‘Runaway’ SAGCs must be controlled

| 02/03/2016 | 13 Comments
Cayman News Service

Ezzard Miller, Chair of Public Accounts Committee

(CNS): The Cayman Islands Government is failing to control statutory authorities and government companies (SAGCs), which should be controlled through ownership agreements, but the budget documents that set out the annual deal between core government and the semi-autonomous entities are not being properly used to hold them to account, according to the Office of the Auditor General (OAG). Public Accounts Committee (PAC) chair Ezzard Miller said last week that many SAGCs were out of government’s control, even though they are all owned by, or are a part of, the government. 

He said that while they had some independence from the central administration in the management of their own affairs, they still had to be accountable to CIG and, by extension, the people.

As PAC members reviewed an OAG report on the SAGCs’ financial and general accountability, the question of how to rein in those “runaway” public authorities was raised. Government is working on legislation to establish a legal regime to govern the entities but Martin Ruben, the OAG’s director of performance audit, explained that what government expects of each SAGC should be set out in the ownership agreements signed every year by the entities when budgets are agreed.

Ruben said they could provide “an accountability mechanism” if government spelled out what it expects from these entities, saying this was the best method for government to regain control of the SAGCs.

Deputy Governor Franz Manderson told PAC that the new public authorities bill was expected to be reviewed in April by the PPM caucus before going to Cabinet and then eventually the Legislative Assembly. He said the law would deal with the problems of accountability and the lack of standardisation across many SAGCs.

A critical issue for the OAG reviewing the Entire Public Sector accounts is that the various authorities outside core government use different accounting methods for such things as valuing assets, which creates enormous problems. Ruben said the management framework at the SAGCs needed to be addressed, but whether the new law was passed or not, the ownership agreements provide the tool government needs for accountability.

“Government should provide expectations of SAGCs via the purchase or ownership agreements,” he said. “This is where government can provide the objectives and accountability it expects. But it is not using the mechanism for the purpose intended.” Ruben added, “The legislative framework is there, it just needs to be implemented.”

Miller pressed Manderson on what he described as “the runway entities” and how the boards now appear to have “carte blanche” to do whatever they want.

When asked how that had happened, Manderson said it was a good question but he was not sure. “But there doesn’t seem to be a clear line of authority from government to SAGCs to promote accountability,” he said, using the introduction of the government travel policy as an example. He explained that Cabinet had wanted that policy applied to all the authorities, not just central government, but discovered it did not have the legal authority to force the SAGCs to implement it.

While the independence of some entities such as Cayman Airways or the Cayman Islands Monetary Authority (CIMA) is important the lack of standard policies in some authorities such as human resource management or IT security, and even just keeping costs down, creates significant risks for government, the OAG has warned.

Manderson said the new public authorities bill will give core government the power to impress certain policies on these semi-autonomous entities, especially in regard to value for money. Contradicting Ruben’s assertion that government could control them through the agreements, Manderson said government needed the bill and wondered why it “wasn’t passed ten years ago”.

PAC member Winston Connolly asked whether there was the political will to force the issue, noting that government was the owner of these entities and they had a duty to report to it.

“It’s about defining roles. I own you so I give you the rules of operation and you report back to say if you are doing what I asked, and if you don’t, we replace the personnel. Simple,” he said. “It just takes political will.”

Miller said he still believed the responsibility to hold SAGCs to account lies with chief officers in the relevant ministries. He said this included scrutiny of board members, as he bemoaned the lack of diversity and accused governments of rotating the same small number of people around the various boards.

Urging the deputy governor to press for the appointment of professional rather than political people, Miller accused the management in some SAGCs of exploiting the professional weaknesses of the boards to run the entities as they saw fit.

“I am very concerned and if we don’t intervene soon, where are we going to be with these SAGCs in five years?” he asked.

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Category: Government Finance, Government oversight, Politics

Comments (13)

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  1. Anonymous says:

    The original Public Authorities Bill when presented many years ago for review to the SAGCS was absolutely hammered by them (or their CEOs) and others because it restricted the ability of these entities to award huge salaries and benefits (free CAL flights eg) to their (especially) senior employees because they were independent of Government. The cry was always “oh no, this would affect our independence”. Except that that independence did not include salary which they got whatever happened and they were able to increase it at will.Why the hell would they NOT fight a law that constrained them. For doubters, check to see if I am right about the following:Head of CIMA $170,000 plus; Maritime Authority $160,000 plus, Civil Aviation $160,000 plus…and so on and so on.

