Bush defends bypassing bid process on loan
Acknowledging his government did
not follow the established bid process in securing a US$185 million loan to support
continuing public sector operations, Premier McKeeva Bush said Wednesday that
he nevertheless got the best deal available for the financing arrangement.
“I had to decide whether to choose
substance or to choose process,” Mr. Bush said in a statement to the country
that was to be broadcast Wednesday evening, an advance copy of which was
provided to the Caymanian Compass. “With the state of the economy as it is and
the government still needing every dollar that it can save…I chose substance
According to representatives of the
Central Tenders Committee and opposition party lawmakers, the eventual bid
winner for the government financing – Cohen and Company Securities LLC – was
not the firm the committee recommended.
Opposition lawmaker Alden
McLaughlin earlier in the week expressed his “gravest concern” that the legally
established bidding process for the loan was not followed.
In his statement Wednesday, Mr.
Bush went into some detail as to why six initial bids for the borrowing were all
rejected and why Cohen and Company was selected by Cabinet the second time
around, over the recommendations of the tenders committee.
Premier Bush said the first round
of bidders did not present any proposals that would allow government to
consolidate its existing debt, as has been required by the UK’s Foreign and
Commonwealth Office. Second, Mr. Bush said bidders were also asked to provide
proposals for the continued financing of Cayman Airways and other statutory
“I wanted the government to use its
collective bargaining power to obtain the best terms possible,” Mr. Bush said.
“The concept of negotiating for a better deal does not exist within the
traditional approach of the Central Tenders Committee.”
The second request for proposals on
the financing was issued, and Premier Bush stated that lower financing offers
came in as a result. He did not discuss the interest rate on the US$185 million
loan because terms had not been finalised at press time.
However, this second round was
still considered “not as competitive” and no one included financing proposals
for Cayman Airways, according to the premier.
“While in New York attending the
United Nations, I asked Cohen and Company if they could consider funding for
Cayman Airways and also provide a more competitive interest rate. I told them
to contact the Treasury.”
Copies of Cohen and Company’s
amended proposal were received by government in mid-October. According to
Central Tenders Committee representatives, no other bidders for the financing
were allowed this opportunity to change their proposals.
“Cohen’s proposal allows government
to benefit from the current low interest rates while guaranteeing that the
interest rate will never go above the agreed fixed rate,” the premier said.
“This saves the Cayman Islands government tens of millions of dollars. It is
not possible to give an exact figure until the long-term financing facility is
Premier Bush said he did not take
the overriding of the Central Tenders Committee selection lightly. However, he
said he felt “duty bound” to get the best financing terms possible.
“I sincerely believe that the best
interests of the Cayman Islands, in this instance, are served by overriding the
selection of the Central Tenders Committee, which will save this country
millions of dollars,” he said.
Mr. Bush indicated that he intended
to embark upon a revamp of the current tendering process and that he had asked
the auditor general’s assistance in making recommendations to improve that
Representatives of the auditor’s
office said they were unaware – as of Wednesday – that any such request had
been made. However, Audit Manager Martin Ruben confirmed that the auditor’s
office was conducting a review of the recently ended bid process for the Cayman
Islands closed-circuit television public surveillance system.
The award for the CCTV system was
granted to The Security Centre, a local security firm, on Wednesday.
Mr. Bush also generally addressed, in the copy
of his broadcast statement given to the Compass, certain allegations that had
been reported in other news media outlets regarding the award of the US$185
million financing deal.
Those accusations generally concerned
certain individuals who were allegedly benefiting from the loan transaction and
who were close supporters of Mr. Bush’s United Democratic Party. The Caymanian
Compass has received similar statements but decided not to publish them as they
involved potentially criminal allegations against people who have not been
charged with any crimes.
“I can assure you
that this entire transaction has been above board,” Mr. Bush said in response
to the other news reports. “No member of the United Democratic Party has any
financial interest in Cohen and Company whatsoever.”