Archive for March 17th, 2009
Search team finds body
(CNS): The body of a woman, believed to be Sabrina Schirn, has been found by a member of the public assisting apolice search team in East End following the discovery of a car linked to her disappearance. While police have not formally identified the woman, other sources have confirmed to CNS that it is Schirn. Police said scenes of crime officers are currently on location processing the scene and family liaison officers are working with the family.
The body was found in bush land off High Rock Road, East End on land belonging to Brazely McLean, sources report, by a local person helping police because of their local knowledge and familiarity with the area. At this stage police have not yet offered any details of how or when Schirn died. However, they have said that they are treating the discovery of the body as amurder inquiry.
According to other local sources. Schrin was threatened at her place of work by a man who was known to her before she borrowed her work colleague’s car and disappeared.
Anyone with information about crime taking place in the Cayman Islands should contact their local police station or Crime Stoppers on 800-8477 (TIPS). All persons calling crime stoppers remain anonymous, and are eligible for a reward of up to $1000, should their information lead to an arrest or recovery of property/drugs.
Members to boycott Chamber BAH over dolphins
(CNS): The decision to host a Chamber of Commerce Business After Hours (BAH) at the Dolphin Discovery captive facility in West Bay has generated a backlash from some members, who say they intend to boycott the event. Well-known local environmentalist and leading member of Keep Dolphins Free in Cayman, Billy Adam, began an email campaign this week which he sent to number of people in the community including some Chamber members asking them not to attend and which has generated a significant amount of support.
The Chamber’s event is scheduled to take place on 19 March at the dolphinarium on North West Point Road, but what is usually a social get-together for local business people has turned into a controversial debate over conservation issues. As Adam notes, hosting the event goes against the spirit of the Chamber’s own environmental pledge.
The pledge states: “l support Government and Non-governmental organizations which are engaged in environmental conservation efforts in the Cayman Islands. As leaders in the financial industry and a prime tourist destination, we have an obligation to do our part to preserve our environment. A healthy, pro-active environmentally aware society reaps benefits for all – clean air and water, healthy lifestyles, happy residents – these all add up to less medical and social costs on us and our nation’s budget. In turn we reap the benefits of increased tourism and we attract persons who care to live and work among us. “Reckless behaviour and neglectful daily practices are contributing to the destruction and depletion of our coral reefs, marine life, mangrove swamps, ground water supplies, natural habitats and air quality. If we do not change our ways, the long term consequences to our way of life, our health and our economy could be devastating.”
Adam points out that by supporting the abusive dolphin industry the Chamber is in conflict with its own stated position and had turned the pledge into an empty statement.
“The Chamber has made a choice to go against its own environmental pledge, which is poor management,” he said. “By hosting this even and offering the facility Chamber membership the Chamber is being used as a laundry to make this business appear clean and respectable, but it is not. Both the facilities have broken local laws, and government and regulatory agencies all seem to feel obligated to them. The leader of government business, the attorney general and the director of agricultural are all fully aware that these organisations have broken the law.”
He said that this was how the captive dolphin industry worked all over the world — breaking laws and encouraging those in government to break them also. By hosting the event, Adam said the Chamber was sendinga conflicting message.
“Personally I find it disgusting that the C of C will now be organizing an event at a location, Dolphin Discovery, located on government land, which by now seems to be a C of C Member, operating in violation of Cayman Islands laws. Dolphin Discovery was allowed and encouraged by government to open without all of the required licenses being issued. Is this the law-breaking business environment the ‘NEW’ C of C now endorses and encourages in the Cayman Islands?” Adam asked.
In response to the boycott, which has received support from a number of local business owners, the Chamber said that the Council had approved Dolphin Discovery as a Corporate Member in September 2008.
“Section 4 of the Chamber’s Articles of Association outlines the membership criteria. It states that membership in the Chamber of Commerce is open to any persons, firms, associations or corporations of good standing interested in the purposes of the Association. Dolphin Discovery submitted all of the required business licenses as part of their application and is a member in good standing,” the Chamber Council said.
