much better then. I remember they had a very talented IT guy who was right on top of the situation, but alas, he was no longer there. The gentleman explained that in the last few years, everyone who had left or retired from the front line had not been replaced.

    And there you have it. Big fat salaries for anonymous pen-pushers while the grunts take the burden of their leaders' corruption, greed and downright selfishness.

    Alden McLaughlin, your government really needs to step up to the plate.

    Can anyone tell me what does Kurt Tibbetts do? What does Joey Hew do? What do any of them do? They all wore nice red ties and promised the earth. What have we received for our votes?

    I will leave it to the readers to answer that question from their own perspectives.

    Don't get me started on crime!

  2. Anonymous says:

    We’re a preferred jurisdiction for the structuring and domiciling of sophisticated financial services products because of our solid credentials, based on out three core tenets of integrity, stability and quality. Or you can read the papers and get the real truth.

  3. Anonymous says:

    If I should return to my home, that definately will not change the thieves that are dressed up like Christians.  I really moved here because I wanted to live amongst Christians.   Remember, that this is a Christian island.  But if people in high places behaves in this manner, it only makes the young people who are stealing appears as if they are not trying whenever they break the law.  Can you tell me what happen to the 1 Billion $ that is missing?l 

  4. Anonymous says:

    What a sad state of affairs our islands have become.

    There is a secondary reason too why CIG spends huge resources to avoid FOI and other obligations / responsibilities. It's when a "decision maker" says "no" to someone they shoud be serving (think term "Civil Servant") and then will do anything in their power to have the final say!

    Unfortunately this is rampant across CIG, and extends all the way up to the Governors Office and even the FCO. And all these entities are using "our" money to pay for it all (the lawyers fees, their large salaries and lavish expense accounts (think; Govt. credit cards), their pensions and other benefits….and even the golden parachutes (think; severance package) on the odd change of early retirement.

    So….is it any wonder so many feel hopeless of any meaningful change?

     

  5. George Smiley says:

    The salaries (and benefits of the Port Authority Director, Civil Aviation Authority Director, Monetary Authority Director and Maritime Authority Director are all more than the Premier's.There may be more. They should be made public.

  6. Anon.....(and on and on) says:

    Dear CNS,  I was a bit confused by the graphic for this story.  I didn't realise it was a story about the Port Authority and public debt.  I thought it was a guide on how to avoid hold baggage charges when packing for a "Leaders of Government" conference in Las Vegas.  My mistake.

    • Anonymous says:

      why is it only the port everyone is blogging on??? I see many different departments that cannot account for missing money, but we dont hear anythng about them????

       

      • Anonymous says:

        There it is….response 101 – deflect!

        Or; I do it because some others do it.

  7. Anonymous says:

    Okay 01:29, name me three (3) other positions that pay more than the Governor and the Premier AND have a 5yr. contract with early termination provision.

     

  8. Anonymous says:

    Either Cayman will clean house or the New World Order will come. These are mutually exclusive events. Alas I fear the corrupt purveyors of the NWO have more than their foot in the door. Your day before the Almighty dawns. Good luck, my Lodge friends, you will need it. The Almighty neither wears a stupid apron, nor does He engage in silly handshakes. Continue at your peril.

  9. Anonymous says:

    Sad reporting by a part of government that is accountable to no one and isn't qualified to render financial audit opinions. Bloggers please do not be so quick to criticize the most important government department, the Port Authority!! Think about one thing, if there was a problem at the Port Cayman could starve to death! 96.5% of the goods are imported through that entity during the night when we are asleep need I say anymore. There are 2 container cranes that offload approximately 50,000 containers per year! All unloaded at night. What the auditor general failed to report on was that the crane that was in use at the time he is reporting was operating at 35% of its capacity and had that crane collapsed Cayman would have stopped in its tracks. 

