Lawmakers query CAL $10 million guarantee

An accounting omission led to some of the most heated exchanges among members of the government’s Finance Committee last Wednesday when an extra CI$10 million guarantee for Cayman Airways was queried.

Opposition Member of Legislative Assembly for Cayman Brac and Little Cayman, Moses Kirkconnell, asked for an explanation on why the budget contained a more than $41 million guarantee to CAL’s bankers for the coming financial year when last year’s guarantee was only about $31 million.

The question drew a blank at first until CAL management could be located and asked to come to the Legislative Assembly to answer the question.

It also drew the ire of Leader of Government Business McKeeva Bush who accused Mr. Kirkconnell of knowing the answer to the question before he asked it.

Mr. Bush explained that a US$65 million guarantee had been put in place for the airline several years ago ‘so government had no need to issue any new guarantee’.

But he said in January this year, US$12 million, about CI$10 million, had been drawn down on the airline’s $15 million line of credit.

‘You should have known it,’ he told Mr. Kirkconnell. ‘I didn’t know anything about it as Leader of the Opposition but that’s not surprising to me. There were some things going on that we’re just finding out about now.’

He accused Mr. Kirkconnell and Opposition members of trying to trip him up throughout the afternoon of questions on the proposed budget items for Mr. Bush’s ministries of financial services, tourism and development.

‘I’ve watched you all afternoon,’ he said to Mr. Kirkconnell. ‘You and your party there tried to get me upset when I did not have technocrats here.’

But Mr. Kirkconnell continued to press for an answer on why there was a $10 million increase compared to last year, repeatedly asking if there had been a mistake.

Mr. Bush said the figure should have shown in the 2008-2009 budget, but insisted that Mr. Kirkconnell and the PPM should have known the figure belonged there all along.

After discussions with CAL staff to clear up the discrepancy, the Financial Secretary Kenneth Jefferson, who chaired the meeting, said the figure should have also appeared in the 2008-2009 column of the government financial statement of its actual commitments as of 30 June this year.

‘I was told the $41.6 million should been in both years,’ Mr. Jefferson said.

The committee heard that the $10 million drawn down on the line of credit had been spent on bills.

Mr. Kirkconnell also queried a reduction of almost $3 million in the government’s subsidy to Cayman Airways.

In the 2009-2010 financial year, the government proposes to give the airline $9 million compared to $11.9 million last year.

Mr. Bush explained that the $3 million reduction would not mean a drop in the number of routes, but reflected the cost of setting up two routes to Washington DC and Chicago last year.

He said that the airline’s recently appointed board of directors were currently looking at the possibility of re-introducing a direct Miami-Cayman Brac route.

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