Most of the tenants in the Royal
Watler cruise terminal in downtown George Town were operating without a lease
in 2008-2009, and some had not paid for their accommodations, a report finished
in late 2009 by government’s internal audit unit has revealed.
According to port managers, the
situation was supposed to have been resolved before the beginning of this year,
but they were concerned that legal red tape could delay clearing up certain
Two major problems were identified
by the internal audit report: Only four of the 14 tenants housed at the port
terminal area during the government’s 2008/09 budget year had written and
signed lease agreements in place; and five tenants owed rent payments totalling
more than $200,000.
The delinquent period on those rent
payments ranged between four and 15 months.
“One of these tenants has not paid
rent from the commencement date of their signed lease,” auditors noted in their
Although the report wasn’t released
until October 2009, and did not become public until the Caymanian Compass filed
an open records request this month, the problems with leases at the Royal
Watler terminal appear to have occurred during the previous government administration
– prior to the May 2009 elections.
Since that time, membership of the
Port Authority’s Board of Directors has changed as the incoming government put
new personnel in place.
The audit report stated that board
members in charge of port oversight at the time contracted with the Lands and
Survey Department to procure tenants and set up lease agreements.
“However, the board did not
adequately monitor the performance of the Lands and Survey Department in this
regard,” the audit stated. “Tenants have occupied the authority’s premises for
periods exceeding one year without formally documenting the terms and
conditions in a lease.”
Auditors advised the board to
immediately review all current lease arrangements with the Royal Watler
In their response to the audit, the
port board noted that new criteria had been developed with regard to accepting
tenants into the Royal Watler cruise terminal area and that technical legal
issues had taken some time to resolve.
“(The) process of obtaining a
vested interest (in the Crown property Royal Watler sits on) took upward of
three years to complete, but is now completed,” the written response said.
“It’s only since this procedure is completed that the contract for each tenant
is being executed.”
Port officials noted that in late
2009 they were working with lawyers to collect all delinquent lease payments
from tenants and previous tenants at Royal Watler.
As of 31 March, 2009, auditors said
$210,364.76 had not been paid by five tenants at the cruise ship terminal. As
an incentive, the Port Authority Board had offered a 15 per cent rent reduction
to Royal Watler tenants whose rent was paid up by 31 May, 2009.
As of mid-June, auditors said no
one had taken the board up on that offer.
“The lack of decisive and timely
action by the board and management has allowed a significant amount of debt to
accumulate and this sets the precedent that late or non-payment of rent is
acceptable,” auditors noted. “In instances where a lease agreement exists, the
terms of the lease were not enforced.”
Port management noted that legal
action had begun to collect outstanding sums from two tenants, and that the
recovery process could take some time “due to the legal ramifications involved”.