Report slams ex-tourism minister

A Report of the Standing Public Accounts Committee tabled by its chairman MLA Rolston Anglin in the Legislative Assembly on Monday is highly critical of the Ministry and Department of Tourism under former minister Thomas Jefferson.

The report was based on the Auditor General’s Summer 2001 Report, which primarily focused on the years 1998, 1999 and 2000.

In addition to expanding on the Auditor General’s report, the PAC also conducted its own investigation, calling 16 different witnesses, and making recommendations on each of the 10 subjects it investigated.

The Standing PAC consists of Mr. Anglin, Government MLAs Cline Glidden and Lyndon Martin and Opposition MLAs Anthony Eden and Arden McLean.

Mr. Anglin read the findings of the report in their entirety into the Hansard.

‘The Committee was extremely concerned about the operations of some Government Departments, and in particular the Department of Tourism,’ he said.

Mr. Anglin said the Department of Tourism audit report was the most difficult on which to report.

‘It had everything,’ he said, ‘he said – she said, finger pointing, senior staff not speaking to each other, Executive Council directives, contracts not being tendered, contracts awarded not in writing, accusations of high-level corporate espionage, accusations of sexual harassment being covered up, subversion of the Legislative budget process, and gifts and other expenditures being hidden.’

Six witnesses directly related to tourism were called to give testimony to the Committee, including former directors of tourism Lania Rittenhouse and Angela Martins, former permanent secretaries to the Ministry of Tourism Charles Clifford and Harding Watler, former deputy director and current director of tourism Pilar Bush, and former DoT director of US sales and marketing Phil San Filippo.

Mr. Anglin said the Committee had no choice but to name names.

‘The Committee had had to provide names of individuals vs. their titles more often than it would have liked,’ he said. ‘But this was the only way to avoid confusion with the persons who now occupy those posts and carry these titles, given that four years have passed.’

Who’s in control?

After an April 1999 directive from the Executive Council shifting about 80 per cent of the DoT’s budget to the director of US sales and marketing, the report indicates that lines of authority in the Department blurred.

‘In essence, the (then) director of tourism Angela Martins had a greatly diminished role,’ Mr. Anglin said, noting that Mr. San Filippo was not only given a budget of over $16 million, but also the freedom to direct public relations and advertising programmes in the US.

The report states that Mr. San Filippo said ‘the Director of Tourism was extremely angry over this directive from Executive Council’ and that Mrs. Martins confirmed ‘there was open tension between herself and the director of US Sales and marketing.’

The Auditor General’s findings revealed that Mr. Filippo did not report to Mrs. Martins or the then-permanent secretary, Harding Watler.

Mr.Filippo said he did in fact report to Mrs. Martins, and said he was often left out of major decisions or consulted over matters within his remit during his tenure.

Meanwhile, the report indicates Mr. Watler effectively washed his hands of the matter.

‘The permanent secretary… pointed out that he had a multi-subject ministry to run along with other crises such as Pedro Castle, for which he acted as manager at one point,’ the report states. ‘He was emphatic that senior level managers should be professional enough to sort out their own personal issues.’

Overstated tourism statistics

In April, 2001 the Auditor General found that tourist air arrival figures had been overstated from 1994, mainly because returning residents had been counted as tourists.

‘Management was aware of this problem since 1997, but the then- Minister Thomas Jefferson instructed the DoT to take no action,’ Mr. Anglin said.

Then-director of tourism Mrs. Martins indicated the problem concerned a software programme used by the DoT and that she brought the issue to the attention of the Ministry.

‘It should be noted that this issue runs much deeper than just giving the public false information,’ he added. ‘Many people who make their livelihood in the tourism sector utilize these figures to make business decision.’

Argentina move flops

The report says the political side of the Ministry of Tourism made the decisions to enter certain markets.

When it came to the final decision to enter the Argentinean market, director of tourism Mrs. Martins reported she was not consulted.

The report said permanent secretary Harding Watler also ‘made it abundantly clear that neither the administrative side of the ministry nor the DoT was responsible for the decision to enter this market.’

‘The then-Minister, Thomas Jefferson, seemed to take on key decision without tangible consultation with the director of tourism,’ the report said.

‘The lack of a feasibility study along with directives coming from non-technical staff resulted in entering a market that proved to be non-viable and a poor investment for the Cayman Islands,’ the report said.

Improper contracts

The report points out several instances where significant contracts for services were awarded by the DoT without proper tendering, and sometimes without a signed contract.

The report indicates that the ‘Romance Brochure Contract’ was not only non-tendered and unsigned, it was with the wife of then director of US sales and marketing.

Mr. Filippo said Mrs. Martins was aware of the contract, and had even approached him about using his wife’s company, the report said.

‘Be that as it may, he will have been aware that any contract granted to a related party, especially as close as his wife, would at a minimum be subject to scrutiny and raise suspicions,’ Mr. Anglin said.

In another example of a non-tendered and unsigned contract, a local hotel operator was paid CI$89,317 for television advertising concerning certain charter flights.

The audit revealed the agreement was made verbally between then-Minister Jefferson and the beneficial company.

‘Proper invoices were not submitted to the DoT,’ the report said. ‘To make matters worse, the audit work led the Auditor General to conclude that an overpayment occurred as the letters received from the operators stated that 50 per cent should be paid, but in fact the entire amount was paid.’

Improper accounting

The report said the audit office found that official travel was being incorrectly budgeted and coded under other expenditure headings, ‘grossly understating the true expenditure in this area.’

During the investigation, Mr. Filippo testified he was told to pay for certain expenditures for members of staff because he would not be able to get them approved otherwise.

‘This was an obvious attempt to circumvent the rules of good governance and transparency in the budget process,’ Mr. Anglin said.

Recommendations

The report makes 10 recommendations concerning the Ministry and Department of Tourism.

Recommendations include always keeping the tourism management policy current; accurately reporting tourism statistics; putting systems and procedures in place to determine cost per visitor figures of DoT expenditures; and carrying out feasibility studies before entering any new tourism markets.

The report also recommends maintaining controls over the awarding and management of contracts; making sure lines of reporting and accountability are clear to all DoT employees to keep the possibility of communication breakdowns to a minimum; and accurately budgeting expenses.

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