Archive for September, 2013

Travel raises contention ahead of premier’s next trip

(CNS): Having recently returned from a trip to Gibraltar, Jersey and the UK, the country’s premier is taking another overseas trip this weekend, this time to Miami to represent the Cayman Islands at the 2013 KPMG Island Infrastructure Summit. Alden McLaughlin will be a panellist at a discussion on Monday regarding infrastructure projects in the islands but is expected to fly back to Cayman later that day to continue budget preparations. Travel became a contentious issue during the previous administration, with criticisms over the number of trips then premier McKeeva Bush and other UDP ministers took when in office. Now the opposition leader, Bush has described the new government as “hypocritical”.

He pointed out that he was berated for travelling and criticised heavily by the opposition and others who have “turned 360 degrees” now that they are in government.

“When I was premier, I had many many subject matters that at the time I had to travel to conduct business for,” he said. “Today, there are four ministers doing what 'me one' had to do … not to mention the duties and responsibilities as the premier of the country,” he said, as he pointed to the role of financial services now held by Wayne Panton, planning now held by Kurt Tibbetts, tourism held by Deputy Premier Moses Kirkconnell, and finance held by Marco Archer.

He said covering those subject matters required his attendance at meeting, forums and negotiations, from Washington to Europe, in efforts to preserve relationships, bring new business to the island and get Cayman in good standing with the G20 and the OECD, keep the credit rating, and protect the financial services sector.

“I was criticised severely by the PPM and the now premier, Alden McLaughlin. It’s more than hypocritical, to say the least, the extent that they went to berate and complain and point fingers, making mountains out of mole hills. Today, with just four months in office, he and his team is already 'on the road' quite a bit,” Bush added

Less critical of the actual travel, however, he gave the premier the benefit of the doubt, adding that he could be doing what he said he would during the campaign, which was to hit the ground running.

“I wish him luck and I hope and pray he is successful in hitting the ground running, and  not running the people into the ground!” Bush added, saying he was keen to put politics aside because if the country is to succeed, the premier and ministers must travel to be at meetings and negotiate on our behalf.

“In so doing, they will need protocol and transport services no matter how long it takes for a meeting to begin and end. They should, as the premier of the Cayman Islands, have personal security and they must be able to travel in a situation where they can read or study their papers, discuss the matter with their colleagues and be ready physically and mentally able,” he said, explaining that meetings would sometimes come after a three to ten hour flight.

These comments by the opposition leader come just days after the announcement that the RCIPS Financial Crimes Unit has opened another investigation into the former premier, this time over the alleged misuse of limousine services in the US, accusations that Bush has denied.

Defending the travel, he said that the country’s leaders needed to do it and needed protocol support and to think otherwise was putting down the government, the country and all the people.

“The premier must travel and have the necessary convenience and services to try and be successful for the country. He is the premier of the Cayman Islands, one of the largest financial and international business centres of the world,” Bush added.

Nevertheless, the issue of travel has already dogged thisadministration after just four months, despite the introduction of a stricter travel policy, which will see politicians and civil servants flying economy-plus rather than business class, and delegations cut to the wire. On this trip McLaughlin is taking only one member of staff from his office, Kenneth Bryan, his political assistant.

CNS submitted questions to the premier regarding some of the questions that have been raised about his and his government’s travel following the significant controversy over Education Minister Tara Rivers’ extended trip to the CPA in South Africa, and we are awaiting a response.

With the exception of the situation concerning Rivers, however, since taking office the new government has been transparent about who is travelling where and why and has also proactively revealed the costs to the public purse. 

On this trip, the premier will only be away for two days and stay just one night in a hotel. According to a release from his office, the conference will explore how island economies can use alternative financing models, such as public private partnerships, to work with the private sector to deliver innovation and efficiencies in asset management, and achieve accelerated infrastructure development that drives economic growth. In light of the plans for the cruise port, the conference has some direct relevance for the CIG

McLaughlin will be on a panel Monday with Bermuda Premier Craig Cannonier; Ryan Pinder, the minister of financial services, trade and industry in The Bahamas; and Dennis Richardson, Sint Maarten’s justice minister.

