Payments made over three years
Recently completed audits reveal that the Cayman Turtle Farm received just more than $28 million in “equity injections” – essentially government subsidies – between July 2007 and November 2010 to keep the government-owned tourism attraction operating.
In addition, auditors with KPMG noted in their report on the financial statements for the Turtle Farm for the years ended 30 June, 2007 and 30 June, 2008 that government also provided an interest-free loan of $939,000 to the facility during the 2007/08 budget year.
“Without this ongoing support a material uncertainty exists that casts significant doubt about the [Turtle Farm’s] ability to continue as a going concern,” auditors wrote in their independent report, which was released Monday in the Legislative Assembly.
The 2006/07 and 2007/08 financial statements were among the dozens of overdue reports to be filed in recent months as the government tries to catch up with its financial reporting responsibilities under the Public Management and Finance Law.
Auditors noted that the Turtle Farm did not meet reporting requirements under that law.
According to the reports, the Turtle Farm facility received about $8.5 million in equity injections during the 2007/08 budget year.
In 2008/09, it received more than $8 million in subsidies; in 2009/10 the facility received about $9.3 million in subsidies.
For the current budget year, 2010/11, the subsidy amount approved was just under $9.7 million.
Records compiled by KPMG as of November 2010 stated that about $2.1 million of the equity injection had been received by the Turtle Farm.
Also, auditors noted in February 2009, government provided additional guarantees of US$5.5 million for a bank overdraft facility.
“Cost overruns of the Boatswain’s Beach project (a name that is no longer used at the facility), lower than projected visitor numbers and operating costs in excess of initial budgets, have given rise to significant business risks,” the auditors’ report stated, adding that those losses have plagued the facility since the 2005/06 year.
Although the report was done for the 2007/08 year, auditors took a more comprehensive look at the Turtle Farm’s operating position and noted that several cost-cutting measures had been implemented since the middle of last year.
“In May and June 2010…the company made 20 employees redundant,” auditors wrote. “Total redundancy payments made to these employees amounts to CI$107,471.”
The report noted the facility’s board of directors has considered the sale of turtle shells locally, has increased the price of turtle meat, and has weighed the potential closure of certain areas of the tourist park at the Turtle Farm site that aren’t making a profit.
Another major issue identified at the Turtle Farm in the audit report was – through the date of approval of the financial statements – the entity had not met certain criteria for reducing the amount of effluent discharge from its grounds.
Effluent discharge is the sum of everything, including water, food, waste and the like, that flows from the Turtle Farm property into the sea.
In 2007 the Cayman Islands Office of the Complaints Commissioner revealed that the facility did not have the legally required discharge permit from the Water Authority and was, in effect, violating Cayman’s environmental protection laws.
A two-year effluent discharge permit, granted in October 2008, required the Turtle Farm to reduce its effluent discharge by some 50 per cent by 1 July, 2009.
The auditors said that didn’t happen, largely because of cost constraints.
“In addition, management has looked further into the system design that the external consultant has proposed, and management now considers that design would not be appropriate as its anticipated adverse impact on air quality in the community would, in all likelihood, be much more noticeable and objectionable than the status quo,” the report stated.
Auditors noted that the Turtle Farm is continuing to work with the Water Authority to lessen the impact of its waste discharge.