CNS submitted questions regarding how the Chamber reconciled its support of the event at Dolphin Discovery with its own environmental pledge. Its response did not make that entirely clear and stated:
“Government’s approval to allow captive dolphin facilities in the Cayman Islands is regarded as a controversial decision by some environmental and animal welfare advocates. The Chamber of Commerce respects these positions, but we also respect the decision taken by Government to allow captive dolphin facilities to operate here. We understand that there may be some members of the Chamber of Commerce that do not support this decision and may wish not to attend the event, but we also believe that there are other members who may not share this view and we invite them to attend the event on Thursday.”
Kids to get free holidays
(CNS): As part of the Ministry of Tourism’s drive to keep families coming to the Cayman Islands this summer, children are being offered free vacations including flights, food and fun. The promotion is part of a number of initiatives to maintain Cayman’s share of whatever market remains this season. Speaking in the Legislative Assembly on Monday, Minister Charles Clifford said consumer confidence was at an unprecedented low but research showed that kids were key in family holiday decisions.
“According to the latest American Express Harris Group research, families will do whatever it takes to keep travel in their plans because it’s the only time that they truly get to spend together. In the same study, 66% of parents admitted their children were very influential in vacation decision-making,” he said adding that the DoT’s summer strategy, in addition to offering the regular fifth night free, would extend to kids.
“The package…..will allow kids travelling with adults to eat, stay, and play free at some of our best attractions, including the Cayman Turtle Farm at Boatswain’s Beach, Queen Elizabeth II Botanic Park, Pedro St. James and a wide variety of private sector owned water sports. And this year, for the first time, kids aged 12-17 will be able to dive free,” he said. “This summer, the local tourism industry is partnering with Cayman Airways to implement a Kids Fly Free promotion which, in today’s environment, will be a direct motivation for families to travel.”
The minister also mentioned the planned skate camp programme, which was announced last month (DoT looks to gimmicks). He said research reveals there are more than 20 million skateboarders in the US, where it has eclipsed baseball as the national pastime of America’s youth. “‘Skate Cayman’ will reinforce Cayman’s leadership position in the region by creating an authentic, credible programme geared towards families by teaming world class athletes with a world class on-island asset — Black Pearl Skate Park at Grand Harbour,” he added.
He said negotiations were ongoing with leading skating athletes. He could not release specific details but said some of the top names in skateboarding would be endorsing the programme.
While the local tourismindustry has been impacted by three hurricanes and the US economy it was still doing relatively well. “There is more to be done and components of our sector which remain vulnerable, and we will continue to dedicate ourselves to moving forward together,” Clifford added.
Man charged in DJ murder
(CNS): Paul Ricardo Gordon (39), a security guard with the Security Centre, has been charged with one count of murder in connection with the fatal stabbing of 42-year-old, Sherman Alvin Bodden, aka Jazzy B, who was a local DJ personality on Vibe radio station. Gordon, who is a Jamaican national, appeared before Magistrate Nova Hall, Tuesday morning, 17 March, and was remmanded to George Town police cells until his next appearence on 24 March. Police said yesterday that Bodden had been stabbed multiple times on Monday, 9 March, at a house in Savannah.
“This is a tragic, senseless incident which has resulted in the untimely death of a young man,” said Senior Investigating Officer, Detective Inspector Kim Evans, on Monday. “Our sincerest condolences go out to all the family and friends of Mr Bodden.”
On the night of the murder police said that the 911 Emergency Communication centre received a call from a woman reporting that two men were fighting at a house in Prince Link. Police and medics responded. Bodden was taken to hospital where he was pronounced dead.
Anyone with informationabout crime taking place in the Cayman Islands should contact their local police station or Crime Stoppers on 800-8477 (TIPS). All persons calling Crime Stoppers remain anonymous, and are eligible for a reward of up to $1000, should their information lead to an arrest or recovery of property/drugs.