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Realities of public accounts bemuse new members

(CNS): The newly elected back-bench members of government serving on the Public Accounts Committee got to grips with the reality of what the auditor general described as the “abysmal state” of some government accounts during the first open hearing of the committee Thursday. Chair Roy McTaggart, along with members Winston Connolly and Joey Hew, all new politicians, were clearly bemused by how it was that year after year government entities were submitting sub-standard accounts to the auditor general and yet there had been no consequences or sanctions of any kind.

“How have people been allowed to submit poor accounts year after year?” asked Winston Connolly, the newly elected George Town C4C member, now sitting on the government benches. “Why is there nothing in the system to correct poor behaviour and, well, incompetence? Who is it in government that makes these decisions?”

Despite the fact that most statutory authorities and government companies (SAGCs) have caught up in terms of submitting something to the Office of the Auditor General by the statutory deadline each year, PAC was informed that the quality is still a major problem.Auditor General Alastair Swarbrick and his team, who were sitting with the PAC, as is customary, indicated that for the core government ministries and portfolios, the situation was even worse.

Concentrating on the SAGCs, the members questioned the accountant general and her team as well as Swarbrick about the general state of affairs before beginning the second day of witnesses relating to the auditor’s recent report on the on-going problems with public authority accounts.

For several years most government entities failed to submit anything after Hurricane Ivan in September 2004 and following the introduction of the Public Management and Finance Law (PMFL), which requires that accounts meet international standards and appeared to be too taxing for the government's bean counters. Some eight years later, the backlog has largely been addressed and most authorities are meeting the auditor general’s deadline. But the problem now is that many of the accounts submitted to the public audit office are of such poor quality that the team is struggling to audit them.

As a former auditor, a qualified financial lawyer and a successful businessman, McTaggart, Connolly and Hew struggled to understand how it had happened, and despite the well-publicised details in the press over the last five years about the problems, they did not seem to realise the magnitude of the problem until Thursday.

PAC members pressed the audit team and Accountant General Debra Welcome, whose office’s main function is to consolidate government’s accounts into an annual entire public sector financial report, but has not been able to produce one for almost a decade. She said that chief officers are responsible for their departments.

Despite the massive focus on the issue and the money spent on external help and experts, the problem with quality continues.

Swarbrick said that while the deputy governor, in partnership with the financial secretary, had done much to drive government entities towards submitting their accounts on time, what they submit still falls far short in too many cases of the expected standard. He pointed out that it was critical for government to take responsibility for producing reliable and transparent accounts, not just for his office but so it knows what is being spent by whom and why, as it is public money.

“Government needs to reassure itself the information it submits is good and not wait for us to say it is or isn’t. It needs to be able to rely on this information,” Swarbrick said.
The new PAC members failed to understand how government was not able to catch and prevent the submission of substandard information.

The auditor general said that when he produces his report later this year on what was submitted for the year end 2012/13, there would be more details release, but he flagged the fact that there were still challenges among SAGCs and core government still had a long way to go.

“The issue of leadership is still fundamental to this,” Swarbrick said. Acknowledging the work of the deputy governor, he said in his opinion there was still a role for someone to have clear and direct responsibility for the quality, accuracy, timeliness and transparency of government’s accounts.

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Port outlook remains poor

(CNS): Officials from the Cayman Islands Port Authority said there is not much more they can do to address the major losses other than increase cargo fees after several years of the board ignoring warnings from the management team about the serious fall in revenue. James Parsons, the financial controller at the authority, said that despite his warnings, in the last two years the directors had invited him to just one board meeting. He explained this was to present a special report from KPMG that had offered some suggestions about how the port could turn around its losses. However, he was given only 15 minutes and when he got there, they cut that to ten.

Speaking before the Public Accounts Committee (PAC) on Thursday, Parsons spelt out the dire situation at the port as the MLAs made enquiries regarding the concerns raised by the Office of the Auditor General in his report The Financial and Performance Reporting of Statutory Authorities and Government Companies for the year ending June 2011, which was published this June. Alastair Swarbrick’s team had found a catalogue of problems at the authority, not least the fact that the port was running at a significant loss.

