OAG: MITAMA broke law re CI$6M spent on o’seas promos

(CNS): The former administration broke the law when it committed the current government to around $6 million in spending over the next five years on overseas promotion. The former premier’s ministry signed agreements and contracts to open overseas offices and attend an Expo in Dubai just days before and after the election. The breaches of the Constitution as well as breaches of the public service and public finance management laws have been exposed in a report by the Office of the Auditor General, which has not yet been published but was recently delivered to CNS.

The damning report raises a number of questions about how former premier Alden McLaughlin, now Sir Alden, and senior staff in his Ministry of International Trade, Aviation and Maritime Affairs handled the financing and staffing of three proposed overseas offices to promote Cayman in Asia, the United States and Europe, as well as attendance at the long-running Dubai World Expo.

CNS became aware of the report at the end of last year and requested a copy of it, which we have since learned examines the mismanagement of public funds and questions why the previous government committed the country to new policies after calling an election.

While Auditor General Sue Winsper confirmed such a report existed, she said it was not hers to release and she was unable to comment. The report was conducted at the direction of the governor after the new PACT administration raised concerns about the chain of events that had landed it with new policies relating to the offices and significant financial commitments for the next five years that had not been approved by Parliament.

When we approached the governor’s office, we were directed to the deputy governor’s office. Officials there told CNS that they could not release the report as an internal inquiry was now underway relating to the civil servants involved. On 21 December we submitted a freedom of information request. Then on 11 January, the ministry asked for an extension in light of the internal report expected to be concluded today, 31 January.

While we have not yet received a copy of the report through the official channels, the report found its way to CNS this weekend.

In the document, Winspear concludes that breaches of both section 55 of the Constitution and section 7 (3) of the Public Service Management Act, as well as section (12) 2 of the Public Finance and Management Act were made after the ministry recruited staff and signed five-year and open-ended contracts with five senior staff for the overseas offices.

This all happened between 9 and 20 April, literally days before and after the election when the Unity government was removed from office.

The chief officer of the ministry, Eric Bush, also signed a contract with Alee Fa’amoe, the husband of the deputy chief officer in the ministry, Andrea Fa’amoe, to take up the temporary job of commissioner for the Dubai Expo. This post and an assistant post were not properly evaluated by the government’s internal job system.

Although the DCO had recused herself from the hiring process, there was no documentary evidence about how the conflict in this situation was to be addressed, Winspear said.

When the new government was elected, it re-evaluated the need for the overseas offices and participation in Dubai and was worried that it was legally bound by the policies of the previous government that were rolled out and committed to just weeks before the election.

Winspear warned that the actions by the previous administration have not only committed the current government to spending almost CI$6 million, but it has also had an impact on policy.

Last week the PPM took aim at the government, criticising PACT over the recent grey-listing and suggesting that by not opening the Brussels office, they had risked the financial services sector.

In response, the current financial services ministry told CNS that allegations they were “dithering” over the opening of the Brussels office was in order “to follow good governance processes and procedures, and to receive Parliamentary budget approval” for the funding of the overseas offices, which, according to the report, had not been received by the previous administration.

“The opening of the overseas offices does not affect whether or not the EU lists the Cayman Islands,” the ministry said, explaining that the listing is directly linked to the long-standing situation of Cayman’s grey-listing by the Financial Action Task Force in relation to our anti-money laundering regime, which happened on the Unity government’s watch. The ministry said that completing the FATF action plan would assist with the EU delisting, not opening overseas offices.

Of particular concern for Winspear was that Chief Officer Bush continued with the novel policies and signing deals to find staff and secure permission for the overseas offices after the election.

She pointed out that the purpose of the civil service is to remain politically neutral while serving the government of the day. She said international best practice requires that no new policies or major agreements should be signed and settled during the time between when an election is called and election day.

But between 10 February, when McLaughlin called the election, and 20 April, while the government remained in question, the ministry signed at least five long-term contracts and one expensive temporary contract for staff.

Winspear pointed out that these were not the only costly commitments the previous administration committed the next government to in the weeks before the election. The government signed a deal with Dart for the ReGen waste-management contract just six weeks before the election.

In her report, Winspear urges the implementation of a pre-election policy to set out guidelines to civil servants about the use of public resources during the period running up to an election and to prevent ministers from initiating new policies or, as was the case with the overseas offices and the expo, have Cabinet vote to spend public cash without seeking parliamentary support.

Winspear said that while Cabinet has the power to vote money for exceptional circumstances, such as spending on the pandemic, she made it clear that none of the spending on the Expo or preparations for the offices constituted exceptional circumstance and so should have been approved by Parliament. As they were not, this was a breach of the law.

She pointed out that although the new government has a different policy position regarding overseas promotions, it is now committed to some $6 million it does not necessarily want to spend because of what could be legally binding contracts, all of which could have waited until the election results were concluded.

See the report in the CNS Library.

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