Accusing Premier McKeeva Bush of contravening the law and established bidding practices to obtain a US$185 million loan for government, Opposition Leader Kurt Tibbetts demanded answers in a broadcast address Monday.
“The Premier has unlawfully overridden the recommendation of the advisors in his own ministry, the Ministry of Finance technical evaluating team, as well as the decision of the Central Tenders Committee, and has handpicked a New York firm to provide this financing,” George Town MLA Kurt Tibbetts said Monday evening.
Mr. Tibbetts was commenting on the recent selection of Cohen and Company Securities LLC as the financier for the government loan following a protracted and somewhat confusing bidding process during which two separate tenders went out, an eventual bid winner was selected and then ignored in favour of the New York firm.
A joint bid from two locally operating banks – Royal Bank of Canada and FirstCaribbean – was chosen by officials with the Central Tenders Committee. Mr. Tibbetts said, as far as he’s aware, that should have been the end of the matter.
“By ignoring the decision of the Central Tenders Committee to award the financing contract to a joint venture of two local banks…and instead awarding it to Cohen and Company, the premier, and by extension the (United Democratic Party) government, has therefore acted unlawfully,” Mr. Tibbetts said.
In a statement made last week, Premier Bush did not deny that he had overridden the decision of the tenders committee. Indeed, he acknowledged that he had purposely done so to get the best financing deal possible for the Cayman Islands.
“I had to decide whether to choose substance or to choose process,” Mr. Bush said in a statement to the country that was broadcast last Wednesday evening. “With the state of the economy as it is and the government still needing every dollar that it can save…I chose substance over process.”
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 had not presented 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 being asked to provide proposals for the continued financing of Cayman Airways and other statutory authorities.
“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 did indeed come in as a result of that. He did not discuss the interest rate on the US$185 million loan because terms had not been finalised at press time.
In his statement Monday evening, Mr. Tibbetts said such comments by Premier Bush were “curious” as the premier admitted the financing for the proposal had not been finalised.
“It would appear from what the premier has said that the crucially important issue of the interest rate that will be charged on this loan agreement has not yet been agreed and is still being negotiated even after the financing contract has been awarded,” Mr. Tibbetts said. “There are…real concerns about whether this deal is really in the best interests of the Cayman Islands and the manner in which Cohen and Company was singled out for special treatment.”
Mr. Bush said his decision to go with Cohen and Company was made after the second round of tendering was still considered “not as competitive”. The premier also noted that no one bidding on the financing had included proposals that involved Cayman Airways.
“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,” Mr. Bush said.
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 finalised.”
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.
“The premier says it was to save the country money, but he has not said how,” Mr. Tibbetts said Monday. “There is a lot at stake here.”
Mr. Tibbetts also raised concerns about the “spectre of corruption” over the Cayman Islands due to issues that have arisen with this bidding process.
“There are huge implications for the Cayman Islands government here,” the opposition leader said. “It is the Cayman Island’s government’s reputation for probity and reliability that has made it relatively easy for it to secure financing, even in these hard economic times.”
“The spectre of corruption has the capacity to undermine any government’s reputation, including (debt) ratings by Standard and Poor and Moody’s. If potential bidders come to believe that the process of awarding contracts is not fair, predictable and transparent, then attractiveness of this jurisdiction as a place to invest is lost, with potentially dire consequences.”
Mr. Tibbetts asked for the following items to be addressed as soon as possible:
*A full disclosure of the circumstances surrounding the financing award to Cohen and Company
*An explanation as to why Cohen and Company was “singled out” from the final round of negotiations
*Disclosure of all documents related to the tendering process for the US$185 million financing
*A report from the attorney general regarding the legality of government’s actions in overriding the recommendation of the Central Tenders Committee
*A special investigation by the auditor general into the tendering process for the financing award.
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Well, lookee here – a smoking gun and you didn’t need to use FOI?
This is news and, potentially, this could be dynamite. For a Premier to over ride the established bidding processes and the advice of his own Ministries does not bode well for Caymanian democracy.
Ask yourselves this question: Would you sign a loan agreement BEFORE you knew the interest rate(s) payable?
Answers on a postcard to McKeeva Bush, Somwhere in world that isn’t reality.
From the outside, looking in, things do not look very good in the Cayman Islands at the moment.
As the Leader of the Opposition has pointed out here, the Cayman Islands has never before been associated with dealings and practicies that bear the hallmarks of high-level government corruption.
The question to be asked and answered is: how did the relationship between McKeeva Bush and Cohen and Company develop ?
When did the people of the Cayman Islands give Premiere McKeeva Bush permission to overide ‘process’ for the sake of ‘substance’ ?
‘Process’ is mandated by whatever law that exists that establishes that ‘process’.
What McKeeva Bush is saying here is that he has the right to overide the laws of the Cayman Islands.
In what other areas will the Premiere decide to overide the law whenever he chooses ?
Taking into account another very important headline ( we cannot openly comment on ongoing court cases)in today’s Caycompass, there are very serious warning signs here.
The Cayman Islands has the Turks & Caicos Islands as a glaring example of what happens when ‘process’ is ignored for the sake of ‘substance’.
Will these warnings be heeded ?
Will/has the Premier’s initial address be/been published at length, similarly to Mr. Tibbett’s?? I might have missed it but I think it should be published at length also.
The Compass was only provided with a draft copy of the Premier’s statement from last week. However, a written copy of the official, finalised statement has never been provided to any of the local press, so far as we are aware. Once we receive the final, officially approved copy, we will publish it on line.