Duty waiver grants ripe for corruption
George Town cargo port, Grand Cayman
(CNS): More than six months after the Office of the Auditor General (OAG) raised the alarm over the failures in government’s management of fee and duty waivers, the situation is now worse, according to Martin Ruben, the audit performance director. Following a change in the law so that waivers of $20,000 or more are only granted by Cabinet behind closed doors and those below that figure by the finance minister, the system is now open to corruption at the highest level, he said.
As the Public Accounts Committee examined an OAG report on revenue collection, the lack of control, monitoring and transparency over waivers was cause for concern.
Ruben, who led the team that produced the report, Collecting Government Revenues, told PAC, “We believe that the way revenue waivers are managed today in is entirely open to abuse and corruption at the highest level.” He said government must put in robust procedures because, despite the recent amendment to the law, there was a complete absence of a policy on granting waivers.
The recent changes have made the situation worse, Ruben warned. Urging government to change the policy of having Cabinet decide behind closed doors any grant over $20,000, he added, “We sincerely hope they will reconsider this as we feel it has politicised the grants.”
Ruben pointed to the so-called NRA Agreement between the National Roads Authority, government and Dart Realty, which he said was an example where massive waivers have been granted in this vacuum of controls and a lack of transparency and accountability.
He said there were no controls over how the duty waiver grants given to Dart as part of that deal were monitored for compliance, and because there were no clear parameters regarding the conditions of the deal, the problems were compounded when there was a change of government. The 50% accommodation tax waiver offered in the original agreement was an illustration of the problems caused when there are no policies or controls and deals are struck in secret.
Ruben said government had to do these things the right way, in accordance with clear policy and frameworks with tight financial control.
However, the opportunities for corruption and abuse by government in massive duty waiver deals was not the only issue highlighted by the report. When PAC Chair Ezzard Miller asked how those receiving waivers were being held to account on the terms of deals, he learned that they were not.
Financial Secretary Kenneth Jefferson, the recently appointed leader of the government’s ‘financial functions’, noted that invoices could be checked against the goods developers were importing for the project. However, if waiver grants were dependent on other conditions, it was not always possible to hold the developer in question to account, he said.
Jefferson explained that requirements like the need to “use as much local labour as possible” were difficult to monitor. Miller described them as nothing more than “feel good” clauses that were never enforced and raised his concerns that the government had done the same thing with the massive Beach Bay waiver packet. In the end, there would be no accountability for those conditions, he said, as he hinted at unspecified rumours of corruption and abuse over that deal.
Health City Cayman Islands was also cited as a major problem. PAC discussed the fact that government had granted a 50 year duty waiver to the investors and developers, a deal that was supposed to be contingent on the hospital becoming the cornerstone of a third pillar of the economy, bringing in significant numbers of overseas patients and boosting the government’s coffers in other areas to make up for the significant and long-term waivers.
Not only is it nowhere near that goal but PAC also heard that no one in government was responsible for monitoring Health City’s compliance with the terms of its agreement with government.
The Public Accounts Committee session continues today as it examines reports on government’s IT security and its welfare programmes. PAC will be calling further witnesses in connection with the government revenue collection next week.
Category: Government oversight, Politics
I think that if people see and know that Government is been deprived of revenue, and they don’t investigate to stop this , they should not complain about criminal conduct.
If one see that trailers are coming from one construction and going to a other site no connection and didn’t come from the cargo dock. Then start your investigation and bring it public, I think that you should be up for the Citizens award of year or century.
And of course you have reported it…
CNS is there any way possible that an FOI request be done on how much duty has been waived by the current Minister of Finance Marco Archer? Then work your way back to previous administrations.
CNS: Like all media houses, we do use FOI a lot but it is incredibly time consuming and we only have one full time journalist – most people don’t realise that because Wendy’s output is unbelievable and far outstrips any other journalist in the Cayman Islands. However, in any given day she only has 24 hours like everyone else and sometimes she needs to sleep, so if you or any of our readers want to do that FOI, which you can do anonymously by email, we can publish the response. Remember that what you need to ask for are documents.
Maybe Mr Ruben has opened the back door , and all it takes is for a group of concerned citizens to hold it open . BUT I wouldn’t depend on the politicians to do so .
6:57 If what you say is true some people may have been winning but the rest of us were losing out big time. How many local residents do you think worked on the R-C development? I can tell not many because the bulk of the labour force were Jamaicans.