Beach trash kills wildlife
(CNS): The Lions Club of Cayman Brac continued its campaign to keep the Brac’s beaches beautiful last weekend by inviting the public to help them clean up three areas of coastline on the island. About 40 people came out over and picked up items such as plastics, bottles, clothing. Fazileta Yusuf, Chair of the Environment Committee, said there was a serious concern about the amount of plastic rubbish collected on the beach, which can have serious consequences for animals.
On 28 July 2008, the Lions Club of Cayman Brac conducted a beach cleanup on about a 300m length of beach in the Spot bay area (behind the Spot Bay primary school). “We thought that it was important that we play a role in protecting and preserving our beaches. At that time, about thirty six 30 gallon garbage bags filled with garbage were collected along with some larger items such as buckets, nets and part of a boat,” Yusuf said. Most of the litter collected appeared to have been washed in by the sea and is therefore coming from fishing boats and cargo ships, the club found.
On Saturday 28 February 2009, the Lions aided by members of the Leo club, took to the beaches again. This time, the aim was to clear the beaches of debris that was still left back from Hurricane Paloma. The beach area adjacent to the Divi Tiara complex was cleared of fallen trees, washed up dead seaweeds, and other debris from the hurricane. Yusuf said members were disappointed to sea a large number of human-generated garbage such as bottles, boxes, plastics and clothing thrown all over the beach.
On the weekend of 7 and 8 March, the club went further with the beach clean-up campaign and invited the entire public to come out and assist with the cleanup of the Public Beach, the remaining sections of the beach area adjacent to Divi Tiara and the beach area long the Stake Bay loop. Approximately 40 people came out over that weekend and assisted in the cleanup of those Beaches. Again, plastics, bottles, clothing, and metals were among the popular items collected. Members were grateful to all those who assisted and urge you to continue to support your community service organizations in their efforts to build better communities, Yusuf said.
“We are however, once again reminding the general public of the threats posed by marine litter. Marine lifeas well as seaside birds can be harmed by this litter. One of the hazards of marine litter includes entanglement. Many animals can become ensnared by litter. The litter can become embedded in the flesh as tissue grows around it. Entanglement may also cause injury and wounds as the animal tries to disentangle itself from netting or ropes, which can also subsequently lead to infections. Another hazard is ingestion. Many sea creatures including the leather back turtles have been found to ingest litter, either accidentally or because they look similar to prey species. Once inside, litter can block intestines preventing digestion leading to starvation. It can also accumulate in the stomach making the animal ‘full’ and reducing the instinct to feed, again leading to starvation,” Yusuf noted.
The Lions reported that the litter washed up on the beaches is only a tiny portion of the marine debris. According to the Marine Conservation Society (MCS), a UK charity dedicated to caring for their seas, 70% of litter sinks to the seabed. Much of this seaborne debris is very persistent and does not breakdown easily and therefore presents a long term and cumulative risk to many marine mammals. The marine litter that causes such problems comes from a wide variety of sources these include: Fishing boats, merchant shipping, ferries, sewage related debris, recreational vessels, offshore installations and fish farms.
”The Lions and Leos clubs of Cayman Brac will remain committed to protecting and preserving the beaches and are encouraging everyone to help us. We all like a nice clean beach. It provides an avenue for social gatherings, relaxation and health benefits through swimming. It is up to everyone to take the responsibility to ensure that the beaches are clean, clear and safe. The simple message from the Lions and Leos is, don’t litter! Preserve today for a brighter tomorrow” said Yusuf.
Mac quizzes Jefferson over G20 list
(CNS): Leader of the Opposition McKeeva Bush has written to Financial Secretary Kenneth Jefferson asking him why the country is facing possible inclusion on a black list which could emerge from the G20. Bush questions what has happened over the last four years to honour commitments made to the OECD and exactly who has been negotiating Tax Information Exchange Agreements on Cayman’s behalf.
