Audit slams Nation Building expenses

Mr. Bush: “[The report is] an almost completely fictional presentation.”

Audit slams Nation Building expenses

The complete lack of financial controls, management processes and oversight around the Cayman Islands’ former Nation Building Fund left the government at risk of fraud and abuse, and showed “how not to manage a government program,” Auditor General Alastair Swarbrick said Friday. 

Ignoring the implied threat of legal action from Cayman’s political opposition leader if the report was released, Mr. Swarbrick made the 26-page document public at a press conference Friday morning, three days before its scheduled release on Monday, Aug. 17. Mr. Swarbrick said the early release was effected after Opposition Leader McKeeva Bush discussed aspects of the report in the Legislative Assembly on Thursday. 

The findings of the report, generally affirmed and supported by Cayman’s civil service, led by Deputy Governor Franz Manderson, were reported to the Royal Cayman Islands Police Service, which for months had been looking into certain matters connected with the funds. 

Mr. Swarbrick reported that $13.2 million was spent from the Nation Building Fund between 2009 and 2013. The operation of the program was done “outside the government’s own governance framework,” the auditor general said. There was no formal application process for any of the disbursements from the fund, whether for assistance to church programs, scholarships or other expenditures until 2012, when applications for fund scholarships appeared, auditors found. 

Money from the Nation Building Fund was spent on the following (among other things): Unfinished church projects, including the construction of buildings, a vehicle, a $3,000 loan for a pastor that remains unpaid, and a total of $30,000 on refurbishments and planning fees for a gymnasium in West Bay that auditors could never find. The latter represented “an abuse of public funds,” according to auditors. 

Some cash from the Nation Building Fund went to pay for supplemental government expenses that normally would have to be approved by the Legislative Assembly, auditors said. Those included $49,000 to pay for lawyers for the information commissioner’s office and $45,000 to help pay for government’s CCTV camera project. 

“If you needed additional funding for your agency, you go back to Legislative Assembly,” Mr. Swarbrick said during the press conference on Friday. “They basically circumvented those rules. If you can’t follow that, you’re … throwing the whole process out.” 

Two officials in the former premier’s office or ministry were alleged to have benefitted directly from certain disbursements from the fund for scholarships and training. In many cases, scholarship applicants were not assessed to determine whether they kept up their grades or even if they were completing their education that was funded by the government program, auditors said. 

“We were unable to determine in every case that the money paid resulted in the education of a student,” auditors concluded. “We found instances where children of government officials, including one in the premier’s office, received support from the Nation Building [Fund]. Given the lack of scrutiny of applications, we believe this practice was inappropriate and provided an opportunity for possible corruption.” 

Government paid $130,000 to the Hope for Today foundation, a nonprofit that helps recovering addicts. However, there was no application for those funds, nothing stating how the funds the organization was given was determined, or how the funds it received were to be used. 

“This demonstrates a complete lack of respect for the use of public funds,” auditors wrote. 

Another $240,000 was paid over two years to Cayman Traditional Arts to provide teaching programs for schools on heritage activities such as Cayman cooking, hat making and catboat building. There was no documentation regarding this program from the schools, auditors found, nor any statements about why the program was needed. 

The report also found that Mr. Bush, the former premier, and his chief of staff, Leonard Dilbert, approved certain individual payments, and that civil service managers insisted they did not play a role in the program except to “write the checks.” 

Moreover, in many cases there was no system of verifying what had been spent for which endeavors, and that record keeping was so poor in some cases that auditors could not determine what the Nation Building Fund money had been spent on. 

“The reality is, trying to conduct this audit was challenging with the lack of evidence to support the payments,” Mr. Swarbrick said. “Checks were being sent out on the basis of just an email. There’s likely some value from the payments that were made, but there’s no way to assess that.” 

