Auditor General Dan Duguay’s draft discussion report concerning the University College of the Cayman Islands brought up several issues beyond the unsubstantiated expenditures of former President Hassan Syed, including whether the need for a campus on Cayman Brac was properly assessed.
The 17 April report noted that minutes of a Board of Governors’ meeting indicated ‘they had serious reservations about the viability’ of the UCCI Cayman Brac Campus.
‘…There was an absence of empirical evidence that such a project was viable and justified,’ the auditor general stated.
The numbers presented at the Board of Governors meeting to justify the need for the Brac Campus included: 45 students set to graduate from Cayman Brac High School; 175-200 civil servants who could benefit from the Civil Service College; 175 students who were pre-registered in the Brac; and 26 students who had indicated a willingness to join the Cayman Brac Campus for the spring semester.
‘From reading the Board minutes, it did not appear that the Board had made definitive positions on the Brac Campus, despite their reservations about its long-term appeal,’ the auditor general’s report stated. ‘There was the absence of a resounding mandate to proceed with the Brac Campus. This may raise questions about the intent of the Board on this matter.’
The auditor general’s report stated that on the face of it, the need for the Cayman Brac Campus was anecdotal.
‘No financial projections were presented to the Board for consideration,’ the Audit Office stated. ‘No evidence of empirical research was done to more accurately determine the level of demand so as to properly evaluate the impact on the bottom line of the UCCI should actual demand… not equate to what was projected.’
Expensive three-year lease
The auditor general also questioned the wisdom of UCCI entering into a lease agreement on a building to house its Cayman Brac campus.
‘The lease is $171,402 per year for three years and the gross area is 5,830 square feet including the building,’ the auditor general stated.
‘The rationale for this lease is questionable. The UCCI signed a three-year lease in an environment where the demand for the facility is uncertain.’
The report said the audit office was uncertain of the suitability of the size of the property for the intended purpose and that it was also unsure if other options were considered prior to signing the lease.
‘Given the potential falloff in demand, a one-year lease might have been more appropriate, or consideration given to utilising other available suitable accommodations at a lower cost to the UCCI.’
The auditor general’s report delved into the recruitment process for two administrative managers.
The post of business development manager was filled on 1 August 2007, but the Audit Office’s report stated there was no evidence of the post being publicly advertised.
‘This denies the recruitment system being perceived as open and fair to equally or more qualified and experienced candidates for the benefit [of] UCCI.’
Public advertisement of available posts at a government-owned entity like UCCI would be standard procedure.
The auditor general’s report also commented on ‘unusual salary arrangements’ that gave large incentive bonuses.
In addition to a basic salary of CI$55,932 that included incremental annual increases upon satisfactory completion of each year of service, the business development manager also was to receive a performance bonus of 20 per cent if she generated in excess of CI$200,000 of gross revenue during the year.
‘No evidence of Board [of Governor’s] approval was seen for this contract, which is a departure from the standard contracts issued by the UCCI,’ the auditor general’s report stated. ‘It is also a deviation from the accepted recommendations of the salary review committee where academic staff was allowed a profit-sharing arrangement for consulting work done by them for the UCCI for industry clients.’
The auditor general said the salary arrangement ‘appears to have lacked sound business practice, as the parameters of the revenue generation were not clear’. The Audit Office also questioned the logic of basing the bonus on revenue instead of profit.
‘It should be noted that the Board approved the recommendations for a profit-sharing formula and not the revenue-sharing formula used in the contract,’ the auditor general stated, noting that as of the writing of the report, no bonus had yet accrued because one year had not elapsed.
The report also noted that the information technology manager post, which was filled on 1 January 2007, also had a revenue sharing element.
In addition to a base salary of CI$65,000, the information technology manager was to receive 20 per cent of any income generated from the department in excess of CI$150,000.
‘The Board had approved this provision in the salary review exercise in November 2006, not specifically for the post of information technology manager, but for all academic staff where work could be contracted to the UCCI and the staff compensated for the additional work as a means to augment income,’ the report stated.
In March 2008, a little more than one year into the contract, the business development manager received a CI$20,000 increase in base salary, retroactive to January 2008.
‘No evidence of Board approval was seen for this,’ the auditor general’s report stated.