Mac and his tekkies

| 02/11/2010

The controversy over the premier’s direct involvement in the decision to choose which financial institution should supply a loan to government has revealed some interesting points about the tendering process and the relationship between elected ministers and their technical staff. The CTC does not actually choose the winning bids but supervises the choice of technocrats in a given government ministry.

It remains to be seen where that leaves Mac and his tekkies, given recent events.

Many people still believe that Ronnie Dunn and his colleagues on the Central Tenders Committee make the decision but it is clear that none of the committee members are experts in all of the diverse areas of procurement government gets involved in, even on a small island such as ours. From helicopters to concrete, a quick scan on the CTC website reveals that the government buys an awful lot of different types of stuff – stuff that the committee could never know everything about (or even anything in some cases).

What the CTC does is ensure proper process and supervise the decisions, making sure that there are no irregularities. On this occasion, with the financing arrangements of the government’s CI$155 million it appears that the CTC was perfectly satisfied with the decision of the technical experts from the ministry. The decision they had made was arrived at under the supervision of the CTC, which endorsed the choice, as common sense seemed to say that awarding the contract to local bidders who had the means and were offering the best interest rate was the most sensible way forward.

There are many issues raised by McKeeva Bush’s choice on this occasion to ignore his technocrats and the official process of central tendering, not just about why and how he did it – the possible contravention of the law and the question of whether his deal does represent value for money or not – but also, interestingly, what this says about the premier’s relationship with his ministerial team.

Putting all the blogger jokes aside about Bush being a dictator, in truth many who have worked with him have said that his style of leadership does tend to be one where he makes spontaneous decisions and steamrolls ahead, despite opposition, or even reservations, from his Cabinet colleagues. In this instance, however, Bush has completely overridden the advice of the people in his ministry who are paid to tell him the facts – not the political spin or stuff to boost his ego but the tekkies who are paid to say ‘this is the way it is’.

There are no two ways about this: such action has to be ill advised. In recent months, in fact almost since he came to office, the premier has berated bureaucrats and civil servants for what he says is lack of cooperation. It is apparent that the most recent decision will serve to exacerbate that situation.

It is fair to assume that the senior civil servants from the Ministry of Finance that made up the technical team that worked through this procurement to finance the government’s $155 million loan are probably less than pleased that the premier has called either their integrity or their ability into question. By overriding their advice concerning the best selection, which was approved by the CTC, Bush has undermined a significant number of civil servants, people who continue to be essential in delivering the elected government’s agenda.

This move can’t have done anything to improve the premier’s relationship with his senior ministry staff (and one cannot help but wonder if that includes the financial secretary) but surely must have made it worse. Under such circumstances, in future the power of the disgruntled civil servant is likely to take an even greater toll on the premier’s reportedly thwarted efforts to implement the policies he wishes to see in place. Anyone familiar with the classic British television comedy series ‘Yes Minister’ will understand that elected officials upset senior civil servants at their peril.

The point, of course, is that either Bush does not care or the motivation to secure this particular deal must be so great the premier is willing to live with a collection of disgruntled Sir Humphries around him. Bush must be completely convinced that this deal is in the best interests of the country for it to be worth running the gauntlet of accusations of irregularity over procedure, investigations by various officials, unsavoury accusations from his opponents, and on top of all that, vexing his own team.

Given the difficulties Bush currently faces, despite there being two and half years to the next election, he desperately needs a major economic miracle whereby he can roll back the fees he implemented over the last two budgets and balance the books with a surplus by the 2012 budget in order to ensure re-election for the UDP. It may well be that the firm he has chosen to do business with could help Bush towards that economic miracle with the consolidation of all of the country’s current debt and, indeed, eventually saving the millions of dollars he has promised.

However, it will be a risky business as a large part of the country’s debt is presently tied up in the bond offering from last year, something that the premier will not simply be able to change without, at the very least, incurring considerable fees – if he can change the conditions of that offering at all.

At present Bush does not seem to want to spell out what his plans are but these things have a habit of unravelling. It will be interesting to see what the terms of the Cohen and Company deal turn out to be compared to those offered during the tendering process, details that no doubt will soon be revealed. Whatever they are, one thing is certain: Bush is in for an even rockier ride with his bureaucrats in the coming weeks and months.

Oh, to be a fly on the wall …



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  1. da-wa-u-get says:

    Why do I get flashbacks to the Botswain-Bay financing arrangements (finders fee’s etc.) when reading about the deal with Cohen & Co?

