Duty waivers still not monitored

| 03/10/2019 | 36 Comments
Cayman News Service
Financial Secretary Ken Jefferson and Deputy FS Michael Nixon (far right) appear before PAC

(CNS): Four years after the auditor general first recommended that government introduce a duty waiver policy and find ways to manage, monitor and measure the concessions it gives away, a proposed policy is still in the very early stages, the Public Accounts Committee heard Wednesday. As senior civil servants appeared before the committee to answer questions raised in the report, Customs in the Cayman Islands, it was clear that officials still have no idea how much duty is given away, largely to developers, and what, if any, benefit that brings.

In her opening statement Auditor General Sue Winspear said that there is still only minimal progress on the management of concessions and waivers, which are still not being properly monitored, so the government does not know if the anticipated benefits of giving the concessions are being delivered.

But when Financial Secretary Ken Jefferson and his deputy, Micheal Nixon, appeared, the committee heard that the policy had just this week made it as far as caucus. Jefferson said that when it was presented it was well received; the only concern from the politicians was that Cabinet needed to retain some flexibility to grant concessions and the policy should not be too prescriptive.

But Jefferson admitted that historically there has been very little monitoring of concessions and waivers.

As far as he was aware, he said, no checks had ever been done on sites to see if developers on larger projects are employing as many Caymanians as they said they would. And while there had been an effort in the ministry to monitor the outcomes and timelines, the more detailed monitoring on the possible abuse of concessions was much more difficult, he said.

The financial secretary said that estimating how much the public purse actually gives away in concessions and what the benefits of that are was a challenge. “It is a problematic area to monitor concessions,” he said. “We have never gone to worksites to question or obtain evidence that Caymanians are being employed where it would have been a condition of the concessions as the ministry does not have the resources.”

But Jefferson suggested the new employment agency, WORC, once it is up and running, may be better able to monitor developers who have agreed to create a certain number of local jobs and assess whether or not they have reneged on those commitments.

Nixon told the committee that the new policy was extensive and the ministry was stepping up its due diligence on those offered concessions. He said the “key deliverables” were now being monitored, and where developers had not met agreed start dates or completed a project as required, the concessions could be change or cancelled altogether. He said the new policy has recommended that developers secure planning permission before they get the concessions.

Jefferson added that the policy will cover the criteria for granting waivers, such as the feasibility and whether it fits with government aims. It also covers the risks that a project could pose and what impact giving concessions will have on revenue, and also requires large waivers to have written agreements defining the concessions and where a developer would need to satisfy certain requirements.

But the two senior government bean counters both admitted that tracking the value of concessions is “a work in progress”, made more challenging by the systems in place at customs and how developers draw down on their waivers.

Wesley Howell, despite being on temporary secondment to the Elections Office in light of the impending referendum, is the chief officer in the premier’s ministry and responsible for the new Customs and Border Control (CBC) agency. This means he will ultimately oversee the concessions policy if and when it is implemented.

Howell welcomed the proposal, saying it would provide a more coordinated approach to concessions and their outcomes in longer term. He said that if people are aware of concession abuse, such as where developers have waivers for one project but are using the goods for others, they can report that to the government tip line or the whistle-blower lines or anyone in government that they feel comfortable talking to.

PAC Chair Ezzard Miller asked how Cabinet is granting waivers to hotel and condos aimed at the tourism sector, given that it breaches the Hotels Aid Law, but the question was not resolved. Jefferson said he was unaware whether or not the finance minister had taken advice about how the concessions, which he said Cabinet has a lawful right to grant under different legislation, conflicted with the laws relating to the relevant hotel legislation.

See Wednesday morning’s PAC session below:

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Category: Government Finance, Government oversight, Politics

Comments (36)

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  1. Anonymous says:

    I am surprised to hear this as the government seems to have the time to travel and attend overseas events.

  2. Anonymous says:

    Oh for f@&$’s sake let’s just stop pretending this is “incompetence” or an “opportunity for corruption” and say it like it is! We all know the waivers are handed out by politicians to their “friends” on the understanding they’ll be looked after in return. That is a serious crime and it’s happening right in front of us. The greedy sleaze-balls who are doing this (while receiving lavish salaries, pensions, unlimited expenses and luxury travel) should be in jail but nothing ever happens! No wonder so many stand for election here – it must be the greatest job in the world. Free money, no work and no consequences.

    • Tell It Like It Is says:

      Ok people I know most of you renters and ravers get on ya morality horses and get some sweetness kicks whenever and whichever government does not perform a specific task or comply with a specific matter. In your rants most of the time and without “evidence” ( yours or someone elses) you cry out corruption.