Bush defends program  

In the Legislative Assembly on Thursday, prior to the release of the audit, Mr. Bush alleged that Mr. Swarbrick was part of a wide-ranging conspiracy to drive the former premier from office in 2011-2012. He further alleged that Mr. Swarbrick had deliberately not spoken to individuals who had oversight of the Nation Building Fund program, including Mr. Dilbert and former ministry chief financial officer Josephine Sambula. 

“[Mr. Swarbrick] has failed to interview the persons that he accuses, nor was the former [program] coordinator [or] myself as the former minister contacted,” Mr. Bush said. “The public would get [the audit] and I would not get an opportunity to speak to this House about it. When does a … supposed audit become a witch hunt?” 

During Friday’s press conference, Mr. Swarbrick clarified that he had spoken with Ms. Sambula but had not interviewed Mr. Dilbert, the premier’s former chief of staff, who had taken up that post only toward the end of the existence of the Nation Building Fund. 

The auditor general’s office does not interview politicians during the course of its audits on the operations of government in order to avoid the perception that the reports are “being cleared” by politicians, Mr. Swarbrick said. 

Mr. Bush said it was “blatantly untrue” that scholarship recipients had suffered no consequences for failing grades or that he and Mr. Dilbert had made “all the decisions” in running the Nation Building Fund program. 

He said the decisions on the program’s funding levels were made at the start of each budget year in the Legislative Assembly and that ministers’ participation in implementing government programs is clearly allowed and required by the Cayman Islands Constitution Order, 2009. 

“[The report] fails to acknowledge government’s policy of greater assistance to churches,” Mr. Bush said, needs which he said were identified through government constituency work. “[The report is] an almost completely fictional presentation.” 

During Mr. Bush’s “personal explanation” statement in the House on Thursday, George Town MLAs Roy McTaggart and Winston Connolly both stated that the opposition leader was actually seeking to make statements about the process and validity of the Nation Building Fund itself. 

“This isn’t an explanation,” Mr. Connolly said. 

Mr. McTaggart noted that Mr. Bush, as a member of the Legislative Assembly’s Public Accounts Committee, was making public evidence that would later be taken up by the committee and asked “whether it was appropriate for the opposition leader, who is a member of this committee, to be making utterances regarding this report.” 

Speaker of the House Juliana O’Connor-Connolly said she had reviewed Mr. Bush’s statement beforehand and allowed him to continue. 

“This toxic repor
t should be struck from the record or [the auditor general] should withdraw his report,” Mr. Bush said. 

“This is meant to damage myself and other civil servants and other politicians,” Mr. Bush said. “He’s not far off … from being sued.” 

Earlier in the week, Mr. Bush questioned whether the auditor general had legally overstepped his bounds in issuing another report concerning government land management. The audit reviewed, among a number of other land deals, the National Roads Authority agreement between the government and the Dart group of companies, and the Health City Cayman Islands agreement. 

“The auditor’s reckless misuse of his position has seriously damaged the reputation of the Cayman Islands by calling into question any agreement that a foreign investor who wishes to invest in the Cayman Islands may make with government,” Mr. Bush said in the Legislative Assembly on Wednesday. “I would argue that the auditor general has done what he accused the Cayman Islands government of doing, by exercising a role that he has no legal authority to exercise.” 

The audit, which was publicly released last month, stated that the Cayman Islands government acted unlawfully and “without proper authority” in signing two of the territory’s largest-ever private sector development agreements. The original National Roads Authority agreement, which paved the way for construction of a Kimpton hotel and permanent closure of a section of West Bay Road along Seven Mile Beach, was negotiated by elected ministers “without the knowledge or assistance of civil servants” the report further stated. 

Mr. Bush’s dispute regarding the land management audit is essentially that it was not a “financial audit” but rather that it delved into areas of legality and governance concerning project decision-making and funding that heretofore had been the purview of the Cayman Islands courts. 

“I doubt the Cayman Islands Constitution expected to confer that authority on the auditor general,” Mr. Bush said. 

Auditor’s response  

Making a rare personal response to Mr. Bush’s allegations of impropriety by his office, Mr. Swarbrick said international standards of public sector auditing, known as ISSAI, clearly encompass both the Nation Building Fund and government land management audit within their remit. 