In his correspondence, Bush notes that in 2000 the Cayman Islands government signed a letter of ‘Advanced Commitment’ to the OECD which excluded Cayman from a list of non-cooperative jurisdictions, particularly in the areas defined by the OECD as harmful tax measures. He said government had set out a schedule to implement measures Ito meet this commitment.
“I am not aware of any significant progress made by the Cayman Islands in delivering on those commitments contained in the letter. I would appreciate a response detailing the actions taken by this government towards meeting those commitments and when such actions were taken over the past 4 years,”Bush wrote.
He also stated that he was seeking clarification on the names and qualifications of the persons who have been tasked with serving as the official negotiators with various overseas governments on matters relating to Tax Information Exchange Agreements.
“As I am sure you will appreciate, the impending G20 Meeting poses severe reputational risk for the Cayman Islands and it is my duty as Leader of the Opposition to fully understand why our country is now in this position and what action can now be taken to address these issues. With the impending G20 meeting set to occur in April and the Stop Tax Haven Abuse Bill being discussed in the United States, the country faces two very serious challenges to the future viability of our financial services sector and our economy in general,” the opposition leader noted.
Levin’s bill – and its likely effect
Iguanas have always fascinated me. Whenever I see one, the question I always ask myself is this: Is it actually asleep – like a fish – or is it just pretending to be (secretly hoping that you will lose interest and go away) – like the CI government?
Whilst iguanas may leave me feeling confused, I would never make the elementary mistake of confusing government ministers for fish. It is quite evident to me that Cayman’s government ministers are not literally asleep with their eyes open, because they do on occasion speak. For example, they came back from their Washington trip last week and were reported in the Compass to have said: “We talked about theLevin Stop Tax Haven Abuse Act and the people we met with said the senator has introduced something akin every year. Coupled with the fact the time it takes between laying it in the house and having it pass into law is considerable, so that we can lay some store in that not being a major concern right now.”
Not a major concern right now? I couldn’t agree less. Have they not read it? The senator has not introduced something akin every year. The version he introduced at the beginning of this month is much more serious for Cayman than the previous ones. Whereas once he planned merely to crack down on individuals and corporate entities that were hiding behind Cayman’s confidentiality laws to evade tax, now Levin is planning to close down entities that were previously tolerated as being legal. In short, he plans to close down Ugland House. He actually names it.
Before I explain, let me reiterate: Levin is a tenacious, dangerous operator riding – causing even – a global wave of anti-tax haven sentiment. It is not just rhetoric; there is a permanent sea change of opinion in the air. Last week, for example, Andorra, Austria, Belgium, Liechtenstein, Luxembourg and Switzerland all appeared to indicate that they will no longer differentiate between tax evasion and fraud. In other words, they will no longer allow their secrecy laws to expedite illegal tax evasion – although legal tax avoidance is still OK.
So what’s legal and what’s not?
Tax is a hugely complex subject. You can adopt a legal approach, avoid it, minimise it, adopt an ‘aggressive’ legal approach, sail close to the wind, ignore it, evade it, adopt an ‘aggressive’ illegal approach, wriggle a bit in your chair, but if all else fails, you can pay it. And if you pay it late, you get a socking great big fine.
Let’s take individuals, because individuals (as opposed to corporate entities) are said to account for 70% or so of the problem. Broadly speaking – and correct me if I’m wrong – onshore individuals are supposed to pay tax on the distributed income (dividends) and profits from their investments wherever in the world they arise, even if the funds are never repatriated. (All in spite of the fact that these funds have already been taxed when you earned them and are going to be taxed again when you die a tax-induced early death – but I mustn’t get sidetracked here by the iniquity of the tax system.)
Last year, the United States Government Accountability Office (GAO) published a report on US activity in the Cayman Islands; in particular, they wanted to know what is going on in Ugland House. The report can be found at http://www.gao.gov/new.items/d08778.pdf and it makes interesting reading. It mentions a number of reasons why Cayman attracts legitimate business; these include Cayman’s creditor-friendly bankruptcy law, its physical proximity to the US, its prominence as an English speaking international financial centre and its business friendly but cooperative regulatory environment.
