Leader of the Opposition McKeeva Bush has questioned the Government’s strategy for dealing with Washington to avoid potentially damaging US legislation.
Mr. Bush criticised the Government for not retaining the services of the Washington-based lobbying firm known as the Livingston Group after the last election.
‘During the period in which the Livingston Group represented Cayman, it was able provide, in a quiet and effective manner, information to the influential [US] leaders and their staff,’ he said. ‘On numerous occasions, the Livingston Group was able to persuade lawmakers that certain proposed legislation, which would have negatively affected our free-market economy and financial industry, was not necessary once the true facts were known.’
The Livingston Group was headed by Robert Livingston, who served in the US House of Representatives for 22 years.
After the last elections, the Livingston Group was not retained.
‘The PPM, in keeping with its determination to unravel all things put in place by the UDP government and myself, chose not to renew the relationship with the Livingston Group, despite the fact that the group was recognised as one of the most successful lobbying firms in Washington, DC, and made a decision to employ another group with little knowledge and information on the Cayman Islands,’ Mr. Bush said.
That group was the international communications firm Fleishman-Hillard, which is based out of St. Louis.
Ted Brevakis, the director of the Public Relations Unit in the Portfolio of Finance and Economics said the decision to change the focus of Cayman’s international public relations approach was already in the works before the 2005 elections.
‘One of the things I was asked to do was an objective audit of what was already in place,’ he said, adding that the audit began in late 2004.
It was decided, among other things, to integrate Cayman’s public affairs efforts on a global basis. At the time, a separate company was representing the Cayman Islands in London, and it was desirous to only deal with one firm, Mr. Brevakis said. In addition to dealing with the US and the UK, Cayman wanted a firm that could deal with European Union matters as well.
The strategy was also implemented to maximise return on investment by having to only engage one firm rather than two or three.
Mr. Brevakis said that did not mean the winning bidder necessarily had to be an international firm, but it would have to at least be able build a consortium for firms to represent Cayman on a global level.
Once the new strategy was established, the contract was put out to tender.
‘The Livingston Group were excellent lobbyists and certainly did a lot of work for Government,’ Mr. Brevakis said, adding that the Group was told they were welcome to put a bid on the tender and that they were pre-qualified to do so.
‘They quite respectfully said they weren’t in a position to do that,’ Mr. Brevakis said. ‘They weren’t with us in the new focus.’
Mr. Brevakis said the decision to change the public affairs focus and then hire a new company had nothing to do with politics.
‘Only after [the Portfolio of Finance and Economics] made the decision did we notify Cabinet of what we were going to do.’
Mr. Bush also said that there is some proposed legislation in the United States that, if passed, would negatively affect Cayman.
Mr. Brevakis said the Public Relations unit was well aware of the legislation to which Mr. Bush was referring.
Both pieces of legislation deal with taxes owed by American individuals or entities. One, if passed, would allow the United States Government to view US subsidiaries of foreign companies as if they were domestic companies for tax purposes.
The legislation is not aimed at the Cayman Islands particularly, but at the offshore financial centres, Mr. Brevakis said.
‘It’s been mentioned and talked about, but there is still a lot of time,’ he said. ‘We’ve had discussions with those directly involved and we’ve had an opportunity to inform them of our views.
‘We’re actively engaged in managing our interests.’
Mr. Bush was also critical of it taking nearly two years for the PPM government to arrange a ministerial-level visit to Washington to meet with key people. That trip took place in late March.
‘These types of relationships take a lot of work and trust to establish, and the UDP Government paid regular visits to Washington, DC, to enhance the relationships with the Livingston Group had been able to establish,’ he said.
‘An active presence in Washington, DC, and regular visits are extremely important to the continuing success of our free market economy, a fact which until recently has eluded the PPM Government.’
Mr. Brevakis said the Public Relations Unit has been working behind the scenes, particularly since 2006.
‘It wasn’t that we just waited for two years,’ he said. ‘We’ve had three previous visits [to Washington], but not at the ministerial level. But we were making sure the lines of communication were open on all channels.
‘We also did a visit to the U.K’
It was not until last year that the Public Relations Unit was really able to implement the strategies it had established, Mr. Brevakis said.
Its efforts in 2006 facilitated 40 media interviews that resulted in 25 placements, including articles that appeared in a variety of publications.
The Public Relations Unite also started laying the groundwork for improving Cayman’s relationship with the UK and the US during 2006.
In the government affairs area, the focus this year is Washington, DC, and a direct outreach to US House and Senate representation, legislative committees and political leadership.
Bob Livingston of the Livingston Group had to admit Cayman did well seeing who it did on the March trip.
‘They saw all the right people,’ he said when he heard the meetings list. ‘But the question is, how often they are seen and what kind of relationships do they develop.’
Mr. Livingston said he did not hold any bad will against the Cayman Islands government for cancelling the contract with his company.
‘Any incoming administration has the responsibility of reviewing contracts and doing it their own way,’ he said. ‘But just because a previous administration [engaged the Livingston Group] doesn’t infer it was a mistake and should be cancelled.
‘I thought it was a mistake to cancel our contract…but they have a right to get rid of us.’
One of the reasons Mr. Livingston thinks it was a mistake for the Government to cancel his company’s contract was because they know the Cayman Islands well and believe in the country.
‘We try to take clients we believe in and with the Caymans, it was very easy. It was a good fit for us,’ he said.
Regardless of who has the contract, Mr. Livingston believes that someone should be protecting Cayman’s interest in the United States, particularly because of its financial services centre standing.
‘Clearly there is a need for representation in Washington,’ he said, adding that such representation needs to be on-going and not a ‘one-shot deal’.