My fellow Caymanians and residents,
in 2009 you elected us to ensure that your money was spent prudently. You
didn’t elect us to foolishly spend exorbitant amounts in interest payments.
Every dollar we save can go toward crucial services to better provide for you
and your family.
As you are probably aware by now,
the Cayman Islands Government has selected a firm to arrange the funding for
our long-term financing. That firm is Cohen and Company, a reputable and
experienced public company trading on the New York Stock exchange.
I’m speaking to you to address
certain issues that appeared in the local media surrounding the selection
process and when I’m finished I’m confident that you will agree that Cohen and
Company was selected by my ministry because their proposal saves the country
millions of dollars compared to the bidders recommended by the Central Tenders
My ministry published what is known
as a Request for a Proposal or RFP as it is commonly called, back in July of
this year inviting tenders for government’s financing. This RFP was reissued in
August for two reasons.
First, because it did not invite
bidders to present us with proposals that would consolidate our existing debt,
as was agreed with the Foreign and Commonwealth Office. Furthermore, if you’ve
ever consolidated your own personal loans, you know that the payment is less burdensome
than paying two individual loan payments.
Secondly, I also wanted bidders to
present us with proposals for financing some statutory authorities. Cayman
Airways is one such Government Company that was in need of funding.
I wanted the Government to use its
collective bargaining power to obtain the best terms possible. I initiated this
change in approach because the concept of negotiating for a better deal does
NOT exist within the traditional approach of the Central Tenders Committee.
The RFP was reissued and when the
new bids came in on the September 9th deadline, “lo and behold”… they offered
better terms than the original bids. It was evident that our strategy was
working. There is no doubt that the traditional approach to tendering would NOT
have gotten these results.
Even so, it became clear to me that
the terms were not as competitive as they should be, given the very low
interest rates available generally. The bids also did not include financing for
Among those bidders submitting
tenders were Cohen and Company. The Central Tenders Committee proceeded to recommend
a joint bid by two locally operated banks.
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.
I received copies of an amended
proposal from Cohen and Company in mid-October. This proposal provided an
innovative solution that enables Government to limit its interest rate. So this
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.
Ladies and gentlemen… 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 finalized.
Over the course of the remainder of
our current fiscal year it is estimated that the Cayman Islands Government will
save many more millions of dollars with this company than it would have with
the Central Tenders Committee recommended tender.
Let’s look at interest payments by
Greece in 2011: Estimated at 6.6
The United Kingdom: Interest
payment in 2010 – 11 estimated at 43.3 billion pounds.
The United States: Interest payment
for 2010 estimated at over $413 billion.
Bermuda: Interest payment for
2010-11 estimated at 38.4 Bermuda dollars.
For the 2010 – 2011 financial year,
these Islands will pay an estimated CI$31 million in interest cost and other
As minister of finance my duty and
that of my government is to make sure that we are managing government’s
finances in such a way that we are not creating tremendous hardship on our own
people and not recklessly mortgaging the future of generations to come.
It is my considered view that CNS
and Rooster FM have maliciously criticized the Government. The Opposition has
been jumping to conclusions as well; however, their mismanagement of Government
funds is one of the reasons why we have to borrow so much now.
And why is it that the Opposition
can’t figure out that there is good enough reason in these bad financial times
that our government should try to save money?
High interest rates and huge
borrowings bring a huge lay out of money that the Government does not have. We
only have to look at what is happening with the economies of other countries
today to see why we should be careful to say the least.
Another important reason for the
selection of Cohen and Company to provide the funding was their ability to assist
Cayman Airways with certain refinancing needs surrounding debt related to the
historical shareholder deficiency, which will allow the national airline to continue
to function more effectively as a strategic driver of tourism growth and
I did not take overriding the
selection of the Central Tenders Committee lightly. However, I felt that as finance
minister and premier, I was duty bound to get the best terms possible on this
funding. Our economy and the Government’s finances are still struggling to
recover. I had to decide whether to choose substance or to choose process. With
the state of the economy as it is and the Government still needing ever dollar
that it can save. I chose substance over process. 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.
Nevertheless, I did not do this
without taking advice as to my authority to do so. As the minister of finance
it is my overriding duty to see that the country gets value for money at all
I therefore feel confident that I
have acted in the best interests of these Islands in selecting Cohen and
Company. That decision, I’m sure, will save the Cayman Islands many millions of
dollars in interest costs.
What this experience has taught me
is that the tendering process needs to be revamped. With the support of my
ministerial colleagues, I have already asked for the auditor general’s
assistance in making recommendations for changes to the tendering process that
will result in a more efficient, modern and sensible process.
Since the selection of Cohen and
Company was announced questions, insinuations and allegations by detractors of
the Government have arisen. Some media organisations have gone as far as to
I can assure you that this entire
transaction has been above board. No member of the United Democratic Party has
any financial interest in Cohen and Company whatsoever.
With the tens of millions of
dollars saved in interest payments by not accepting the Central Tenders recommendation
we can help to provide funding for services such as schools, hospitals and
benefits to the elderly and handicapped in these Islands.
I reaffirm my commitment to you,
that whatever I do in my office as Premier or as a Minister… I do it in the
best interests of the people of the Cayman Islands.
Thank you for listening and God
bless the Cayman Islands.
Premier McKeeva Bush