Anti-corruption review for travel costs

“High likelihood” that government mishandled public resources

Hundreds of thousands – if not millions of dollars – spent on months-long hotel room stays, limo rentals for government officials who were on vacation and other items that were left unexplained could end up landing some Cayman Islands public figures in legal trouble.  

A recently completed audit of nearly $8.6 million in Cayman Islands government travel and hospitality expenses over three years has been presented to the Anti-Corruption Commission for further review, Auditor General Alastair Swarbrick said Monday. 

Read the Management of Travel and Hospitality Expenditures report

Some of the expenditures in the report were unaccounted for and in other cases, Mr. Swarbrick said, information regarding the travel or hospitality spending was so incomplete that auditors couldn’t make sense of it.  

The value-for-money audit focused on two government ministries, the former Ministry of District Administration, Works, Lands and Agriculture, run by then-Deputy Premier Juliana O’Connor-Connolly, and the former Ministry of Finance, Tourism and Development run by former Premier McKeeva Bush. Those two ministries were collectively responsible for about 70 percent of the travel and hospitality-related spending in central government between July 1, 2009, and June 30, 2012.  

“[There is] the high likelihood that the government mishandled significant amounts of public resources,” Mr. Swarbrick said. “Furthermore, monitoring and reporting of these transactions by management was virtually nonexistent.”  

While the auditor general’s review was ongoing, Deputy Governor Franz Manderson instituted a new policy requiring the reporting off all travel by civil servants and has voluntarily made his own travel expenses public. Premier Alden McLaughlin – while not legally bound by the civil service policy – has also publicly reported his own travel expenses incurred on behalf of government.  

Mr. Swarbrick applauded these efforts, but he noted that public reporting of all official travel is still not being done across the board, and in any case, government still has no policy regarding hospitality expenses.  

“If not managed effectively, [travel and hospitality spending] could be seen as providing personal benefits to officials,” Mr. Swarbrick said.  

Credit cards and negligence  

Auditors noted in the report that no supporting records had been provided to explain nearly $500,000 spent on travel or hospitality items.  

“It was unclear whether the expenditures had any business purpose,” Mr. Swarbrick said.  

The audit report noted that some of the hospitality and travel expenses were paid for by government-issued credit cards given to elected ministers and “senior” government officials.  

The five ministers who were elected at the time received credit cards with spending limits from $15,000 to $25,000. The 47 senior officials (presumably civil servants) noted in the report were given credit cards with limits between $5,000 and $50,000.  

Of the $458,000 in unaccounted for travel and hospitality expenses, auditors noted that $71,000 of the expenses were incurred on the credit card of one former minister who “effectively self-approved” the payment of those transactions. Auditors did not identify this minister in their report.  

Mr. Swarbrick said the responsibilities for placing proper controls on such transactions fell to the civil service chief financial officers in charge at the various ministries and portfolios. In a number of cases, the expenses for which no explanation had been provided were approved by government financial controllers. 

“We found that the chief financial officers involved were negligent in these duties,” he said.  

Limos and SUVs  

One area the audit highlighted was spending overseas by the Department of Tourism on ground transportation involving the use of limousines, vans and SUVs between 2009 and 2012.  

About $400,000 was spent during the three fiscal years, with the annual expenditure increasing from $147,000 in 2010 to $162,000 in 2012, auditors reported.  

When an open records request was filed seeking information about the ground transportation payments during the period, a full $272,000 was not disclosed to the applicant seeking the information, auditors noted. Audit Principal Martin Ruben said Monday this appeared to be an error or oversight on the part of government rather than an attempt to cover anything up. However, the expenditure raised several other issues, according to auditors.  

Transportation rates charged for the use of the vehicles was US$85 to US$250 per hour. Some of the individuals who expensed the government for the use of the ground transportation were on personal leave at the time the charges were incurred.  

“It was unclear from the information found in the files whether or not the expenses incurred were linked to business objectives of the Department of Tourism or the [ministry],” Mr. Swarbrick noted.  

Qatar trip  

The Cayman Compass reported in 2012 on the $42,000 spent to send five representatives to an international postal conference in Doha, Qatar.  

It appears that government did not report the full cost of that trip, which was $45,742. The government left out an amount it had spent on sending the chief officer of the ministry to London in the days before the Qatar conference.  

