Archive for February 20th, 2012
Bermuda’s deficit almost $276 million
(CNS Business): Bermuda’s government spent nearly $276 million more than it raised in revenues in the fiscal year ending 31 March 2011 and drew down all $200 million of a term loan it got from Butterfield Bank last May, financial statements issued by Auditor General Heather Jacobs Matthews and tabled in Parliament yesterday revealed. The government also upped its borrowing at the end of last year, extending and increasing overdraft facilities with both Butterfield and HSBC Bermuda, totalling some $80 million. The finanacial statements reveal that the Butterfield loan had been “fully utilised” with successive drawdowns of $70 million, $50 million, $50 million, and $30 million, taking place in May, June, August and September of last year.
The Consolidated Fund statements showed on November 16 the Government signed a $50 million overdraft facility with Butterfield Bank that expires at the end of next month, with a daily charge of 1.2 percent above the bank's base rate of about 3.75 percent, the Royal Gazette reports.
And just over a month later, on December 29, Government increased its overdraft facility with HSBC from $20 million to $50 million, to also expire on March 31 and with daily charges on overdrawn balances of one percent above HSBC's base rate.
Premier Paula Cox blamed “an array of very challenging economic and financial circumstances” for the “short-term deficit peak”.
In his blog cmlor.com, offshore recruiting specialist Steve McIntosh notes that funding the additional interest on the resultant debt alone will mean finding an extra $14m in revenue each subsequent budget year till the sum is paid off. "No small beer," he writes.
"Not to pile on, but it’s worth noting that these results are just about a year old and that the economy seems unlikely to have improved in the last year given the continued job losses in the international business sector."
He noted a change in Bermuda's accounting policy that required the restatement of prior year numbers. "Far be it from this recovering accountant to cast aspersions on the motive for a change in accounting policy but let’s just say organisations with this much red ink on their books would be loath to agree to a change in policy that negatively impacted their bottom line.
"No wonder Premier Cox has come out all rhetorical guns blazing against an effort announced by the Cayman Islands to attract reinsurance companies, a sector traditionally dominated by Bermuda. The last thing the Bermuda economy needs is a slide in payroll tax revenue, the treasury’s life blood accounting for $423m, 42% of revenues for the fiscal year," McIntosh wrote.
Too much profit in Cayman politics
Do you know of any Caymanian politicians who have significantly increased their personal wealth while “serving the people”? How do they manage to do that, anyway? It’s a fair question. How is it that we see people with very little personal wealth take office and then, after a few terms, seem to be far richer than their salary can account for? We can’t assume that they took bribes because everyone is innocent until proven guilty.
Many of these career politicians have businesses so maybe that explains it. In many cases, however, it’s clear to everyone that not all of them possess elite business minds capable of turning thousands of dollars into millions in a few years. So that doesn’t explain it.
A recent book by Peter Schweizer, “Throw Them All Out”, describes the blatant unethical and unfair practices of many elected politicians in the United States. Schweizer documents how members of both parties routinely become entrenched in power and then use their positions and connections to make lots of money for themselves. They do this in ways that ordinary citizens can’t.
The most outrageous aspect of this is that the people who are responsible for writing the kinds of laws that would prevent such unfair profiting are the very people who are cashing in and don’t want anything to change. It’s a catch-22 only a politician could love. So they keep cashing in, not because they are smarter or luckier than everybody else, but because they share and receive privileged information and tailor laws to please those who can add to their bottom line in some way. If they behaved this way in the financial industry they would face criminal chargesand likely end up in prison. But in politics, it’s business as usual.
It sounds crazy but it’s true: Handing a politician $50 for a favor is called bribery and somebody is likely going to jail. But when a politician learns things in closed meetings and then immediately rushes out to buy or dump millions of dollars in stock accordingly, it’s all legit. The people’s interest, be damned, individual profit triumphs. Legal or not, it clearly is the path of a scoundrel and shouldn’t happen.
So what does America’s problem have to do with us? Everything, because the situation can only be much worse here! Who exposes it? Who fights it? Who cares? Cayman’s news media is far less aggressive and capable due to limits of manpower, resources and legal protection. And, sad to say, the Caymanian public seems reluctant or incapable of working up much outrage about politicians who abuse their office in selfish ways. Maybe they don’t recognize it or, if they do, feel it’s impossible to reform. Or maybe they are too busy trying to figure out how to become a “servant of the people” so they can get rich too.
If anyone has doubts about how political office in the Cayman Islands is often profitable far beyond base salary, just look at how hard people fight to win elections here. Why would any normal person do that? You would have to be kicked in the head twice by an old East End mule to willingly embrace such a demeaning circus. If anything, people should be reluctant and even fearful of taking on such a job with so much responsibility, so much public criticism and such a relatively small paycheck. We should see only the most intensely patriotic, unselfish and compassionate among us vying for office—with a few megalomaniacs here and there, of course. But, no, we see hordes of people charging full speed toward it as if they really do love begging for votes, making empty promises and reading legal documents. Isn’t it obvious what they are really chasing?
Still not convinced there is a mountain of shady money at the end of Cayman’s political rainbow? It’s common knowledge that some voters have been given washing machines, free home renovations, even had driveways paved leading up to past elections. Why? Why would candidates fork out so much money, so many goods and services in order to “serve the people” as an elected representative? It might be because they love the Cayman Islands, want to improve our schools, reduce crime and build up tourism. But it’s probably because they are aiming to use your votes for access to big bucks.
Visitor drowns at Spotts
(CNS): Just over twenty-four hours after a four-year-old child was drowned in a local pond in Northward, police reported the death of a 58-year-old tourist who drowned in the Spotts Public Beach area on Sunday. An RCIPS spokesperson said that shortly before 5:00pm today, police received a report that a man was unconscious floating on the water. He was found by a member of the public who was also at the beach. He went into the water and brought the man ashore, but found he was unresponsive to CPR. Emergency services personnel attended the location and took the man to the Cayman Islands Hospital in George Town, where he was pronounced dead.
Police stated that enquiries into the circumstances surrounding the incident are ongoing.