No answers on Cohen deal

(CNS): Following questions raised in the budget debate about the circumstances surrounding the loan deal with Cohen & Co, which was abandoned by government earlier this year, the premier accused the opposition leader of being “hell bent on trying to make me look bad” but didn’t reveal how much the failed deal had cost the country. McKeeva Bush told Alden McLaughlin to go ahead with his relentless pursuit of the issue as he had done nothing wrong. The premier said the deal with Cohen had been an attempt to save the public purse millions of dollars for government’s financing needs but when the firm could not come through government was encouraged to look elsewhere for the funds.

Government first announced that it had secured a deal with the New York based financial firmto provide government with the US$185m loan it needed to make up what was expected to be a deficit and to cover capital projects for this financial year. However, this was contrary to the decision of the Central Tenders Committee which, based on the recommendations of the ministry’s technical team, had awarded the contract to a bid made by a joint venture of two local banks.

During his debate on the premier’s budget presentation Alden McLaughlin had asked Bush to reveal the details surrounding the decision to deal with Cohen and Co outside of the CTC process, what had happened during that process, why government had then pulled out and how much had been spent on arrangement fees and the loan advance.

McLaughlin said the premier had admitted that he and the government had ignored the decision of the CTC and  his own ministerial team and had, himself, handpicked the New York firm by claiming that he had acted in the best interests of Cayman and would save millions, but the premier had never revealed what the interest rate would be, he noted.

The opposition leader accused the premier of acting unlawfully, which he said was a grave step for the elected leader of the country to take. “The first obvious question therefore is, why?” McLaughlin said on Wednesday. “The premier says it was to save the country money.  But he has never said how, nor has he explained why he invited Cohen and Company to make another proposal after the Central Tenders Committee had already decided to award the financing contract to Royal Bank and FirstCaribbean. 

“Neither has he explained why he did not invite all the other bidders to engage in negotiations or to present another proposal to government in the way that Cohen and Company was invited to do, nor has he told the country why Cohen and Company was singled out for special treatment in this way.”

Although the premier had said at the time that he chose substance over process, the opposition leader noted that the process was important and not just for reasons of compliance with the rule of law. 

“When due process is not followed it opens up the ominous prospect of corruption,” he added.  “The spectre ofcorruption has the capacity to undermine any government’s reputation, including ratings by Standard and Poors and Moodys.  If potential bidders come to believe that the process of awarding contracts is not fair, predictable and transparent, then the attractiveness of this jurisdiction as a place to invest is lost, with potentially dire consequences.”

McLaughlin also noted that at the time the UDP Treasurer, Peter Young, had called CrossTalk and in a discussion lasting the best part of an hour described in detail the process involved in arriving at the decision to choose Cohen.  “Despite what appeared to be intimate knowledge of the details and why it was such an attractive deal for the Cayman Islands government, (he) was unable or unwilling to disclose what the interest rate on the loan would be,” McLaughlin added.

The opposition leader reminded the premier that the opposition had already asked government for the details and circumstances, as well as an explanation of why Cohen and Co were singled out, plus disclosure by the CTC, the premier and government of all relevant documents, a report from the attorney general regarding the legality of the premier’s action and a special investigation by the auditor general.

“We have never received a response to these calls other than an indication from the governor that the auditor general was looking into the matter,” McLaughlin said, noting that no report had been released.

The opposition leader said that after government had received substantial advances from Cohen, the premier announced the agreement had been terminated because they couldn’t provide the previously agreed rate-cap on interest.  FirstCaribbean was then awarded the financing contract.

“The people of the country are owed a proper explanation and accounting by the premier and the government for the irregular and apparently unlawful course of action which it took in relation to this critically important matter of securing financing. In light of the termination of the agreement, the premier as minister of finance should also explain how much the Cohen arrangement has cost the government,” he said.

Hitting back on Monday afternoon as he wrapped up his budget debate, Bush did not answer the questions about how much the loan advances and arrangement fees had cost government, nor did he address the details of the process.

The premier denied wrongdoing, as he said it was all about trying to save government money, but when Cohen said they couldn’t make the promised deal, government walked away. He accused the opposition of saying there was something sinister or that he was trying to “get something for myself or my party,” the premier said, adding that now he had moved away from the deal they were chasing shadows and he hoped they tripped up.