OfReg accused of wasting more public cash

| 05/03/2020 | 80 Comments

(CNS) Updated with correction: The utilities regulator, OfReg, which has already faced criticisms for its lavish spending of public cash while failing to address any of the issues it was created to tackle, wasted well over CI$200,000 in 2018 on renting an office it never used. The regulator also exceeded its travel budget for that year and has continued spending on hospitality without a policy in place.

OfReg’s continued wasting of the people’s money was highlighted in a report accompanying the regulator’s audit for 2018.

While Auditor General Sue Winspear gave OfReg’s books a clean bill of health following the latest audit of its accounts, she raised a number of concerns for managers about how the regulator is using public money. Winspear was quite direct in her allegation that OfReg is wasting public cash and not offering value for money, as she highlighted poor controls and said there was a lack of policies in place to help it manage expenditure.

The report by the Office of the Auditor General (OAG) paid particular attention to the more than $206,000 that OfReg spent on a suite of offices at Smith Road Centre in George Town that it never occupied.

In 2017 the regulator signed a ten-year lease for those offices, which it planned to move into in December of that year, but the deal was signed before the office had the funds it needed to cover the rent. Nevertheless, OfReg continued to hold the lease for more than a year before beginning the process to terminate what became a wasteful and costly exercise.

In the management report Winspear pointed out that, in addition to the complete waste of over $200,000 of public money on the lease, there will also now be an as yet unknown fee appearing in the regulator’s books for 2019 for breaking the ten-year lease.

OfReg said in its response that the lease was signed on the basis that it expected to get funding to cover the various sectors it is meant to regulate. But managers claimed that the regulator is still not getting fees relating to its supervision of water provision nor was any budget allocated until halfway through 2018 for the fuel sector regulation.

This meant that the necessary renovations and adaptions to the offices could not be made, and when it became apparent that the regulator could not even pay the rent, it began the process of puling out of the deal.

OfReg management accepted that no business case had been done before it entered into the lease nor any procurement process conducted for what would have been a near $2 million investment had the lease run its course.

Accepting the auditor’s recommendation, the regulator said that in future it would use business cases to avoid what the auditor described as a “significant waste” of public cash.

Despite previous concerns about OfReg’s spending on travel and hospitality by the Finance Committee and the Public Accounts Committee of the Legislative Assembly, the regulator was called out by the OAG on this same issue.

During 2018 OfReg exceeded its travel budget of $60,000 and also spent more than $20,000 on hospitality, despite not having any policy in place to control that type of spending. In the report Winspear pointed out that there is a risk that public money is still being spent on travel at OfReg with no business benefit. Hospitality represents another potential abuse of public money, as there is no way to know if these activities are appropriate, the auditor stated in the report.

Correction and clarification: This article originally stated that OfReg entered into a lease agreement with Smith Road Plaza. However, the office suite in question was leased from Smith Road Centre and the article has been corrected to reflect this.

The Office of the Auditor General has explained that while there is no error in the report itself, there was an error in the response by OfReg’s management to the OAG report, which was not included in the report but which was supplied to CNS. The OfReg response erroneously stated that the lease was with the Smith Road Plaza.

This is what CNS used as our source (see here, page 9), which we had no reason to doubt was accurate. We nevertheless apologise to the owners of Smith Road Plaza for any inconvenience or embarrassment it caused.

The owners of Smith Road Plaza stated in an email to CNS: “OfReg has no office suite in Smith Road Plaza nor have they ever negotiated or entered into any lease agreement with Smith Road Plaza.”

See the full management review in the CNS Library


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Category: Government Finance, Government oversight, Politics

Comments (80)

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  1. Anonymous says:

    OFREG do not answer to a Chief Officer, they only report to Cabinet, so ask Cabinet whats going on

  2. Anonymous says:

    OffReg needs to be properly regulated……. ironic

  3. Anonymous says:

    Ofreg need to show value for $$ to the people of Cayman. Start by getting a new license for Cayman Water with SIGNIFICANTLY lower rates. Why are WestBayers still having to pay way more for water to a private utility when Water Authority sell the same product cheaper!!! I encourage everyone to go online to CWCO and read their financial reports and see how much money they are making off of Caymanians. An NO its not a Caymanian owned company, a few Caymanians own shares, but they also own a few Apple shares too!!!

