Government consultants everywhere

If the Cayman Islands government has a problem, they’ve likely hired a consultant for that. 

While the majority of the $40 million government ministries and Cabinet said they spent on advisers and consultants since 2005 was related to the Ministry of Education’s new high schools project, the other entities combined to spend nearly $8 million during that time period on a variety of purposes, including accounting, construction, drafting legislation and legal advice. 

Those figures – supplied to the Caymanian Compass in response to open records request under the Freedom of Information Law – are just for consultants paid by ministries and Cabinet and do not necessarily include consultant expenses at the department level. [Ed note: click here to jump to an interactive graph at the bottom of this page]
 

Questions have arisen as to the practical impact of some of that consultant spending. 

 

AG: Why bother with old reports?  

For example, from July 2009 to October 2010, the Public Finance section of the Ministry of Finance, Tourism and Development (under the control of then-premier McKeeva Bush) paid accounting firm KPMG nearly $1.3 million to reconcile government’s backlog of financial statements since the 2004/05 budget year. 

In December 2010, Auditor General Alistair Swarbrick estimated that the total cost associated with the accounting “task force” totalled nearly $2 million, not including costs associated with government employees assisting with the work. 

The money was spent despite the scepticism of two auditor generals, who questioned the usefulness of filing financial statements several years after the fact. 

In mid-2008, then-Auditor General Dan Duguay wrote in a special report, “The 2004/05 financial statements, when they are finally produced and distributed to the Legislative Assembly, will be so out of date so as to be rendered practically meaningless. They will probably be ignored as the largely historical document that it will be.” 

Mr. Duguay revisited the issue in another special report in April 2010, saying the “accounting task force” was to involve an average of 11 contractors over a 10-month period. 

While Mr. Duguay did not find fault with the performance of the task force itself, he strongly questioned spending money and time compiling questionable, old information. 

“The work of the task force has been focussed on getting the accounting done and the preparation of audit schedules for 2004/05 and 2005/06 in some ministries and portfolios that requested assistance. As the information being worked on is now so old and the quality of the financial systems and practices so poor for those years, it is very questionable how useful the information will be to provide accountability for government operations in those years,” he said. 

“Therefore, we assessed the work of the task force to be of limited value as the scope and nature of their work was so narrow and their results to date to be of limited use for achieving financial accountability,” he said. 

In December 2010, Mr. Swarbrick issued his own report on the financial statement backlog and reiterating his predecessor’s advice that lawmakers reprieve ministries and portfolios from preparing the “out of date financial statements” so they could focus on information for more recent fiscal years. 

“It is my view that these resources could have been more effectively deployed to provide more current financial reports that would have been more useful for members of the Legislative Assembly and for public accountability,” he said. 

 

Tourism  

The $1.3 million paid to KPMG is nearly half of the $2.8 million spent on consultants by the Ministry of Public Finance, which ranked a distant second to the Ministry of Education in terms of spending. Meanwhile, the Ministry of Tourism and Development spent $2.6 million during those eight years, including more than $1 million on matters related to aviation. 

The Ministry of Tourism paid German company Lufthansa Consulting more than $500,000 to conduct an audit of Cayman Airways in 2006. That contract purportedly resulted in a report of more than 1,000 pages that included 49 action plans, 168 projects and 840 initiatives to help turn around the airline. 

That audit report, however, was never made public. 

From November 2005 to January 2013, US law firm Pillsbury Winthrop Shaw Pittman was paid about $425,000 for providing “legal advice on aviation matters”. Additionally, between 2006 and 2007, the ministry paid US-based PR firm FleishmanHillard nearly $95,000 for “air svc agreement”, according the records. In January 2008, Cabinet paid FleishmanHillard nearly $25,000 for “media training”. 

From July 2010 to June 2012, the Ministry of Tourism paid Jannet Tomaski about $84,000 for being a “liaison officer” in Tampa, Florida. Similarly, the ministry paid Olga Jefferson about $26,000 to be a liaison officer in Miami from December 2011 to July 2012. 

 

International, domestic expertise  

The list of consultants includes people and firms from places far and near. For example, government hired a pair of Barbadians to provide communications services. The Ministry of Public Finance paid former Barbados minister Clyde Mascoll more than $32,000 to prepare three speeches from 2010 to 2012, including a “Strategic Policy Statement for Premier” in December 2010, as well as budget speeches in June 2011 and 2012. 

Before that, Cabinet paid communications consultant Reudon Eversley, a former editor of the Barbados Advocate, more than $97,000 from February 2008 to May 2009. Cabinet provided copies of Mr. Eversley’s contracts (being the only entity to provide copies of consultant contracts), which showed that he was tasked with putting together and implementing “a communication strategy with the aims of creating a virtual omnipresence that will give constant high visibility to the work government is doing”. 