Parsons revealed that the port’s income from cargo was down some 50% since the economic slump began to bite around 2009, and with cruise revenue also falling, the authority was no longer a viable concern. Governmentis not officially injecting cash into the port, as it does with Cayman Airways and the Turtle Farm, but because the port owes government for several years of its costly annual insurance cover, it is indirectly subsidising the authority to the tune of over $3.5 million.

As a result of the labour intensive nature of the port and the need for expensive security, Parsons said the management had cut staff down to its bare minimum, but any more would risk the safety and efficiency of operations.

“There is not a whole lot more we can do,” he said. With warnings going unheeded and what Parsons said was something in the region of a million dollars spent by the board on consultant and legal fees over the last few years, things were bad.

Attempts to increase fees to the tender operators was rejected by the board just weeks after the increase was passed into the regulations. Parsons  explained that when the tender owners tried to push the increase on to the cruise lines, the FCCA complained because it had an agreement with the Cayman government not to put fees up as part of its contribution to the construction of the Royal Watler pier. Parsons said the only place left was an increase in cargo operation fees.

Pressed by the committee about what the board had done about the warnings, Parsons implied that no one had listened or heeded his warnings that action needed to be taken. However, Parsons and Port Director Paul Hurlston said that they had begun discussions with the new board about a gradual phasing of fee increases for cargo operations because, both men told the committee, based on the recommendations by KPMG there was little else to be done.

Several other issues were discussed by the committee, including the revelations in the report that former premier McKeeva Bush had directed the hiring of two men to oversee and report on issues relating to the Sandbar, which had caused considerable controversy because politicians should not be involved in hiring staff.

However, Hurlston said that over the years he had served at the port, he was aware of politicians directing certain people be hired at the port on many occasions. As director, he had been told several times to hire certain people for certain things who didn’t necessarily answer to him.

Forced to discuss this issue with McKeeva Bush sitting on PAC, even though it was Bush in his role the tourism minister who had made the directive, Hurston was reluctant to elaborate and the PAC government members were also reticent about the issue. It was established, however, that the two men never reported to either the director or the board.

Bush defended the hiring and told PAC that had the auditor general asked around, he would have learned that the men were reporting to the ministry every month. He said he didn’t hire them but the ministry did, and what was more, they had addressed the problems at the Sandbar of boats not following the rules and things had improved.

Making a point about the newly elected members of the Legislative Assembly, Bush said, “If people weren’t paying attention to this country until recently,” they would not be aware of the headaches at the Sandbar. “We spent every month dealing with trouble at Sandbar and we asked for something to be done but no one could get anything done,” the former premier and current opposition leader said.

Although a member of the committee, Bush became a witnesses as he was the centre of the issues in the report —  a problem that had been pointed out by the former PAC chair, Ezzard Miller, who had said that the committee risked being dysfunctional, given how frequently the former finance minister would be implicated in the work of the committee.

Regardless of the unusual situation, Bush took the opportunity to explain himself and the action taken in his role as tourism minister in the previous UDP administration 2001-2005. He said a decision was made to hire people to address the Sandbar problems following complaints from the cruise industry about what was happening at the attraction, from damaged boats and overcrowding to other boats damaging the Sandbar itself.

“At one point we had some boats capsize as they were overloaded with people,” he said, adding that nothing he could do seemed to prevail. “So we came up with idea to have trustworthy people keep an eye on it.” He said that had helped and further plans were developed to control the area before Hurricane Ivan in September 2004 derailed them.

The two men were let go during 2005-09 “for political reasons”, Bush stated . However,the trouble started again, so when he returned to the tourism ministry in 2009, the ministry directed that the men were re-hired. “We had monthly reports and the board had agreed to the decision,” he said. “Today the situation is much better … systems were put in place where boats anchor away off from the Sandbar.”

He justified the $1,000 paid per month to each of the men, saying, “You think you get stuff done for nothing? We expect people to come work for us for nothing but government charges people for what they do.” 

He said the men, who were experienced trustworthy people, were not overpaid and the situation improved.

“They call it interference, but it was good interference; it was something done by me; it was agreed, and by the looks of it, you should all be hiring a whole lot more people as Caymanians are out of work,” he added directly to the government PAC members.

It was established, however, that no one on the board or the management at the port had seen the reports or knew what the two men were doing, even though the money, which amounted to over $90,000, was being paid from the cash-strapped government company.

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