2007 top stories: The flap over scrap

In November 2006, Minister of Communications, Works and Infrastructure Arden McLean announced the government would attempt to sell the scrap metal stored at the George Town Landfill.

This scrap metal consisted of an estimated 4,000 automobiles, three-quarters of which had been destroyed during Hurricane Ivan in 2004.

The sell off of the scrap metal would not only free up about 10 acres of precious space at the landfill, but improve the aesthetics of the area, Mr. McLean said at the time.

Because of a high global demand for metals, the scrap had a value and could be sold, Mr. McLean said.

The contract to remove the scrap metal was put out to tender in November 2006 and the Central Tenders Committee received three bids. The scope of the contract widened a bit because Mr. McLean said he wanted to do ‘a clean-up of the country.’

Mr. McLean also said he wanted all of the scrap metal removed from the landfill before the start of the next hurricane season in June 2007.

The CTC agreed with recommendations made to award the contract to Matrix International Matrix bid $1.25 million dollars for the scrap metal, $50,000 more than another bidder, Cemax Limited.

The award to Matrix, who had involvement from foreign nationals, instead of to Cemax, which was a wholly-owned Caymanian company, caused some stir. However, Mr. McLean said Cemax did not provide all of the necessary documentation required by the tender document. He also said Matrix ‘demonstrated the best knowledge of the processes necessary to complete the project.’

Although the contract had been awarded on 15 December 2006, by March 2007, none of the scrap metals had been removed.

As it turned out, there was a lengthy delay in actual signing the contract, which Mr. McLean attributed to ‘due-diligence procedures.’

The contract with Matrix was eventually signed by government on 19 March and the company removed the first shipload of about 400 compacted cars from the George Town Landfill in early April. Matrix shipped the scrap metal to Mobile, Alabama for processing.

After initially bidding on the project themselves, the foreign principles of Matrix formed a Caymanian company with two Cayman partners with the idea of buying scrap metal here again in the future.

According to the contract, all the loose scrap metal was to be removed from Cayman no later than 1 August, two months after the start of hurricane season. That did not happen and the Ministry of Works attempted to find out if there were any legitimate reasons for the delay.

The Canadian partner in Matrix, Bruce Young, said the company had ‘bent over backwards’ to get the scrap metal removed, but it had faced numerous delays, including the more than three months it took for the government to sign the contract.

Mr. Young also said the baler belonging to the government which his company was supposed to use to crush cars only worked 23 out of 178 days because of equipment failures.

By early September, Matrix had shipped 6,200 tons of scrap metal off the island in three shipments. Then a large barge which could hold 7,000 tons of scrap metal on its own came into port and left loaded.

Many local companies, including trucking companies, helped Matrix transfer and load the scrap metals onto the barges.

By November, many of these local contractors were complaining they were owed money by Matrix.

As it turned out, Matrix also owed the Government $940,000 on the contract, having only paid $310,000. However, it also turned out Matrix only took 55 per cent of the metal it was supposed to remove from the Landfill.

Mr. McLean dodged questions from Leader of the Opposition McKeeva Bush about the matter in Finance Committee in November when it met to approve the 6th Supplementary Annual Plan and Estimates for the financial year ending 30 June 2007. As a reason for not answering Mr. Bush’s questions, Mr. McLean said the financial year in which the Finance Committee was considering fell prior to the government entering into the contract with Matrix. That response was incorrect.

Days later in Legislative Assembly, a shouting match between Mr. McLean and Mr. Bush broke out when Mr. McLean again refused to answer questions about the Matrix matter. Mr. Bush, in particular, was interested in knowing what sort of due diligence the government had done on Matrix because some questions about its foreign owner’s past had arisen.

Mr. McLean eventually read a statement about the Matrix matter in Legislative Assembly. He noted that Matrix was declared in default of their contract with government on 19 September, and on 2 November the government suspended all operations of Matrix at the landfill and demanded full payment.

Mr. McLean also said a $500 per day penalty on late payments would be assessed.

With Mr. Young no longer on the island and his return in doubt, the 60 per cent Caymanian ownership of the company seemed left to bear the liability of the contract alone.

In addition, Mr. McLean said he saw no reason why government should pay subcontractors hired by Matrix because of that company’s default.

Auditor General Dan Duguay said the Matrix matter had attracted his attention, although he also said he liked to give government entities a chance to resolve problems before his office got involved.

However, Mr. Duguay said that based on media reports, the contract did not seem to be well managed by the government, in that Matrix was allowed to take the high-value scrap off the island before paying for it.