Further, “The approach will focus on identifying credible media contacts, who are friendly with government and working closely with them. At the same time, a plan will be put in place to counter hostile communication which deliberately seeks to undermine the government’s record.” 

Additionally, the website of Mr. Eversley’s firm May Hinds Consulting says that Mr. Eversley “fine-tuned the core message that drove the campaign on constitutional modernization” and “authored almost every major policy statement delivered by the leader of government business”. 

Caymanians and Cayman residents did receive plenty of contracting work, though. The Ministry of Public Finance paid Don Ebanks $210,000 (in the year 2005 and the year 2008) for financial advisory services. Likewise, the ministry paid Christopher Rose about $176,000 in 2005, 2006 and 2009 for financial advisory services. 

From 2010 to 2012, the Ministry of Education, Ministry of Tourism and Cabinet paid about $164,000 to Straight Ahead Consultants in relation to various issues, including the National Pensions Bill, Legal Practitioners Bill, Planning Appeals Tribunal and the 2012 White Paper on the UK’s relationship with overseas territories. Straight Ahead Consultants is the firm of attorney Theresa Pitcairn, who was an independent candidate in the 2009 election and a United Democratic Party candidate in the 2013 election.*
 

From December 2010 to July 2012, the Ministry of Tourism paid attorney Steve McField $154,000 for a “legal retainer fee”. 

(In addition to his work for the Ministry of Tourism, Mr. McField was also paid a retainer fee of $5,500 in June 2010 by the National Roads Authority – of which he is a board member – in relation to attempts to have an injunction lifted preventing the expansion o
f the junction of Linford Pierson Highway and Bobby Thompson Way. That information was provided to the Compass in early April in response to a separate open records request. According to the authority, no written contract or formal agreement existed between the authority and Mr. McField, only a letter Mr. McField wrote offering his services.) 

From 2009 to 2010, the ministries of tourism and community affairs paid Paul Byles and/or his Focus consulting firm about $173,000 for financial services consulting, reviewing the Trade & Business Licensing System and developing a strategic plan for the Ministry of Community Affairs. 

From 2006 to 2008, the Ministry of Education paid Roberta Bostock about $103,000 for “consultancy”. During that time, Ms Bostock was the ministry’s executive director of special projects and events. 

From July 2009 to August 2011, Pearlina McGaw-Lumsden was paid nearly $102,000, mostly from Cabinet, for services provided as a “political consultant”. Although Ms McGaw-Lumsden received a regular salary, pension and health insurance, the records indicate she was “not an employee”. Ms McGaw-Lumsden was a UDP candidate for election in 2009. 

  

 

 

 

Editor’s note: This story has been corrected from the original for clarity.
 

Cayman-Islands-consultants-graph
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5 COMMENTS

  1. The only way Cayman islands could benefit from this is if there was a law in place to make them take the advice given. Right now its only window dressing. Knowing what to do is worth nothing when there is no discipline to do it.

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  2. There are instances where consultancy firms ought to be used for project management to ensure high value capital plans are delivered to spec. on time and on budget, rather than simply being used to provide best advice.

    Their experience can ensure that the people of cayman get the best value for money by ‘policing’ the companies doing the work preventing waste and overages and if their fee is tied to the deadline and the budget you know it will be done as required.

    Lack of oversight can mean a 20 million dollar project becomes a 50 million dollar project so 2 or 3 million on the right project management firm will pay dividends in the long run.

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  3. I see where KPMG was paid 1.3 million for work on Government accounts against the advice of the auditor general.

    How will the new Public Accounts Chairman who was in charge of KPMG at the time Govt paid the 1.3 million, be able to deal with this issue objectively?

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  4. Without impairing any of the honourable names mentioned above I would like to add that due to following:

    1. Difficulties with estimating the real cost of consultations.
    2. Difficulties with estimating benefits of consultations.
    3. Legality of consultations

    They are very often used in corruption kickback schemes, when government official initiates consultation procedure, get budget approval, pays money to consultant, while consultant gives something (usually 15-30%) back. Such schemes are very difficult to uncover.

    Another thought occurring in my head is that it might be a good idea to take consultants advice from time to time. But if you do it too often, that might be not a good indicator. If I was a minister of tourism, with a team of professionals which I personally selected from tourism industry personnel… wasn’t it actually MY job answering those questions? If government hired me to do job of minister of tourism, am I supposed to be able to do this job? Or am I supposed to hire consultants to do that job? If you hire consultants for everything, then what’s your job there really?

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  5. @Che

    I would imagine that where appropriate, he will simply declare a possible conflict of interest and recuse himself from that part of the discussion.

    On the flip side, Mr McTaggart has THE perfect skillset and background for the job and I pity those who try to take financial liberties on his watch… It aint going to be pretty but it’s sure going to be fun to watch and it’ll be real good for the country.

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