Late fees on government credit cards

Credit cards issued to 10 Cayman Islands Government officials attracted numerous late payment fees and accrued interest at rates up to 18 percent per annum. 

In 269 credit card statements dated between 2005 and 2013 that were released as part of an open records request relating to the 10 government officials, 77 showed late payment fees. 

The credit cards relate to current and former Cabinet ministers Kurt Tibbetts, Juliana O’Connor-Connolly, Arden McLean, Charles Clifford and Mike Adam, as well as current or former chief officers Gloria McField-Nixon, Alan Jones, Donovan Ebanks, Carson Ebanks and Kearney Gomez. 

Multiple late payment fees were charged to credit cards, which were issued by RBC Royal Bank, on all 10 accounts, including more than half the time in the cases of Mrs. McField-Nixon (11 of 17 months of statements) and former chief secretary/deputy governor Mr. Ebanks (13 of 23 months of statements). 

Initially during the period covered by the statements, the late payment fee was US$15 per month. In 2009, that fee was increased to US$25 per month, and then increased to US$40 per month in 2013. 

There is also an annual card fee of US$60 per cardholder. 

In some cases the minimum payment due was less than the amount of the late payment fee it attracted. In one case with Mrs. McField-Nixon’s card starting in Sept. 2007, a balance of US$17.04 went unpaid and attracted late payment fees for at least four consecutive months, even though the card wasn’t used to make any other purchases during the period. It is unknown how long the late payment fees continued because the credit card statements released in relation to Mrs. McField-Nixon only go through December 2007. 

Late payments also resulted in interest accruing. Even in cases when payments were made on time, sometimes less than the entire outstanding balance was paid, resulting in interest fees. 

Based on inspection of the records, the interest rate for the credit cards issued to government officials was 9 percent per annum through September 2007, after which it increased to 18 percent per annum, a rate that remains in effect. 

Although the total sums of late payment fees (US$1,550) and interest fees (US$3,874.42) on the credit card statements is relatively small, the records are incomplete. Statements in relation to some cardholders during the period were only partial – for example, there were only nine statements relating to Mr. Clifford’s credit card – or contained large gaps. In addition, the 10 cardholders for whom records were received represent only a small number of government officials who were issued credit cards. It is unknown at this time if similar late payment fees and accrued interest fees are common on all government credit card holders.  

According to the Auditor General’s May 2014 report titled “Management of Travel and Hospitality Expenditures,” as of June 30, 2012, credit cards were issued to 52 government ministers or senior officials. 

That report contains a section with a subhead “Credit Card Policies and Controls Disregarded” and noted that between July 2009 and June 2012 an amount of $458,000 of travel and hospitality expenditures were not supported by receipts and formal documentation as required by the government’s credit card policy and various financial regulations in force.  

“It is the responsibility of the [chief officer] to ensure the proper controls are in place to ensure probity of government expenditures,” the report stated. “In the current framework, the [chief officer] relies on the chief financial officer to implement the procedures and controls required to ensure that legislation and policies are observed. From the work we performed, we found that the CFO’s involved were negligent in these duties…”  

Former Cabinet Minister Charles Clifford confirmed that even back when he was minister from 2005 through 2009, the administrative oversight for the credit cards didn’t fall to the ministerial level, but to the chief officer and chief financial officers. 

“The chief officer has the ultimate oversight,” he said. 

Government explains 

Deputy Governor Franz Manderson said the government viewed the matter of late payment and interest fees very seriously and has taken steps to address the issue. 

He explained that in relation to the late payments on the credit cards, sometimes they were not the fault of government. 

“The government’s banker commonly issues the original credit card statements one or two days before the payment due date and in some instances after the payment due dates,” he said. “Hence it is often extremely difficult if not impossible to meet the payment due date.” 

Mr. Manderson also said that payments on credit cards are only made against original credit card statements – not online statements – and “were only made after the cardholder submitted the completed expense claim forms, original receipts and other supporting documentation, and this often occurred after the cards’ payment due date.” 

In addition, at one point in time, the statements were all sent to Treasury, which then sent them on to the appropriate cardholder’s ministry for further distribution.  

Mr. Manderson said the government has taken other steps to address the issue of late payment fees, including: 

Accessing credit card statements online for better management, monitoring and settlement of bills 

Ensuring the bank issues monthly credit card statements well before the due dates 

Establishing a set payment due date with the bank for all cardholders 

Adhering to the government’s credit card policy, which requires credit card payments to be paid on or before the due date 

Forwarding online credit card statements to cardholders at a fixed time line each month 

Disputing late fees and interest charges if the delay is caused by the bank.  

With regard to the latter point, there is evidence that in 2008 Royal Bank reversed three late payment fees of $15 each in relation to the credit card held by then Leader of Government Business Kurt Tibbetts. It also reversed four interest fees that year. 

Earlier this week, Mr. Manderson announced that, as a result of the auditor general’s report on travel expenditures, all civil service chief officers, deputy chief officers, heads of departments and deputy heads of department would be required to publish their travel costs starting Sept. 1, 2014. Part of the requirement is the publishing of their credit card expenditure on a monthly basis.