Seven-year-old reports from the Auditor General’s Office into an affordable housing initiative reviewed by the Public Accounts Committee last week showed that contentious issues over Cayman Islands government procurement are far from new.
In his opening comments about three reports prepared by his predecessor Dan Duguay, Auditor General Alastair Swarbrick told members of the committee: “[M]ost of the issues and concerns that are raised in these three reports bear a striking resemblance to issues that my office and others have identified over the last few years in respect procurement, project management and governance, including issues recently identified at the National Housing Development Trust during 2011.”
He said it concerned him that issues highlighted in the 2005 reports continued to be significant today, “casting a shadow over effectiveness of accountability of government to their stakeholders”.
“The true value of effective audit and scrutiny, apart from ensuring that public officials and entities are held accountable for their actions, is to ensure that government and its agencies learn and continue to improve so that the citizens of the Cayman Islands receive better services, outcomes and value for the funds that they entrust to government,” he said.
The Affordable Housing Initiative reports, which included two forensic reports requested and subsequently released by the then governor Bruce Dinwiddy and an auditor’s report, which has yet to be made public, were the oldest outstanding reports awaiting review by the Public Accounts Committee.
The 2005 audit led to a criminal investigation of Cayman’s Affordable Housing Initiative, which ended nearly three years ago. Despite that, the report did not come before the Public Accounts Committee until last week.
The initial special report on the government’s Affordable Housing Initiative was submitted to the Speaker of the Legislative Assembly on 3 March, 2005, under the previous rules governing the release of the auditor general’s special reports. Under those rules, the report could not be made public until it was dealt with by the Public Accounts Committee. However, it was leaked to the Caymanian Compass the same year and the newspaper wrote two articles about it.
The full report was not publicly available as of Friday.
Dr. Frank’s side
Former housing minister Frank McField, who has waited years to give evidence on the issue, appeared before the Public Accounts Committee Wednesday and said he welcomed the opportunity to give his side of the story and to address a report that he said had tarnished his reputation.
“My reputation and character, I feel, was stained by the way in which the previous auditor general handled the publication of his findings,” said Mr. McField. “It was at a time when we were recovering from a very disastrous hurricane and most of us had undergone a very traumatic experience.”
He said that Mr. Duguay may not have been given the full information about what transpired at the National Housing and Community Development Trust, partly for political reasons, and that the former auditor general may not have been given access to “a certain type of unwritten information”.
Mr. McField admitted that protocol had not always been followed and corners were cut, but said: “I don’t think the audit was called because of those reasons”.
“I thought the audit was motivated by political expediency, to a certain extent,” he added.
He explained to the committee that after visiting Honduras, Cuba and Jamaica to research affordable housing schemes there, he started building a team, headed by Carson Ebanks as his ministry’s chief secretary, who had been director of planning for several years and a project manager who had experience in building homes in Cayman.
He said he was perplexed that a minister of housing with no building experience would be held responsible for the nails and building material and the technical aspects of a construction project. “We tend to focus on the politicians in this country, but we never focus … on other individuals that are involved in very significant projects, especially those of a physical nature,” he said.
Despite subsequent doubts about the quality of the housing project, Mr. McField said the structures were of good enough quality for the banks to lend money for the project and an insurance company to insure the homes.
The original affordable prefabricated homes were built under Mr. McField’s direction at Windsor Village and Eastern Avenue in George Town and in West Bay off Captains Joe and Osbert Road. Many of the homes were damaged in Hurricane Ivan, although Mr. McField said some stood up well to the storm.
He told the committee that the original houses were built by an Italian company called Vetromeccaniche Invest Ltd, the representatives of which he and Mr. Ebanks met in Cuba after hearing the company could build homes with prefabricated materials at a cost far cheaper than using bricks and mortar. He said the project was not publicly tendered as the price the company said it could build the homes for was very low – about $30,000 to $40,000 per home. The price was ultimately about twice that, due to changes to the original designs for aesthetic and architectural reasons.
Mr. McField said the company offered a 20-year written guarantee on the houses, but he did not know where the paperwork outlining that guarantee ended up because all documents are retained by the ministries when a minister leaves government.
When Hurricane Ivan struck in September 2004, building material set aside for 160 more homes was destroyed. Because Vetromeccaniche had not insured the material, Mr. McField said he was so upset with them, he did not want to work with them anymore, so he hired a different company called Staunch to repair damaged homes in the affordable housing scheme and to build homes for people whose homes were wrecked in Ivan. There was also a plan to build temporary housing for construction workers who had come to the island to assist in the repair work.
He said Staunch was given about $150,000 to purchase housing materials in Mexico. “It was one of the particular points where people started to think money was missing,” he said.
In response to the assertion that Mr. Duguay had damaged Mr. McField’s reputation by publishing the reports, Mr. Swarbrick pointed out that the two forensic reports were released by the governor’s office and the third report had not yet been released.
Following his comments, none of the members of the committee posed any questions to Mr. McField.
Click here to read the NHCDT Special Forensic Audit on future viability
Click here to read the NHCDT Special Forensic Audit on financial activities
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Mr. Duguay was booted off the island because of his previous findings. Unfortunately Mr. Swarbrick may also get the boot because he not only resurrected those findings but raised the same issues in respect to recent procurement, project management and governance practices.
Some things never change. The beat goes on.