  4. Anonymous says:

    At least they are really good at ignoring all traffic laws whilst driving around the fancy company vehicles.

  5. Anonymous says:

    The wealthy/retired expat Caymanians that cant serve individually to improve local politics by standing for election, can serve everyone by collectively forming an advocacy group to file claims that establish maladministration consequences, improve accountability and administrative function. Claims should be filed against each comfortable department head in CIG that fails to deliver proper accounting, and public reports. That would be a start. Someone bold needs to fire some canon shot across the bow of this operation.

  6. Calling out media BS. says:

    Why is this not your top story? No one cares what the opposition does, they are useless. The only one who will call out BS is KB and this story about the govt ineptitude is found way down on the list. wow!

    CNS:
    This was our top story Thursday.

  7. In the Business says:

    At OFREG there is no-one on the staff that knows anything about electricity generation, water production and distribution, petroleum storage and distribution, telecommunications; Oh, my list has come to an end, so what exactly do they do or have they done to have needed to provide hospitality and to travel.
    You don’t need a PhD to understand what is happening.

  8. Anonymous says:

    Be smart guys…..don’t blame OfREG….blame our government….cant you see that the government is not even sure who manages/controls the courts as our justice system….look around and pay attention. You want to do something for our country?? Request a referendum for a “National Vote”. Only then will we have a competent government.

  9. Anonymous says:

    These guys are as useless as sending a former drug dealer to represent Cayman, at a Cyber-Security conference in the UK.

  10. Anonymous says:

    Just another day in Dartistan.

  11. Anonymous says:

    Didn’t we build a Government Office Building for these people, and to rent for 10 years!

  12. Anonymous says:

    Can someone please confirm for me – doesn’t OfReg have 2 alternating Managing Directors, Alee Faamoe and Greg Anderson? How does that work, why is it necessary when they haven’t achieved anything and who is directly allowing this crap to continue??!! There must be a Chief Officer or Minister to whom they report?

    • Anonymous says:

      3.35, probably Jon-Jon, nuff said.

    • Anonymous says:

      They report to the Premier. Nuff said

    • Anonymous says:

      A few Facts:

      since September 2019 they have had a new CEO who ran the regulator in TCI. They also have a law called the Utilities Regulation and Competition Law. That means they have a board who handles the hiring of the CEO and the Acting CEO. The board is chaired by Linford Pierson. OfReg’s board has no civil servant on it. The Chief Officer for infrastructure is not even an ex-officio member. It’s one of the few SAGC boards without a civil servant on it!

      A minister cannot lawfully intervene in the day to day running of an SAGC. Until the Public Authorities Law came into effect there was little guidance on the relationship between Cabinet and Chief Officers and the Boards.

      https://www.ofreg.ky/upimages/commonfiles/1555574116UtilityRegulationandCompetitionLaw2019Revision.pdf

  13. Say it like it is says:

    You wonder why so many new vehicles are imported each year – ask Government who guarantee big profits for all the major dealers with their insatiable demand for their employees.

  14. Anonymous says:

    problem 101..politicians lodge too!!!

  15. Anonymous says:

    lo…ge hotel!!😭

  16. Anonymous says:

    It is time for a cull at OfReg. The regulator is too top heavy and will not be able to provide value for money until there are fundamental changes.

    • Anonymous says:

      The Cabinet Secretary has an oversight role under the Public Authorities Law and yet he appears to be doing nothing in terms of that role.
      The ex Education Chief Officer is apparently still at OfReg for some reason , being paid CO salary for some made up COO role… which he clearly also isn’t fulfilling.
      The whole organization is a joke.

    • Anonymous says:

      Ofreg salaries are certainly top heavy, shameless.

  17. Anonymous says:

    another glorious day for our ‘world class’ civil service…..zzzzz
    any comment franzy?

    • Anonymous says:

      12:44 You should know and not have to ask our DG that Offeg is not part and could never be a part of our world class civil service.