But Cayman’s biggest draw is its absence of corporation tax; as I understand it, onshore individuals can legitimately invest their personal wealth in offshore corporate entities – and so long as any profit or income stream is rolled up or reinvested within the entity rather than being distributed, these individuals can defer their onshore tax liability indefinitely. This is because non US earnings of non US entities (in which the individual’s funds are invested) are not generally liable to US tax. Tax deferral, then – and there are various other tax avoidance techniques – is quite legitimate.
The reason Levin is incandescent with rage is broadly two-fold. (His latest report, which was published earlier this month, can be found at www.levin.senate.gov/newsroom/release.cfm?id=308945. It’s packed full of ideas, with case histories that “unfold like spy novels, with secret meetings, hidden funds, shell corporations, and complex offshore transactions spanning the globe …”)
The first reason for Levin’s rage is individual illegal tax evasion: some individuals are apparently forming their own personal entities which are not genuine corporate global entities at all, but which are incorporated for no reason other than to escape personal taxation. (Whatever is the world coming to?) These people employ compliant offshore ‘puppet’ controllers, but in reality the onshore citizens own and control the assets themselves. According to Levin, their strategies are also often extremely complex. MEGOs, no less (which stands for my eyes glaze over). After all, if a personal case history is complicated enough, no one can be bothered to get to the bottom of it all.
These are the illegitimate tax evaders, and they are aided and abetted by offshore confidentiality laws. In general, Europe and the US want to do away with confidentiality laws altogether; in addition, Levin proposes to deal with them by establishing rebuttable evidentiary presumptions such that the individual will be presumed ‘guilty’ until he can prove his innocence. In other words, any assets sent offshore – to any of the countries in Levin’s list of ‘offshore secrecy jurisdictions’ – will be deemed liable to tax.
Even more potentially serious, perhaps, will be the how Levin will deal with the problem of Ugland House because – and this is the second reason for his rage – “very few Ugland House registered entities have a significant physical presence in the Cayman Islands”. They will be tolerated no longer. Section 103 of Levin’s law proposes, therefore, that if a corporation is publicly traded or has aggregate gross assets of $50 million or more, and its management and control occurs primarily in the US, that corporation will be treated as a US domestic corporation for income tax purposes.”
Now, I am English and English people do not like to be the bearer of bad tidings. It is part of our national psyche. This is because in the old days, if you went to the King and said, “Your Majesty, I return home from lands afar, and I have to report that we lost the war and your magnificent empire is slightly diminished”, the King would chop off your head.
So how would Levin’s law affect Cayman? In its present form, its financial centre would struggle to survive. In fact I will go so far as to say that sooner or later, one way or another, I think the party could be over. But, I hasten to add, that may turn out to be a good thing…
Coming next (after the G20 summit). Make way for a physical influx of fund managers and tax exiles… whose bright idea was it to build Camana Bay, anyway? Maybe I should take back that iguana/CI government comparison thing. Maybe the government is very clever after all.
Disability law promised
(CNS): People with disabilities are being promised far reaching legislation by Minister of Education Alden McLaughlin, who has said that at the earliest opportunity in the next administration a law will be drafted to enable people with disabilities to enjoy the same rights, freedoms and protections that others take for granted. Tabling a report by the Legal Subcommittee for Persons with Disabilities commissioned by his ministry, McLaughlin said it was the most comprehensive assessment ever undertaken of the needs of the disabled.
“God and the electorate willing, it is my intention that a bill to protect and promote the rights and interests of persons with disability will be ready for discussion by this House very early in the next term,” the minister said in the Legislative Assembly on Monday.
McLaughlin explained that the report lays the foundation for the implementation of new legislation aimed at transforming current provisions to have a positive impact on the lives of persons with disabilities. ”It will be a helpful instrument in mainstreaming disability in the Cayman Islands’ development agenda so that our society may be as inclusive as possible for all,” he said.