      Now think people think, the many times you have gotten on this soap box news service have you seen evidence of corruption published or have any of you provided such credible information that has resulted in conviction(s).

      For Pete’s sake stop jacking with this “ corruption ting” if you can’t assist the process by showing it. Truth be told if it really going on y’all look so diam stupid and those who do it ,laughing all the way to yonder banks( and I don mean 12 mile bank either)

  3. Anonymous says:

    Anyone out there not surprised by this news? Duty waivers are thinly disguised kickbacks that work both ways – there’s no way they’ll ever be subject to proper public scrutiny.

  4. Anonymous says:

    Where you at Anticorruption Committee? Your silence is deafening. What purpose do you serve if you’re not willing to tackle problems such as the one mentioned in the above article. You can’t make this shit up

    • Anonymous says:

      Has the ACC tackled anything? I don’t envy them…where would one begin?

      • Anonymous says:

        Well, let’s see. They could start with an investigation into the cabinet status grants, but….

    • Anonymous says:

      @1:50 pm They’re still investigating Juliana’s spendings.

      The auditor general revealed in his report [2015] that Ms. O’Connor-Connolly somehow managed to spend $34,000 in hotel charges on Cayman Brac, where she lives and has a home. He also raised questions (and eyebrows) when he referred to Ms. O’Connor-Connolly’s now infamous trip to Qatar, entourage in tow, to attend a postal conference where Cayman received a bronze award for the excellence of its postal service.

      Speaker [Julianna O’Connor-Connolly] may face ACC probe [for a “breach of trust”]. https://caymannewsservice.com/2015/07/speaker-may-face-acc-probe/

  5. Anonymous says:

    Any comments from the Deputy Governor Franz Manderson?

  6. Anonymous says:

    another glorious day for our ‘world class’ civil service…..zzzzzzzzz

  7. Anon. says:

    Small note CNS, I think the deputy is Michael Nixon, not Dixon.

    CNS: Thanks! Very much appreciated.

  8. Anonymous says:

    Does anyone know if there are any area(s) or ministry(ies) where this government does a good job? Genuinely curious.

  9. Anonymous says:

    Wesley cannot handle what he has now and you going to give him more. This is just a paper shuffling mandate. As usual the Govt really does not want any accountability as it will expose their corruption

  10. Anonymous says:

    I have come to the conclusion that the Caymanian people enjoy being screwed. Can you imagine what its going to be like when we have 100,000 people living on this tiny Island. Can someone tell me why we need to give concessions?

    • Anonymous says:

      Good question…………..! Why in the name of God, do we have to give concessions to developers? They develop for their own gain, not to benefit the Caymanian. They are making millions everytime they finish a project and all their condos etc., are sold. Why do we need to help them further? Just asking.

  11. Anonymous says:

    World Class, right “Linda”?

  12. 4th Floor GOAB says:

    A deliberate failing by Cabinet and Ministry of Finance over many years. How can any person be held accountable if there are no rules guidelines and policies to follow? This is how the system has always worked by design. It is serious failing on this government and previous ones that do not want the concession deals monitored or there to be any paperwork that can be followed or audited. That sort of management or lack thereof facilitates side deals, abuse of office and potential corrupt activities.

  13. Anonymous says:

    What a hot mess. If we knew the numbers on how much they have given away to assist these people to fatten up their pay cheque we would all get a stroke. They are giving our money away and not even checking to see if they are hiring our people. This is mind boggling!

  14. Anonymous says:

    It is easy to determine the number of Caymanians employed by developers. The pensions office alone has the data. Is anyone going to check, and demand payment of the waived duties from those developers that did not fulfil their end of the bargain? Anyone? Anyone? ….. these punks are selling our future and our sustainability….

  15. Anonymous says:

    The scope for corruption is enormous! Incompetence reigns.

  16. Anonymous says:

    CUC collects Gov’t Fuel Duty on every customer bill (subject to service cutoff if not paid), yet, according to Customs in Auditor General 2018 report, those duties on fuel have been waived and the amount collected is supposed to be funding the NRA Fund. If that’s the case, where does the $10mln/year in budgeted NRA allocation go? Why doesn’t it say NRA Fund contribution on our Bill? Who is keeping track?

    • Anonymous says:

      Because it’s most likely not going there and because certain prominent MLA’s are stack holders in CUC no one is going to look into it… SFPL needs to begin immediately.

    • Anonymous says:

      National Rifle Association?

    • Anonymous says:

      Perhaps even more worrying, CUC’s public financials on SEDAR do not report that amount they are collecting and remitting-on to CIG, even as a pass-through payable on their balance sheet. Deliberately sloppy?

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