Falsely importing goods under a duty waiver is a criminal offence because it deprives these islands of revenue that we are entitled to – are you happy with that?
No one will ever know how many millions of dollars or other “valuable considerations” were given away by the last administration. Will it continue? What do YOU think?
Prosecutions?
I think yes.
since Dart was mentioned in this article. There are rumors on the marl road that Dart wants to dig up or in some way alter the natural coastline of seven mile beach in front of what will be the Four Seasons Hotel. And they are, behind closed doors, asking PPM to let it happen. CNS can you please find out about this! The people should know about this and have input. This could be worse than a “duty concession” or the proposed Dock. This should not be allowed to happen “behind closed doors”.
I heard Dart met with PPM in Caucasus asking that they be allowed to by pass a coastal works license and that they want to start within a week or two to dig up part of the sea bottom on seven mile beach. It would be nice to have more information for the public.
All relevant stake holders should be a part of this decision and the people of Cayman are for sure a stake holder. We should not be left in the dark or excluded for this decision. PPM say no to the practices of the UDP and take this to the people do not be like the UDP by giving in to Dart behind closed doors. Dart can wait and let this be done with public input.
I do hope that is true. The new hotel sounds fabulous and whatever they are planning can only make it even better.
Just in case anyone is still in the dark “ripe for corruption” means it is in fact corrupt to the core, and your money is going into the back pocket or corrupt officials who never have to worry about being called on it. That’s the reality here and it isn’t going to change unless we change it.
I think that the political corruption needs to be stopped and we the people who votes In Cayman Islands can an should stop it . I think that Mr Ruben has brought this to light and we should open our eyes to the corruption that is going on behind closed doors.
There’s so much of this kinda thing going on in Government , and who is benifiting from it ? While this is causing the Islands to go deeper in debt , the people be coming more recent -full over issues , then we have politicians given $2.00 for votes to keep him or her in power of Government and making hundreds of thousands dollars.
We should not be tolerating this kind of disrespectful behavior from no politician, and we should show who ever was not transparent in their term , that they have just lost job come next election .
While I agree that Government need to be making concessions to encourage development in the Islands but it must be done in a transparent way in the LA .
The massive Beach Bay waiver packet also includes an indemnity absolving the developer from any environmental costs. Who agreed to that time bomb?
6:30 The whole Beach Bay development doesn’t make a lick of sense anyway so this hardly surprising. The project was floated with the previous government on the basis that it would have the Hilton brand name but nothing ever came of it – why should we expect anything different this time? The bottom line here is that the people behind the project don’t seem to have any hard experience in resort development and, if anyone bothered to do due diligence, a rather patchy history. I may be wrong and they may deliver on this but I’m not holding my breath on it.
These duty waivers have to be seen for what they are – a quid pro quo.
How far that extends is obviously open to speculation but it isn’t rocket science to figure out that some of them are little more than reciprocal kickbacks – and here I’m obviously thinking about one rather troubled development in particular.
The bottom line is this is not a free ride. At the end of the day everyone pays for these waivers and it would take a lot to convince me that we are getting value for money or anything like it out of these deals.
The answer is simple – if CIG doesn’t have the resources to properly the monitor the waivers they shouldn’t have been granted in the first place.
I dont understand why there are waivers even granted. These waivers are granted to multi millionaires, who can afford to pay the required duties, yet the poor Caymanians have to pay ultra high duties, are given no breaks, plus we end up paying for the duties that the filthy rich have been given by our stupid as effing shit government. But not to worry, they love us dearly.
This proves yet again that PPM is no different than UDP both need this system of corruption to thrive politically. None want changes. Marco is continuing the work of McKeeva.
I think that Mr Ruben is correct in his assessment on how these things are done.
I think that this kind of business of given tax exempt should not be done behind closed doors, this is government revenue and it should be conducted and done as government business in the LA .
I really think that this kind of business needs to be brought to light and the government needs to do business in a transparent way .
Elections coming up soon of course PPM will support things that are done in secret and gives absolute power to a Minister or Finance Minister. Changing the laws to accommodate less transparency is full of potential issues and bad for Cayman it doesn’t matter if the PPM or UDP or any group is in power.
Cayman needs more sunshine legislation and decisions that will face the appropriate checks and balances not less. Hasn’t this country learnt any lessons over the last twelve years about all the secret deals that the way politics really works behind the scenes. Look at the manner that concessions and waivers are given away like candies to friends and supporters in exchange for continued political support. C’Mon Maaaaaan