The minister noted recent attention regarding services and provisions for persons with disabilities as a result of the constitutional talks, and said the report showed that a great deal of care had gone into developing new provisions for a comprehensive continuum of care for the disabled.
He explained that in 2007 his ministry established a Steering Committee for Planning the Future for Persons with Disabilities in the Cayman Islands. “Their work culminated in a report which outlined the limited provisions that existed for persons with disabilities, and detailed the areas needing improvement. This initial report established that,in order to provide the requisite improvements and grant long overdue protections for persons with disabilities, a new legal framework would need to be put in place to underpin the progressive revisions that were clearly required,” he said.
McLaughlin described the woeful inadequacies of current legislation pertaining to disability issues and said the sub-committee had turned their attention to international research and to the United Nations Convention on the Rights of Persons with Disabilities. He said the committee also identified areas in the convention that could be improved upon to fit the specific needs of persons with disabilities living in the Cayman Islands.
“To augment the new Cayman Islands legislation even further, sections from other pieces of legislation such as the Disability Discrimination Act 1995 (UK) were incorporated. This Act specifically addressed the formation of a National Disability Council and went into greater detail on issues such as discrimination in the areas of employment, education and transport,” the minister explained. He went on to say that the Cayman Islands legislation will be sturdy, comprehensive and effective as a result of the extensive research done by the committee.
He said the report outlines each of the Articles from the UN Convention and provides relevant recommendations for amendments to bring about equal rights and a continuum of care for persons with disabilities in our islands. “It also goes as far as specifying which areas should be addressed in law and which should be dealt with at the policy level.
He said it was the first time that there has been a full and comprehensive review of all legislation pertaining to persons with disabilities in the Cayman Islands. “At long last, with this report in hand, Legislative Drafters will be able to create a customized, wide-ranging disability law, and once this work is legislated; this comprehensive disability law will be the first of its kind in the Caribbean – and for most of the world – making the Cayman Islands Disability Law a model framework for other countries.”
He noted however that the law would affect every aspect of life from education to healthcare, to building regulations and recreational participation, to employment, housing and safety.
“This law will bring many challenges with its implementation, and some of these challenges will be at a legislative level where other laws may have to be revised to fall in line with the new Disability Law. Additionally, its implementation will require large scale public awareness about the specifics of what has changed and who will be affected. Notwithstanding these challenges, this day is a historic day for persons with disabilities in the Cayman Islands. This report is an expression of this Government’s unswerving dedication to proactively address the needs of all sectors of our population, and is a resounding assurance of our commitment to facilitating equal opportunity, full-participation and the wholesome development of persons with disabilities.”
He said it was coincidental that it had arrived when there is heightened awareness on the subject of disability, because of the Constitutional discussions and the draft Bill of Rights. “This new customised legislation will complement the draft Bill of Rights by having the potential to ensure that the rights of persons with disabilities will be factored into the social and institutional operations of this country. Further, the provisions in the report relating to equality and non-discriminatory treatment provide protections that should allay any concerns about the absence of a free standing non-discrimination clause in the Draft Bill of Rights,” the Minister added.
McLaughlin said that the report goes to great lengths to ensure that everyone with a disability can live an independent, meaningful, socially connected life in an environment that is both accessible and understanding of their needs.
Minister denies secrecy law
(CNS): While other offshore financial service centres are rushing to change legislation regarding the secrecy laws that govern their banking systems, Minister Alden McLaughlin has said that the Confidential Relationships (Preservation) Law, which is sometimes referred to as Cayman’s secrecy law, does not need to be repealed to save the Cayman Islands from blacklisting as he says it is not a secrecy law, but a law which facilitates the exchange of information.
There is, however, much debate in the financial industry as to whether the law is in fact a barrier or a gateway, and that given the current global perception regarding off offshore financial centres, the law, at the very least, needs a name change. A number of leading figures in the industry and Leader of the Opposition McKeeva Bush have all called for the law to be changed. However, Minister McLaughlin said last week that, despite being called a secrecy law, it is nothing of the sort.