    Do Leopards change their spots?

  2. Also Want to Know says:

    We also have to ensure that the Technocrats do nothave conflicts of interest that can be levied at them and when I understand who is on the review committee on this one and where relatives work it always opens the door to doubt.

    Cayman is a small island and we are always going to have a cousin here or a cousin there or a spouse here and there. It is incumbent on us to walk away from situations that will lead to the even slightest potential of someone claiming special interest or corruption.

    This goes for the politicians as well as the Technocrats and civil servants.

  3. anonymous says:

    Sigh, if only we had a few Sir Humphries. The staff in the Ministries seem less interested in ‘giving right advice’ than in ‘giving the right advice’.

  4. Anonymous says:

    So, per the CNS article today, we hear that a rate of 3.5% was rejected as not being good enough value.

    What we did not hear was if that was a floating or fixed rate ? If the latter, how long was the fix ?

    It appears the Premier is trying to save money (I’m guessing here) by going with a floating rate issue, likely trying to convert to a fixed rate down the line, but on what advice is he taking this tack ?

    Let’s say (and we don’t know) that the preferred CTC bid was a long term fix of 3.5%. Historical sovereign borrowing rates for a country like Cayman (and this is before the debt ratios jumped here and globally in recent times) would be more like 5.5%.

    Put another way, if three years ago someone had offered Cayman a long term refinancing at 3.5%, we would have been crazy not to take it.

    It is very difficult to gain any kind of clarity by peering into an economic crystal ball, so we can’t know right now if we are charting the right course, but these are big numbers we are playing with that will impact our government finances for years to come.

    We need to take as much care as possible.





  5. Anonymous says:

    My question is:  If the details of the arrangement are still being worked out (negotiated, if you will), thereby preventing the Premier from discussing the details (such as the actual interest rate), is that not going about things in a backward manner?

    Don’t you negotiate, then sign an agreement and not the other way around?

    • Anonymous says:

      the premier should have taken a page out of rollie’s play book and he even mentioned it at the BT public meeting last nite.

      cancel the bidding process and start over so that people know what they have to do!!  Not a peep out of the public.

      somebody please give mckeewa a copy of "the prince"


      • Anonymous says:

        Please no – he doesn’t need any more ideas. Things are bad enough as it is.

      • anonymous says:

        The premier mentioned at the meeting that the government had reduced the bids on the schools project management from 6 million to 3 million by not taking the initial recomendation of CTC (in an effort to justify what he did with the bond issue).  This was done by cancelling the first round of bids on the schools and starting over.  What no one seems to have grasped unto is how the winning bidder could have gone from 6 million to 3million for essentially the same work.

        Did anyone see the grave face Mr Anglin was wearing at this meeting when this issue was raised? He just sat with his face down and frowning the whole time.  

        where are you Mr auditor general?

    • Anonymous says:

      Remember, this is the king of Fire – Ready – Aim.

  6. Lachlan MacTavish says:

    Great piece Cybil, out of control, nuff said. 

  7. Anonymous says:

    The intriguing question is whether $155m or $185m was borrowed – or is it a $155m loan with a $30m "finder’s fee"?  Tasty!

    The real problem Bush faces is that s34 of the Public Finance & Management Law is not an alternative to the tendering process (which, under the Law is mandatory save when the "chief officer" certifies that there is a sole local provider capable of delivering the scope of services sought).

    S.34 relates to the FS’ ability to borrow and lend.  Interestingly in the comment attributed to Bush in the Compass yesterday whilst it refers to the section and the power makes absolutely no reference to the conditions contained  in s.34(3).

    As if that was not enough Bush also fails to explain how the procedure which was initiated through the CTC then fell under s.34 – if it really is a case of s.34 being applicable there was no need to tender via the CTC.

    An adage of some antiquity raises its head yet again – lies have short legs.

    • Anonymous says:

      This is just a currency difference. US$185m = CI$155m.

      I agree on all other points.

  8. Hurry kean says:

    This certainly deserves a thorough and impartial investigation.

    Not only as to possible finders fees and interest rates but also the long term effects of not giving local lenders a fair opportunity to bid against Cohen on a level playing field!…and by so doing, allowing those funds to be re-spent within the Cayman community.

    This Premier clearly does not care about fairness, due process or ethics! And by extension, seemingly only cares of what he wants.