Seamen's benefits 'never adequately implemented'

13 years later, problems remain

A number of participants in the retirement assistance program for seamen and veterans received unauthorized benefits, and some may have been fraudulently earning payments, according to a review of the program completed by government’s Internal Audit Unit.  

The review, completed in late 2013 and recently released under the Freedom of Information Law, mirrored similar findings of the Cayman Islands Auditor General’s Office regarding the seamen and veterans’ benefit program more than a decade ago.  

“It is our audit conclusion that the Seamen and Ex-Servicemen Benefits Program has never been adequately implemented since the program commenced,” the internal audit review noted. “The auditor general reviewed the program operations in 2001 and the same deficiencies…have been identified during out audit, despite recommendations made for improvement [in 2001].” 

At the time the internal audit review was completed, in October 2013, approximately 862 seamen and seamen’s wives were receiving benefits of $550 per month. In 2000, the number of those receiving benefits was 250. 

Retired Caymanian servicemen – those who assisted the United Kingdom and its allies during World Wars I and II – numbered 190 in late 2013. They received the same $550 a month stipend, according to the report. 

Updated figures of just less than 800 seamen and 180 ex-servicemen were reported in the Legislative Assembly in June 2014.  

The government maintains criteria for those seamen and veterans who apply for the monthly assistance, including requirements that they earn no more than $2,000 per month aside from the $550 per month benefit, that they live in the Cayman Islands as their permanent home and, in the case of seamen, have substantial proof their years at sea, such as a Seaman’s Discharge Book or other records.  

While the monthly amount per beneficiary is not large, it cost the government an average of between $7 million and $9 million a year during the period reviewed by the Internal Audit Unit. Nearly $23.5 million was spent between 2010 and 2012 to provide the $550 per month benefit to seamen, seamen’s wives, veterans and their spouses.  

It is likely, according to the 2013 audit, that a significant number of seamen and veterans are deserving of the benefits. However, certain cases reviewed by internal auditors revealed unauthorized payments simply because government officials were not checking program criteria properly or at all.  

In one case, a seafarer’s account was credited with benefit payments totaling $11,500 over a 20 month period after he died. “We were informed that the seafarer’s death certificate dated July 20, 2009 was submitted late to the ministry,” the audit report noted. “There is no record on file to document the actual date the certificate was received.”  

Another two beneficiaries of the program earned more than double the maximum monthly amount of $2,000 required to qualify for the program. One file showed monthly earnings of $4,480 prior to receiving the seaman’s grant, another earned $4,101 per month before receiving the benefit.  

“Not having a formal system in place to verify the continued…qualification of beneficiaries under the program could cost the government,” the report noted.  

Ministry officials responding to the audit noted that the situations described above appear to be extreme cases, and in each instance, the names had been removed from the program. Government officials also noted that the previous Ministry of Home Affairs handled seamen and veterans’ claims during the period under review.  

The ministry responsible for the benefits program at the time had no formal system in place for determining whether beneficiaries were still alive, other than reading the obituaries section of the Cayman Compass and “periodic checks” with the births and deaths registrar. There was also no system in place to determine whether seamen or ex-servicemen had moved from Cayman.  

Further, the audit raised some question about how a number of program beneficiaries were signed up in the first place. Looking at a sample of 124 seamen who were beneficiaries of the program, auditors found 69 percent were accepted into the program based on an affidavit they submitted stating that they received less than $2,000 in monthly salary and that they had a certain number of years at sea.  

“Some of the beneficiaries cannot present their Seamen’s Discharge Book as the document was either misplaced over the years or lost during Hurricane Ivan [in 2004],” auditors noted.  

In the ex-servicemen’s benefit program, which began in the mid-1990s, an initial list of 200 beneficiaries was presumably passed along to various government ministries that took over administration of the program during the next two decades.  

However, the ministry advised auditors in 2013 that it was “unable to locate relevant documentation listing the names of these 200 servicemen.”  

The Internal Audit Unit generally warned the ministry against relying on personal affidavits without an independent verification process in place.  

“This exposes the ministry to the risk of providing financial benefits to individuals who may not be genuinely entitled to it,” auditors stated.  

Promises 

During a June 2014 meeting of the Legislative Assembly’s Finance Committee, lawmakers promised to review the seamen and veterans’ benefit program.  

“Over the course of the next few months, we need to come to some decisions about this issue because the cost, rather than going down, is climbing and the number of persons on the waiting list just keeps growing,” Premier Alden McLaughlin said. “At the moment, we cannot accommodate anyone else on the list unless someone comes off, and usually they only come off by virtue of death or if they move overseas. Even when they die, we wind up having to continue the payment to their widow, and increasingly the widows are younger and younger.”  

East End MLA Arden McLean said the original policy had been “sold wrong” from the beginning in an effort to win votes in the 2000 election.  

“It was sold to the people that if you went to sea, you were entitled to it, and people continue to expect it. That government from 1996-2000, they tried to win an election by placating the seamen with an ex-gratia payment,” Mr. McLean said.  

As of the end 2014, The Progressives-led administration had not announced any decisions regarding program benefit changes.  

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  1. This is something that has definitely gotten out of hand from the get go, however there is no excuse for not putting things in perspective now.
    There should be a committee set up to re-review each individual claim; having the beneficiaries complete updated information. In so doing a true record would be obtained of who should and should not receive.
    What I see most important is that the government pay much attention to see that the money is being given to those who deserve it on the island, and not as an additional paycheck to persons receiving a permanent salary of over two to four thousand a month and under the age of fifty. Some instances it has been said that the seaman funds are leaving the island to other destinations. I believe that recognized seamen who are over 65 should receive these benefits, after all they are the people who contributed in having the first homes and businesses constructed on the island.

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  2. Yet another example where the public’s money has been wasted by fraud or negligence. Luckily in spite of the previous premier we still have an AG that is unswerving in his duties and takes no prisoners. One of the problems is clearly that these misdoings are found out rather belatedly. I would suggest the Government adds to the department of the AG a person or persons who act as a roving investigator who can swoop in unannounced in any department to do spot checks. The audit firms in the old days would do this and it is amazing what they found when the client was suddenly surprised on their arrival. Had this procedure been in place the people’ s money may not have found its way into slot machines or invested in Rolex’s or it seems given to the dead. Frequent checks with the Registrar would ensure that only live bodies not straw men receive money. Presumably the dead recipients are now being subjected to ambulance chasers with the view of returning the public’s money.

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