“The Confidential Relationships (Preservation) Law is not a secrecy law. It provides gateways to information with the permission of the courts,” the Minister stated. The area of controversy, in particular, is that the law criminalises anyone who gives information about a company unless it has gone through the legal process, but McLaughlin said there has never been a single criminal prosecution under it. “There is no doubt that the name creates some perception issues but the law protects relationships and information, which is important.”
He said, however, that governmentwas in the process of developing a Data Protection Bill, which may go some way to achieving the same objectives, and there was a possibility of getting rid of the criminal sanctions part of the existing law.
“Government is looking very carefully at this and will make some announcements about possible changes soon, but a mad rush to repeal it may create problems,” McLaughlin added. He also noted that the law of unintended consequences had never been repealed and that it was easy to create more problems for the future by rushing to repeal a law without considering all the implications.
Moreover, he said he was confident that the law would not cause any extra problems regarding the potential blacklisting of the Cayman Islands during the G20 summit, as during all of Caymans inspections, assessments and reviews by what he called "the alphabet soup of organisations", none of the agencies had ever identified that piece of legislation as an obstacle.
He said the law was originally drafted on the back of the common law, which is still in effect in the UK and literally thousands of requests for information have been met through that very law.
However, the leader of the opposition recently added his voice to the growing chorus for the law to be repealed. “We should give serious consideration as to whether the Confidential Relationships (Preservation) Law is still necessary in this country,” McKeeva Bush said. “This law is potentially a misnomer in any event because, although it criminalizes the disclosure of unauthorized confidential information, it nonetheless allows access to foreign authorities using proper internal procedures to obtain information when investigating or prosecuting serious crimes.”
Other leading financial figures have also questioned the law. Tim Ridley, former Chair of CIMA, has said that if not repealed it needs to be amended to suit its purpose. The law has also been criticised as badly worded and causing unnecessary delays and costs just to disclose one or two documents.
Turtle Farm increases government debt liabilty
(CNS): The currentTurtle Farm loans are to be refinanced and, as a result, the government will be increasing its debt liability as it moves to guarantee an existing overdraft facility of US$5.5 million and a new financing package which consolidates and increases the farms existing debt portfolio to US$14.8 million. Although this only equates to around $2 million of new money for the farm, the government’s net debt ratio is impacted by around $6.5 million increasing it from 73.4% to 74.4% and taking it another step closer to the 80% limit.
Passed in the Legislative Assembly on Monday afternoon, Government Motion No 14/08-09 was brought by the Financial Secretary Kenneth Jefferson, who explained that the motion cancels all existing debt guarantees for the Farm and introduces two new ones. “Currently, the Cayman Turtle Farm (1983) Ltd is in negotiations with another local financial institution to refinance its local debt portfolio,” Jefferson told members of the House. “While no deal has been finalized, the proposed refinancing is in the amount of US$14.8 million and its terms are such that it will allow the company to realize significant cash outflow reductions in the amount of cash spent on serving the local potion of its debt portfolio over the next several years.”
The government will also now guarantee an overdraft, which the Financial Secretary said was not new debt but an on going facility that the farm uses to deal with cash flow management, and the balance is constantly fluctuating. This, he explained, was not previously guaranteed by government as the bank in question was happy with a letter of comfort. However, he said that had changed and a government guarantee was now needed.
Jefferson said the impact on government’s contingent liabilities was 0.8%. “After factoring in these new debt guarantees the net debt ratio would be 74.4%, which is below the 80% ceiling specified in the Public Management and Finance Law,” he added.
The net debt ratio is the total amount of government’s own debt plus a risk-weighted proportion of statutory authorities and government companies’ debt that has been guaranteed by government, less the government’s cash balances or reserves.
Leader of Government Business Kurt Tibbetts called for a divsion on the motion, which received 13 ayes, including one from the only representative of the opposition, Captain Eugene Ebanks.