    One should ask the AG if he made inquiries into the replacement cost of that type of specialized crane before he concluded that the Port had excessively spent on refurbishing. According to sources close to this writer he only looked at the payments for the refurbishing. Bloggers, to replace that crane with a 2nd hand one would have cost $2.5mil a 2 year wait and a new manufactured crane cost upward of $5m and a 3 year wait. But the Port made an executive decision to refurbish for $1.2mil that took little over 14 months to complete and now the port have a refurbished crane that is as good as brand new for less. Now tell me if the people didn't get value for money. The AG is only reporting half truths. And CNS is there to amplify this untruthful report.  

     

    • Anonymous says:

      Was that 1.2 million justified through a tendering process?  Was the 1.2 necessary? Was the 1.2 the best price possible for the works required?  Who did this 1.2 million dollars worth of work?

    • Anonymous says:

      Hey Port-Lover, there is much more issues mentioned in the news article than crane refurbishing. Care to speak about those since you are close to "sources" of information about the Port?

       

      It mentions:

      June 2012 negative asset value of 3.5million

      Conflicts and related party transactions

      Failure to comply with (its own) Port Regulations

      Not following the Project Management process set out in the law

      Ineffective inventory management practices leading to risks of loss or fraud

      A lack of sound monthly financial analysis

      The writing off of some assets without board approval

      A failure to monitor employee time

      An increase in the Port’s bill for lawyers to fight FOI requests.

       

      Care to expand on these too? Until the Port does everything right they will get criticised, and why n ot, we are paying them a good salary right? I mean, the Port Director is the highest paid "public officer" outside of the Governor, and is being paid more than the Premier.

       

      Check it out if you dont believe me.

    • Hammerhead says:

      So we are paying our guy about the same as the CEO of the Port of Miami who oversees almost 1,000,000 containers annually.

      And that's ok?

       

      • jonas dwyer says:

        You know apart from the glaring salary, the Non corrected errors of previous Audits, it seems that a) the staff bankrupted the authority b) the Accountant did not do his job properly and c) there was a reluctance or lock of knowledge by the so called Professionals, the Director and accounting staff to make suggestions to come out of the hole. There could be a case to be made perhaps of revenue streams not being the same as in prior years, for cargo and cruise ships during that period, as there could be other reasons why expenditures were made. But, there is no mention in the AGs report of recommendations being made to the Board or to Government on how to correct the situation,isn't that part of their function. Of interest is that there has been no fraudreported but accounting errors, lack of internal controls again the Directors, the Board and Accountants remit and the FOI decisions which the AG will state his opinion on.  Lastly the fact that money was spent on the process for Port Development has not been broken down which would be helpful to understand really for what periods and on what the money was spent.  Now let's hear the AGS further subjective opinion.s, because at the end of the day that iall it is. Commercial decisions are not totally made on accounting rules.

    • Anonymous says:

      Your so full of it and only 1/3 truths

      The cranes used at your dumpy port can be had second hand at less than 600k and have it shipped quickly to the island  but if you include the marking it up 3x then yes it is almost 2 million

    • Anonymous says:

      So you are saying because it provides a vital function it should not be held to account?  Only in Cayman

  10. Anonymous says:

    I did not know that when I moved to live here, that I would be living amongst thieves dressed up like christians.

    • Anonymous says:

      well said

    • Anonymous says:



      You need to go back home then……but I guess it is still better than where you come from why you are still here.

      • Anonymous says:

        I would rather live next to somebody on the Island who is fighting against corruption and incompetence than suport it by threatening that same person's residency. But corrupt minded often use such tactics to squeeze expats, so I guess we all know what type of neighbor you are so coy in communicating to all of us.

      • anonymous says:

        Looking at your news and your politics, I would say that you are not in a position to turn help or assistance down.

        I would not burn your bridges just yet is the best advice I can give you. Many people are making plans to leave but that is for economic and pension reasons, not because you want them to.

    • Hal E. Lujah says:

      Well the cross is a plus sign after all!

    • Anonymous says:

      If you can distinguish thieves by the way they dress then you are one step ahead of the rest of us.