ISSAI 100 – the fundamental principles of public sector auditing – identifies three separate kinds of audits: financial audits, performance audits and compliance audits. 

“Compliance audit focuses on whether a particular subject matter is in compliance with authorities’ identified criteria,” the principles state. “These authorities may include rules, laws and regulations, budgetary resolutions, policy, established codes, agreed terms or the general principles governing sound public sector financial management and the conduct of public officials.” 

Mr. Swarbrick
Mr. Swarbrick


  1. Methinks he doth protest too much, to quote a bit of Shakespeare.
    Bush has excelled himself here, and so has the Auditor. The one has done his job right and brought scandalous goings on to our notice, and the other by his bluster has shown his true colours once again.
    It is sad to think that in times past, the reports were with held for so long that if they ever reached the light of day they were ignored anyway. I suppose for Bush it is a bit hard to find that his shortfalls are now being exposed, and so the natural reaction is to cry foul, it shows us, if we didn’t already know, what kind of a person he is. The important thing now is to ensure that the new auditor is not hamstrung like previous versions, it took two strong men, Swarbrick and Duguay before him, to drag this role into the light. Let’s not regress!

  2. The only concern I have with the report at this stage is the statement that the ”Cayman Islands government acted unlawfully”. Such a statement should not be made publicly unless discussed and agreed with the DPP. If such a statement is made but the DPP later declines to prosecute then what message does that send to the public?

  3. I wonder if Mr. Swarbrick would be replaced by one as equal or better, if so then we could expect some transparency, and all the politicians would know that they have to stay on their toes.

  4. Mr. Swarbrick must be tearing his hair out at the financial records of the government.

    There are more flaws in the whole financial system than any financier must be able to tolerate.

    The Rubix cube sure seems easier.

  5. In my own opinion the NBF was nothing more than a politician’s personal slush fund; they all have them, they are just called something different or fall under a different government policy, but it all comes down to finding ways to channel incentives to those who support you. On one hand it might be referred to Nation Building Funds, on the other hand it can by promises of huge government contracts or advertising revenue channeled to companies sensitive to a specific politicians political agenda.
    I am not saying that there was anything done illegally as I am not a lawyer or judge, all I can do is voice my opinion. I do still find it strange and kind of suspect that the focus of years of investigations, audits and searches for wrong doing have all seemed to focus on Bush his administration and the 2009-2013 CIG. I am sure that if these audits ever cover other administrations we find that a lot of what Bush is accused of doing has been common practice for years, just like the whole Credit Card scandal – everyone was doing it, but the focus was only on Bush.
    An audit that covered more than one administration and focused on more than one man would do more to convince me that Bush was doing anything different than what the others were doing, or that they are any better for Cayman.
    Yes, I do believe that there is a hidden agenda to all of this. Whether Bush was the criminal people are trying to present him as is for the courts to sort out. But I will say that with the choice he made, he certainly made himself an easy target.
    I am curious to see what the next auditor brings to the table and where his primary focus lays.

  6. No Michael, I don’t think it is fair to say that Swarbrick has focused on Bush. It is more a case that the sequence of events is so drawn out that we are only just getting to the end of the Bush period of premiership. It is my personal view also, that Bush himself lends himself to such criticism because of his way of doing things. His love of due process is legendary! His tendency to do deals without involving departments also leads suspicious folk such as me to constantly question his motives, and so when the auditor gets to such situations, his comments are bound to be as they have been. You could say that he brings it on himself.
    As to the "slush fund" as you put it, again I disagree that it is just like any other. The other instances you mention are unacceptable, and indeed have attracted the focus of the auditor, but this in my opinion is much worse. It seems the record keeping is negligible, the recipients of some of the money seem almost blatantly close to the action, and it seems that little account is given by them as to the ultimate use of the money. Again, a suspicious person like me is bound to wonder how a situation has been allowed to become so bad.