Gov’t projects may face ongoing audits

Government projects, like the proposed private sector
partnership agreements for a cruise berthing facility and the mitigation and
relocation of the George Town Landfill, could face audits while they are under
way, the Cayman Islands Auditor General’s office has revealed.  

The auditor’s office has in the past refrained from looking
into public projects until they are completed. However, issues raised in the
recently completed review of government bidding and procurement practices caused
auditors concern over whether government officials are following the rules when
purchasing supplies, 
services and assets.  

Moreover, the report found significant evidence of political
interference in some recently 
bid projects.  

“This obviously raises significant concerns from our
perspective,” Auditor General Alastair Swarbrick said. “We will be looking at
procurements as they go forward and potentially before they’re 
finished
as well.” 

Mr. Swarbrick acknowledged government may feel there is a
significant difference between publicly bid projects and public-private
partnerships or privately financed initiatives.  

“They can have the policy decision about going out for a
loan or building a port, but at the end of the day we’re talking about a
process which is to try and achieve value for money … and that has to be open
and transparent,” Mr. Swarbrick said. The auditor general plans to release a
second report on procurement in the coming weeks that specifically reviews
three projects or bids. Those include a US$185 million loan initially awarded
to a New York financing firm, the first phase of the public closed-circuit
television camera installation, and various purchasing for the Cayman Islands
Jazz Fest.  

Problems with bidding in at least two of the three projects
were revealed over the last year.  

 Premier McKeeva Bush admitted that his government did
not follow the established bid process in securing a loan from Cohen and
Company Securities LLC last year, but Mr. Bush said he got the best deal
available for government financing.  

“I had to decide whether to choose substance or to choose
process,” Mr. Bush said in October.  

Cohen and Company, which was not the financier originally
recommended by the Central Tenders Committee, eventually had its agreement with
government terminated. An unknown amount was paid to Cohen by the Cayman
Islands government for arranging short term loan financing.  

The CCTV project award was delayed for several weeks last
year for reasons never stated. The government’s Portfolio of Internal and
External Affairs has repeatedly refused to answer questions about the matter.  

It was unknown what auditors reviewed with regard to the
Jazz Fest, which was cancelled in 2010 and is not sure of proceeding this year.
 

 Mr. Swarbrick said the second audit his office is
releasing will discuss what occurred in each of the three cases. He said he had
not referred the reports compiled on the three projects to any other agencies
and indicated it was “someone else’s decision” as to whether that would be
done.  

 “If we had found any evidence of criminality, we
wouldn’t be having this discussion right now,” Mr. Swarbrick told reporters on
Monday. “We’ve found no evidence of criminality in any of the work we’ve done.”
 

 Cayman’s Public Management and Finance Law does not
precisely prohibit interference in the bidding process by elected officials,
nor does it clearly set out the Central Tenders Committee’s responsibilities
for releasing information about publicly bid projects once those projects are
awarded.  

 However, Mr. Swarbrick said it was his office’s view
that procurement of public services was an “operational and administrative
process … not a policy process”. Auditors also noted that the tenders committee
should issue some form of report on all bidding processes that involve
contracts worth CI $250,000 or more.  

 “CTC has a responsibility after the contract has been
awarded to provide public information about what happened,” Audit Manager
Martin Ruben said. “As we found out, that’s not happening.” 

  

Government response 

 Governor Duncan Taylor said Monday he had instructed
Deputy Governor Donovan Ebanks to prepare a response to the auditor general’s
report and to address the shortcomings it identified.  

 “There are many dedicated and professional public
servants who do their best to make our procurement system work,” Mr. Taylor
said. “This report does not question their commitment. But it does highlight
serious shortcomings in our procurement system which we need to address and to
address quickly.  

 “I note that the auditor general has reported that he
had found instances of political interference in the procurement process and
that there are significant risks when this happens. I believe that the
best way to eliminate those risks is to ensure that we have a robust and
effective procurement system which enjoys the respect of all stakeholders.  
That is what we aim to achieve.”  

 Deputy Governor Donovan Ebanks also issued a statement
concerning the audit:  

 “I welcome the report released today by the Auditor
General’s office … and the request which His Excellency the Governor has
extended to me to take the lead in responding to it.  

 “It has been recognised for some time that procurement
is an area in which our systems have not been developed as fully as they should
or by comparison as they have been in the financial and human resources areas.
This report will prove a valuable resource and stimulus to efforts which were
already being contemplated to address this area during the first half of the
2011/12 fiscal year. 

 “While the Auditor General’s report makes a number of
broadly critical statements as to the state of procurement, I am proud of, and
grateful for, all of those public servants who consistently strive to ensure
that the interest of the public is best served within the systems at their
disposal.”  

 The Caymanian Compass had not received a response from
Premier McKeeva Bush’s office by press time Tuesday.  

 

1 COMMENT

  1. And about time, too. Why stand by while the incompetence (and corruption) proceed? Have regular continuous reviewing by the Auditor General’s staff. that is exactly what they are paid to do – and to report publicly.