      Why can’t you simply understand the difference between a public authority which is managed by a private sector board and the civil service which is lead by the DG.

      Shame on you 12:44 ;

    • Anonymous says:

      12:44. Sorry you have to blame the private sector board for this. The DG has no control over the run away public authorities.

      Maybe the Board should be disbanded and the public servants brought into to the civil service. They will have to give up their SUV’s and reduce their cost.

      • Anonymous says:

        No we have to blame the Cayman Islands Government in whatever guise for creating and then failing to control a number of economy destroying monsters that appear to be depriving us of our financial security.

    • Anonymous says:

      12:44 please remember to engage brain before typing. You are bound to write rubbish.

      It’s 2020 and people don’t know the difference between a public authority and the civil service. Very scary.

      When will the private sector board turn Offreg around.

    • Anonymous says:

      12:44 I don’t know who Franzy is but he must be laughing at you right now.

      Mental health is senior business.

  18. Anonymous says:

    how many lodge members in ofreg?

  19. Anonymous says:

    That is so gross. Really they should be embarrassed but I’ll bet they are not that bothered. One of our news sources should get an interview to see what kind of wobbly explanation they come up with…Just to watch them stutter and try to talk around it…
    Stupidity is so ugly.

    • Say it like it is says:

      12.31pm Be patient, the protocol is to refer any criticism to their consultants for a response. Like all civil servants why be bothered when there is never any accountability.

  20. Anonymous says:

    To be fair to OfReg these are the exact same issues that were already highlighted. They were discussed in the media as a result of foi requests and then the PAC and Finance Committee picked up on them and asked about them. So it’s not that the OAG is highlighting them as continuing issues, this is actually the first audit conducted that highlights them, hence 2018 audit. What we will need to see is whether those issues persisted into 2019 and the current year.

    • Anonymous says:

      True. Some read but don’t understand. However I think they need to make a change in the staff out there, certain ones does nothing but cause animosity and bad undercurrents by siding first with one then another. I don’t understand why these people are being recycled over and over. Why don’t they just go enjoy their retirement instead of sucking every penny they can out of these places. so many offices filled up with these people who’s only purpose is to collect a pay cheque. Enough is never enough to satisfy their greed. Obnoxious is what they are.

  21. Anonymous says:

    Guess who?

  22. Say it like it is says:

    Reminds me of CIMA who had Govt spend hundreds of thousands of dollars fitting out an office for them in the new Admin Bldg and then decided for operational reasons they needed to be housed separate to Govt. Who owns THEIR current premises by the way?.

    • Anonymous says:

      You argument is partially valid in that the Monitary Authority should have know in advance the need for separate offices and planned accordingly. However Monitary Authority cannot be housed in the same building as Govt. The global financial regulators would have a serious issue with the two being in close quarters.

    • Anonymous says:

      CIMA claiming lack of resources to fulfill their role and yet can afford to move to luxurious new premises in Cricket Square with a massive fit-out cost. We would like to know how much that cost !
      Plus paying ridiculously high salaries and Board stipends.
      Yet it’s this Organisation that will be at fault – together with Financial Services ministry- for Cayman being put on the grey list.
      No accountability yet again.

  23. Anonymous says:

    Lol. They must love it here in Cayman

  24. Anonymous says:

    Why aren’t the monopolies and oligopolies paying for govenment dinners and travel as usual?

  25. Catcha Fire says:

    What’s new so long as we continue to install Lodge minions in chairman and directors in senior positions in statutory boards and government post this will continue to happen and they will continue to not get punished or give account. Big Thank you to Mrs Winspear for constantly remind us of this ! Because we know those elected to remedy this will never lift a finger to do single thing about it other than MLA Mr Ezzard D Miller. That we the people know for sure.

  26. Anonymous says:

    What the hell? They have done nothing for the consumer they are only helping themselves to our money. Total Failure!!!!!!!!!

  27. Anonymous says:

    Which is it: clean bill of health, or wasting public cash? Can Sue help us to understand at what point does squandering public cash constitute mismanagement in her eyes?!? Abiding maladministration on this scale sounds like a yardstick that doesn’t serve the public interest.