The trip revealed vastly different expenses for the former minister, Ms. O’Connor-Connolly, and her “executive aide” to travel to the conference and for the two civil servants who traveled there.  

Air fare for the minister and her executive aide cost $6,003 per ticket; the postmaster general and deputy postmaster spent $1,170 and $1,261 on their respective flights. The minister and her aide also stopped in New York City for five nights prior to attending in Doha for eight nights.  

The minister’s credit card charges on the trip included expenses of $885, while the ministry’s chief officer charged $669 to their credit card and the postmaster general had card charges of $170. No explanation was given for the variations in the charges.  

Further, per diem expenses for the minister on trips to places like Qatar, Jamaica and Grenada were posted at $250 per day. In some cases, staff traveling on the same trips were paid per diem rates of $40 or $50 per day.  

In other cases, auditors found rank and file staff members being paid twice what senior civil servants received in per diem expenses. For example, the Ministry of Health at the time paid its heads of departments $50 per diem, while the Ministry of Tourism paid a staff member $150 per day to travel to London.  

Other expenses  

Other questionable expenses flagged by auditors included hotel room charges in Cayman Brac of nearly $34,000 over three years for the executive aide to former District Administration Minister Juliana O’Connor-Connolly.  

No reason was provided to auditors as to why those amounts were paid or why the aide was needed on the Brac for such long periods; auditors said there were no records on file indicating an explanation.  

Separately, an event for the Tourism Apprenticeship Trade Program graduation in 2010 cost $27,506.  

The government paid $10,000 to “hold” a rental property for the potential filming of a television program in 2011. That program never aired.  

A retirement party for a senior official in the office of former Premier McKeeva Bush during the 2012/13 budget year also cost government nearly $10,000.  

All of these expenses w
ere logged in the “hospitality” sections of the two ministries’ budgets.  

The Panama trip   

The government spent $71,000 to send 43 representatives on a three-day trip to Panama for the launch of the Cayman Airways inaugural flight to Panama City.  

“Although there was a strategic objective for the launch event, there was no formal case prepared to support the need for all the … travelers to attend this even and whether it was necessary for public funds to have been used to provide travel for all the participants,” Mr. Swarbrick wrote.  

Those on the trip included 13 government officials, 12 guests of government officials, four private sector partners and 14 “entertainers.”  

Asked Monday who the “entertainers” were, government responded that they were musicians who traveled with the group. Air fare for the trip cost $19,198 because some of the passengers flew there on American Airlines.  

Mr-Swarbrick-L

Mr. Swarbrick
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5 COMMENTS

  1. This all sounds pretty impressive until you put in the context of the figures so far released from Operations Tempura and Cealt.

    According to the 2009 audit, in just under 17 months that farce succeeded in squandering CI780,957 on travel, CI443,235 on accommodation, CI109,320 on vehicle hire and a staggering CI928,673 on legal expenses. The cost of simply employing the member of the investigating team was over CI1.8million or a bit more than CI100K a month.

    The actual investigation then trundled on for a bit over another year and the litigation that followed it is, nearly seven years after it all kicked off, still on-going. How much has been spent since the audit in 2009 is anybody’s guess.

    So Mr Swarbrick’s office has resources to investigate this (and the CI47K hospitality expenses reported elsewhere) but, despite the fact evidence has emerged showing that in 2009 significant information was withheld from his predecessor, will not consider completing the Tempura audit? I wonder why that is?

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  2. John, could the answer to your final question simply be that Mr Swarbrick has no desire to end up like his predecessor. In so many cases Tempura has turned out to be the proverbial poisoned chalice and maybe he just doesn’t want to drink from it?

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  3. Since no clear policy was in place, and seems still not in place, thanks for the information. Instead of investigating an unregulated expenditure after the fact, lets regulate the cost center with reporting requirements and penalties for non compliance. Format should be fit for audit and auditor.
    Trying to justify someone renting a cheap car VS an expensive SUV would be nothing more than pointing out extravagant behavior, without a policy one cannot break it. Although, if I was FC you would have to receipt every dime, with the authorization level closely monitored. Finance again?..

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  4. Swarbrick is the right man for this job. I am sure this type of thing has been going on uncontrollably for decades. Having someone like Swarbrick who has no allegiance to any local political groups keeping a watchful eye over spending will keep present and future politicians in line. Look at how well behaved the current leaders are when it comes to this type of spending. I sure there will be no more first class flights or expensive parties on the public dime any more.

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