  11. Anonymous says:

    Until we stop appointing Caymanians to these very senior positions in Government and their Statutory Authorities simply because they are Caymanian, nothing will change. That's the elephant in the room or the obvious fact that "dares not say its name". It wont happen so we have to accept mediocrity and we should stop griping about it. At least Caymanians are earning salaries and supporting the economy. They are just not much use use as managers as the Auditor General has demonstrated. Nothing has changed in 40 years or more. Get over it.

    • Anonymous says:

      Ignorant bloggers like you are who are making this country go to hell. Criticizing a Caymanian who is working their butts off so you can have food on ur sorrowful pricklyheat butt table for you family. The AG is not reporting facts in its intirity but half facts and dummies like you will jump on his bandwagon.  

    • Anonymous says:

      Yes! And the Paper Caymanians in senior govt have douible the entitlement attitude and childish dispositions!

  12. Anonymous says:

    Okay 13:28; let me get this straight then:

    • the Port Director had never had a contract;
    • the former Board never had proper HR policies and procedures; 
    • the Board on which you served with Wayne Panton as Chair in 2005 had proper HR policies and procedures;
    • under your proper HR poicies and procedures, your Board decided to give him a contract for 5yrs? paying him the same thing the former Board had plucked out of the sky; and
    • this amount JUST HAPPENS to be more than the Premier or the Governor is paid.

    On that basis, your Board's proper HR policies and procedures indicated McKeeva's Board had plucked a pretty good number out of the sky.

    I'm suggesting to you that most of us who have to pick up the tab on this think that neither McKeeva's Board or 'your' Board with Wayne as Chair had a clue what you were doing.

    • Anonymous says:

      Don't be so ignorant. There are a number of positions in the public service which pays more than  the Premier and the Governor. A five year contract with an early termination by notice provision is perfectly normal.

    • anonymous says:

      The salary was discussed in an open forum and it was all transparent.

      Each prospective candidate was invited to throw a dart, the number was then multiplied by ten. That was the starting salary if they were successfully in interview.

  13. Anonymous says:

    Please note that this is the Auditor General's Report for the year ended 30 June 2012. Since then the Board has changed and few other changes have been insttuted as well.

    It would be well worth investigating what these denied FOI requests were though. Had to be in some way related to Mckeeva!!!

  14. Dreadlock Holmes says:

    Pretty obvious the most important post in government is that of the Auditor General for without that the people wouldn't have any idea what happened to all their money. That's right their money. 

  15. Anonymous says:

    I remember hearing someone at one of the PPM meeting in Savannah reading out the qualifications of the politicians and I was amazed that Mr. Suckooo was so qualified. I believe they said that he has a Masters in Business from a very good University, Syracuse I believe, why did'nt the PPM give him one of those portfolios.  Looks to me that if the PPM want to have any chance at the next election they should really try and put these qualified politcians to work to help them sort out this mess. 

  16. Anonymous says:

    The only surprise is that they haven't run it into the ground yet……Or have they?

  17. Anonymous says:

    I hope they do not paint every port employee with same brush. I know someone who is employed at the port at 65k annual- which is a living wage….  considering the person was making more in the private sector but moved over due to security of tenure. The problem with this attack the Civil Service crusade is that every one knows of someone who is a hard working civil servant at 50 to 60k annual salary. These folks are doing their job. The problem is the top heavy folks …. if lay off say 50% of the entire Civil service-  it will kill the economy palin and simple.

    • Anonymous says:

      Funny that $65K/yr is considered a "living wage" for prima donna blue collar workers in Cayman.  In Canada, that would be a pre-tax $120k+ putting them in the most wealthy top quartile income bracket for tax purposes.  

      • Anonymous says:

        It's not Canada. 

      • Anonymous says:

        Canadian, Caymanian… what's the difference?

      • permit holder 29750 says:

        I will do it for half that if anyone is interested.