    • Anonymous says:

      The records of wasting public cash have a clean bill of health. They are healthy records.

    • Anonymous says:

      OfReg’s books a clean bill of health?

      An auditor conducting an audit in accordance with professional standards is responsible for obtaining reasonable assurance that the financial statements as a whole are free from material misstatement, whether caused by error or fraud.

      An external financial auditor’s responsibility is to express an opinion on financial statements.

      External financial auditors perform their work on a sample basis and do not test every transaction, so they can’t be expected to catch all fraud or errors. Instead, your government’s management should design, implement, and maintain internal controls to limit unauthorized transactions in financial statements.

  28. Anonymous says:

    Good question.

  29. SKEPTICAL says:

    Cayman is no longer a Third World country – rather a Fifth or Sixth World example.
    Will CIG never learn that giving managers authority to spend money without independent oversight makes them feel important, and they feel obliged to show how important – by spending as much as possible.

  30. Anonymous says:

    Ask the police. It would be nice for them to do something for a change!

    They managed to find Mac yet? How are their detailed and robust investigations going (given the whole thing has been nicely videotaped and substantially admitted in writing)?

    • Anonymous says:

      Real property ownership information is Public Records in the US. Few clicks and you find it on internet.

  31. Anonymous says:

    Government please stop throwing away our good hard earned money after this failing authority. it has done nothing for the benefit of our people and islands

  32. Anonymous says:

    CLOSE IT DOWN!

    Quickly.

  33. Anonymous says:

    Why is the chairman being paid so much? Need to revisit payment for board members. Even Chairman of CIMA is not paid as much.

  34. Anonymous says:

    The staff and board are almost entirely men. Why isn’t there more diversity in the hiring at this entity? Looks like a typical boys club having fun traveling & partying without any consequences.

    • Anonymous says:

      are women allowed in lodge???…there is your answer.

    • Anonymous says:

      Mind you still many of those at OfReg are not qualified for the positions they hold. But they have a good talk and got appointed because of their Lions Club and political affiliations rather than their competence.

  35. Anonymous says:

    I wish Ofreg weren’t making such a mess of it. They are exactly the kind of organisation that Cayman needs. A group looking out for the consumer. But they are not good project managers and I don’t want that to turn into “protecting consumers is a waste of public money.”

  36. Anonymous says:

    Over $16,000 per month for office space at Smith Road Plaza? Were they going to rent the entire building? Wow … what a waste!!! Someone, and not the Cayman taxpayer, should pay for this screw-up!!!

    • Anonymous says:

      Head should be fired for cause, and probably charged civilly. Chamber of Commerce and other business advocacy groups (anyone who pumps gas, or uses a phone) should propel consequences. These agencies and their heads are not immune from prosecution…the cost of public maladministration needs to start directly hurting those that abide it. We need to spend a little bit of money on litigation to create the consequences and enforcement culture that doesn’t exist in this Peter Pan utopia.

  37. Cheese Face says:

    I love their fancy new trucks too.

    • Anonymous says:

      Those trucks are really excellent.

    • Anonymous says:

      My thoughts exactly! See a few very nice new OffReg vehicles. This Authority is a complete waste of money. Will only cost consumers more in the long run in my opinion.

    • Anonymous says:

      Chevy Tahoe(S)….I am infuriated each time I see them driving round. The unit cost, cost of operating and maintaining these beasts is ridiculous and completely unwarranted. Why can’t they drive picanto?
      Actually, why do they need cars/trucks at all?

  38. Anonymous says:

    The very agency that’s supposed to be protecting us is screwing us. Oh the irony. Only in Cayman!

    • Anonymous says:

      yep…another wonderland classic!
      direct rule now!

      • Anonymous says:

        Direct rule would result in UK overlords driving around in those OfReg vehicles and taking expensive junkets to conferences overseas. That is not the solution.

        The Board of OfReg is responsible and should be held accountable for the actions of OfReg’s management.

  39. Anonymous says:

    Shut them down. Never achieved anything anyway. In the private sector, they would have been closed long time ago.

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