Slightly more than 900 people in the Cayman Islands are expected to receive $550 monthly as payment to retired seamen or their widows during the government’s upcoming financial year.
According to budget records, 910 people will receive assistance from the ex-gratia benefit payments to seamen in the 2015/16 budget year, which begins on July 1. That represents almost a 15 percent increase from the 793 former seaman and their widows who received the monthly benefits during the current fiscal year.
The cost of administering the benefits is budgeted to increase from $5.1 million in the current year to just more than $6 million in the upcoming year.
Finance Minister Marco Archer and Premier Alden McLaughlin have warned about increasing costs of the benefits program due to a growing list of people who are eligible.
The seaman’s benefit is supposed to be paid to any Caymanian over age 60 who earns less than $2,000 a month and has spent at least three years at sea. The merchant marine trade was one of the major sources of employment for Caymanian men up until the late 1970s.
Last June, Premier McLaughlin said, “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. 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.”
Some legislators, including East End MLA and former seaman Arden McLean, have questioned how many people were qualified to receive benefits under the program, which began in 2000.
Mr. McLean alleged during last year’s budget debate that the benefit program was begun under the former government of Truman Bodden as a way to sway votes prior to the 2000 election. Mr. Bodden’s government lost the election, giving way to a coalition government made up of the leaders of what became the United Democratic Party and the People’s Progressive Movement party.
“There were not that many of us [referring to Mr. McLean’s generation] that sailed. I don’t know where they’re getting these affidavits from. In my age group – the end of the baby boomers – there weren’t many of us. [The number of people getting the payment] should be starting to go down.”
An internal audit completed in 2013 regarding eligibility for the benefits found that a number of participants in the retirement assistance program for seamen and veterans received unauthorized benefits, and some may have been fraudulently receiving payments. The veterans benefits program is funded separately in the budget and its funding was slightly reduced this year, with no new participants. It is expected to cost about $1.1 million over the next year.
The audit mirrored 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 2013 internal audit review noted. “The auditor general reviewed the program operations in 2001 and the same deficiencies … have been identified during our 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.
Who gets benefits?
It is likely, according to the 2013 audit, that a significant number of seamen and veterans are deserving of the benefits they receive. However, certain cases reviewed by internal auditors revealed unauthorized payments due to the fact that 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.”
Two other beneficiaries 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 said 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 Community 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. Also, there was no system in place to determine whether seamen or ex-servicemen had moved from Cayman.
Further, the audit raised some questions about how a number of 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 based on an affidavit they had 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.