Premier McKeeva Bush again defended the government’s choice of Cohen and Company to arrange a $155 million loan for the Cayman Islands when he appeared before the Public Accounts Committee on Friday.
Auditor General Alastair Swarbrick has said Mr. Bush did not break any laws when he disregarded recommendations by the Central Tenders Committee and, against the advice of officials in his ministry, selected New York finance firm Cohen and Company to arrange the loan last year, but that the premier had violated financial regulations when he did so.
Reading advice provided by the attorney general’s office, Mr. Bush said the constitution and the Public Management and Finance Law gave him the authority, on behalf of Cabinet, to borrow money, lend money, give a guarantee and enter into any financial transaction or financial obligation to avoid or reduce impact on the public coffers.
The premier also defended his decision not to reveal time lines, interest rates and other borrowing terms of the deal, saying during a worldwide roadshow with HSBC to secure a $309 million bond financing for Cayman, large institutional investors told him he “could not state the interest rates that we were expecting, until after the ‘quiet period’ in respect to our filings with the Securities and Exchange Commission (SEC) had passed”. He added: “To have done so would have been in violation of the rules and regulations set down by the SEC, and as such, we would have had to call off the roadshow and the issuing of the bond.”
Mr. Bush also defended United Democratic Party treasurer Peter Young’s role in bringing Cohen and Company to the table.
The auditor general, in his report, said Mr. Young had pointed the premier in the direction of Cohen and Company based on his knowledge of the industry and had given information to ministry of finance officials, as well as “some analysis to assist them in securing the intermediary agreement on behalf of the government”.
Mr. Young, who also appeared as a witness before the Public Accounts Committee on Friday, disputed he had provided analysis on the deal, insisting all he had done was contact Cohen and Company to provide a proposal and then forwarded that proposal by email, along with a cover letter stating that in making their decision, finance ministry officials should consider whether or not interest rates were high or low.
“I don’t know how that could be classified as analysis,” he told the committee.
Mr. Young said he had not been paid any money for introducing the government to Cohen and Company and he knew the company and its principals through working in the financial industry.
Asked if there was any further evidence Mr. Young had provided other analysis on the deal, other than the cover letter, Mr. Swarbrick said he would provide the committee with that information, adding there was “contradictory evidence from various parties in terms of this”.
Ultimately, at the end of the investigation by the Office of the Auditor General into the Cohen and Company deal, “we have no clarity about who actually arranged the deal and who was involved in this,” Mr. Swarbrick said.
Mr. Young told the committee he was “totally shocked” the auditor general’s report stated he had provided analysis to the government on the Cohen deal. He said he was also at a loss as to why he was implied in the report to be an “adviser to the premier”.
Mr. Kirkconnell requested Mr. Swarbrick talk again with Mr. Young about his role in the deal and come back to the Public Accounts Committee with any additional information.
During the meeting, Mr. Bush said he had been “warned” by senior civil servants and had received complaints from members of the public about how the Central Tenders Committees awarded contracts, adding the government needed a “proper procurement system”.
He said Deputy Governor Donovan Ebanks would spearhead efforts to revamp the government procurement system.
“We asked Mr. Ebanks to move forward with this to get it done. And so, once it’s done, it could be a Martian done it, once it’s done and done good, I don’t care. I want it done … I think Cabinet has said the deputy governor could take the lead … I’d work with him, of course, and the finance committee would work with him on it,” Mr. Bush said.
He said the finance department also needed the expertise of an economist and accountants with expertise and experience in complex financial instruments.