    • Anonymous says:

      The real joke here is that the head of insurance which needs to attract a world class player cannot because it’s paying CI$100,000. You want the best you need to pay triple that. Hence the job is open still. Someone I am sure will do it for that price but not anyone who could promote cayman in any meaningful sense.

  2. Anonymous says:

    “….governments rotating the same small number of people around the various boards?” Hummmm, sounds just like politicians!!

  3. Anonymous says:

    EZZARD when you failed to hold JOCC or Mac accountable for their abuses you revealed your true nature. Very good at thumping the lecturn and saying what “must” happen, very poor at actually doing anything about it.

    • Anonymous says:

      Ezzard was hedging his bets and showed his true colors. He put his own political interests before doing what he promised.

    • Anonymous says:

      Anonymous you are making a great leap of faith as are the press in assuming who is going to be called as witness, please remember that Ezzard as Chairman said quite clearly that no investigation has been completed. How do you know JOCC and Mac will not be called. Get off your “Ezzard Hater” horse.

      • Anonymous says:

        I know because he said there is no point blaming for past mistakes and we need to look to the future to make sure it doesn’t happen again blah blah blah. In other words the good old Cayman whitewash and the forever honourable perpetrators (who are still in office getting a massive salary AND pension payments and unlimited expenses) get a free pass.

        There are no financial records (of course) so it’s almost impossible to pin these people down and make them account to the people they supposedly serve. Ezzie had that chance and was armed with at least two thorough reports from the AGs office clearly pointing out unlawful activity.

        He had a duty as chairman of the PAC to at least look into the issues the AG reports raised, he had a duty to us but because he represents us, and he had a duty because he knows full well that the only way to actually stop this happening again is to hold somebody accountable for their actions.

        But he gave them a free pass.

        I am furious about that and you should be too. As far as I’m concerned the supposed champion of the people has revealed himself to be another grandstanding windbag who doesn’t give a damn that this country is systemically corrupt. We are missing a billion dollars and might well be missing another billion before anyone gets another chance to nail those slimy b*stards, but he wasn’t man enough to do it.

        • Ezzard Miller says:

          Anonymous 8;49
          You seem to have knowledge that I do not possess.
          Can you give me a call 3275757 so I can arrange for you to attend the PAC meeting next week and provide the statute and other authority that gives me as chairman of PAC the power to punish anyone for their wrongdoing.
          Since you are so willing to give commentary you should not require the legal notice of being called a witness of seven days, but since it is very likely that these hearing will continue after next week I still have time to summon you and comply with the rules.
          If the AG or the PAC suspect from the evidence presented that any criminal activity took place we have to refer such matters to the police and/or the Anti-Corruption Commission.
          Maybe you should not jump to conclusions so early in the process but wait to see what the PAC will recommend and what the Governments response will be in the Government Minute all of which will be debated in the Legislative Assembly.
          Ezzard Miller

          • Marathon says:

            Mr Miller

            Would you be prepared to set out here on this forum precisely what you expect to happen concerning (for example) Mr McKeeva Bush and the Nation Building Fund, and Julianna Oconnor-Connelly and the private paving on the Brac with public funds?

            Please include your understanding of which Govt agency, committee or the police have the appropriate jurisdiction, and how you mean to help bring this about in your position as Chairman of the PAC.

  4. Anonymous says:

    Why must CAL be independent? It just seems an organisation headed by directors with rampant conflicts of interest.

    • Anonymous says:

      More to the point why should CAL continue to survive on massive CIG subsidies when in the real world it would have been wound up and shut down years ago? How can islands with just over 50,000 inhabitants justify spending over $25million a year propping up an international airline? None of it makes sense.

      And please don’t respond with claims that CAL generates $200million a year in extra tourist revenue because that’s complete BS.

      • Anonymous says:

        2:08 Even if CAL did make that much difference the math still doesn’t work. After covering their overheads CIG’s cut of $200million isn’t $25million or anything like it and in any case most of those tourists could have flown in on other carriers. I bet if CAL dropped their entire US itinerary tomorrow it wouldn’t make any difference at all except to all the people who get free flights and other perks. It’s about time CAL was forced to tell us just how much their US route network is losing and how many freebies they hand out every year.

    • Anonymous says:

      Rampant conflicts of interest…? Surely you mean the Planning Board..!

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