      • Anonymous says:

        Apples and oranges. 

        Cost of living in canada is significantly lower. Cuc bill in Cayman takes up half of ones salary. 

        • Anonymous says:

          That would depend on the size of your home and whether you were living within your means in the first place, or not.

        • Anonymous says:

          your CUC bill isover 2,500 a month? wht exactly are you doing to be so wasteful? mine is around 650 pm in the Summer.

          • Anonymous says:

            My florida bill is $120 us per month and thats 2 ref 1 ac  2 deep freezes and a hot tub

            CUC is a good investment much better than fpl or any other utility for that matter

            sorry it kills people though

  18. Anonymous says:

    Yes, the sad reality is that it was Wayne Panton as the Chairman in 2005 who gave the Port Director that lucrative and outrageous deal – either days before the election or right after before the new gov't was appopinted.

    Talk to us Wayne; what were you thinking bobo?

    • Anonymous says:

      As a former member of the board at that time, I am sure that Mr Panton does not have any explaining to do. The board which he chaired oversaw proper HR policies and contracts for all staff being put in place. Prior to that there were little to none.

      This included the Port Director who had never had a contract since he was first employed there.

      As I recall, the terms of the annual pay for the Port Director that was fianlly set out in a contract was either the same or slightly less than he had been receiving by authorisation of the administration prior to 2005 under which William McKeeva Bush was both the leader of government business and the Chairman of the Port Authority.

      If an explanation is required, he is the bobo that should do it for this and a lot more. 

      • Anonymous says:

        You are so correct, you mean the Port Director contract that they signed the day UDP was being sworn in.  The contract which pays this genetleman 200k a year??  Try sit down about proper processes and protocols.  SMH

        • Anonymous says:

          Yes exactly. The same contract which simply documented what the individual employee of the Port Authority was already being paid. No more than that.  FOI it – even someone like you could probably understand it.

  19. Anonymous says:

    One has wonder why they spend so much on figting FOI requests, what could they be hiding that worth spending over 100k to keep secret..

    • Anonymous says:

      The Chinese Port deal is the most likely answer to your question. don't lose sight of the time frame for the AG's audits.

      • Anonymous says:

        Or perhaps the on the quiet deals with both Atlantic Star and Dart?  Like the dump, this is another project that has moved from one party to another with no real rhyme or reason.

  20. The Thinker says:

    Unbelievable!  Have they all lost their minds?  How could so much money be squandered?  Why is so much going to lawyers to prevent information being given out?  What have they done that they want kept secret?  Perhaps it's time to clean house.

  21. Polyakov says:

    Could have fooled me these chief officers and their private businesses are doing very well. The boards who are manned by political cronies or the secret handshake crew aren't hurting either Poor old Cayman Corruption cronyism nepotism killing it Dead!!!!

  22. Anonymous says:

    This is how 90% of my fellow locals in so-called “to positions” runs business, normal operations involve stealing, cover-ups, a bit of fraud, lying, mismanagement,  plenty hypocrisy, and a lot of stepping on and stifling other bright, young Caymanians with a conscience and good ideas to benefit the business

    Then we speak about who’s an entrepreneur, who’s successful, fictional surpluses, and don’t forget cursing at those pesky Expats?

    And the worst part about all the news in recent days exposing these practice, nothing will get done, its “business” as usually here in the Cayman Islands

    • Anonymous says:

       08:31.Why are you putting down  "fellow locals" Is this an attempt to make yourself look good in expat eyes? "My fellow locals " does not sound very local at all.I smell a coverup;aren't you really an expat pretending to be a "fellow local"?

      • C'Mon Now! says:

        Who cares what he/she is.  They are correct, we the people are getting robbed blind!  I'd say it has to stop but we all know it won't.

    • People's Front of Judea says:

      You forgot about the plethora of look-how-great-I-am awards that seemingly everyone gets around here, in addition to inflated salaries, regardless of their actual competence, work ethic or integrity. This is a very dysfunctional and depraved society we live in now

      • anonymous says:

        As a recent recipient of the order of the meritorious  medal of the cayman pineapple ( tungsten) I resent this remark.

        I was in on time everyday for two weeks to get that.

  23. Anonymous says:



    HMM. How much is a port fee? Numbers don't lie but people do..

  24. Anonymous says:

    The real problem is the incompetence of "Management" which needs to be replaced at salary costs equivalent to the private sector. The port director's salary is the second highest salary in the publc service includng being way higher than the Premier and the Governor. An absolute joke for leadership and management which is mostly abscent from running and managing the business of the port.

  25. Anonymous says:

    That's no wonder. Just take a look at the ridiculous wages/salaries that they pay certain categories of their workers ie. security  over $3000 per month that's outrageous.

    • Anonymous says:

      Get real, who can live in this country for less thatn $3,000 a month with a mortgage and a family to feed and educate?

  26. PPM Distress Signal says:

    When the port director and deputy are the highest paid civil servants in Government  over $25,000 per month and $6000 call out duty and cannot be fired because the current Environment minister who was the former port chairman gave him tenor 15 years "Taking Care Bizzness" with a 1 million dollar  let go clause yes the port would be in debt. Yes and they are now living in Carte Blanche and blissfulness What Time is it PeopleS PPPM Time!!!

    • Anonymous says:

      The UDP BS machinery is at work. Please do not make it so easy to prove that you are liars when you try to deflect attention from the UDP machine that has brought this situation on the Port Authority!

      Do you really think people have forgotten who the Premier and minister with responsibility for the Port Authority was for the period of this report?

  27. Anonymous says:

    1 billion missing, 21 Million for Cayman Airways, Authorities in Trouble, Ex-Premier Gambling 100's of thousands on Gov. Credit, Over-Paid Self-Serving Chief-Officers, long-winded no good career politicians.

    wtf is really going here? ineptitude doesn't even begin to cover this mess. it's blatant criminality. 

    • Anonymous says:

      Not if its covered under Cayman Islands "honorable for life" clause.

    • Anon-E-mousy says:

      From Pirates we decended ….

    • Will Ya Listen! says:

      We're lucky nothing is reallly wrong – except the above.

      This seems to be entirely home grown. Have to correct that perception before we start looking at things closely. Closely? They don't keep records and there IS a reason for that.

    • anonymous says:

      Don't forget the pre retirement pensions already being drawn early, dwindling the pot even more.

  28. Anonymous says:

    Everything under Mc Keeva's rule was shrouded in mystery and inefficiency.

  29. Anonymous says:

    You think the director makes plenty money check out what the workers make

    • Anonymous says:

      Talk of this talk of that will not help our economy…. i always knew our economy esp government has plenty money to go around but simply do not want to share it equitably all round…… my two cents on this one- lets increase port fee by 20% (current fee is too low to pay port workers wages let alone generate gov revenues) then hire more and more of our unemployed at say 100 persons at 2,000 a month for a faster service delivery which inturn will reduce delays and time=money losses to small business and get gov. revenues up again…..this plan is fool-proof and only needs a competent manager to oversee (Also applies to our other gov. departments)

      • anonymous says:

        Losing a billion and throwing some darts into a dart board to come up with a salary for lackeys on the optical payroll will not help the economy either. Let's reduce the salaries to a reasonable level, get rid of all the incompetent and poor copiers by bringing in people who can do the job and start running the country with some rules.

        Stop awarding people with platinum pineapples, golden apples and hero statues just because they did their job and talked others into the votes for fridges scheme.

        Once the rules and transparency is there, the stability and confidence may trickle back into the financial community. At the moment, it is a bit of a laughing stock akin to engaging in business deals with Nigerian internet gem dealers.

      • anonymous says:

        The damage is already done. Sorry, it is too late.

    • RP says:

      So thats why they spend 100k+ on lawyers to block for requests?