The Cayman Islands government cannot quantify how great a financial loss it will incur to remediate the George Town Landfill, if and when such a project is completed, and the lack of any cost estimates has led auditors to conclude the territory’s environmental liabilities are “understated.”

“Government did not have in place a process to properly determine the cost to remediate the George Town Landfill and, as a result, they arbitrarily set the land value of the landfill at $0,” said Angela Cullen, performance audit director at the Auditor General’s Office.

The problem with considering the landfill property essentially worthless, according to auditors issuing their opinion on the government’s 2015 financial statements, is that it could end up being worth less than $0.

“The presumption [is] that remediation cost would completely eliminate the actual land value,” Ms. Cullen said. “However, we raised concerns on this point, as there is the possibility that the cost to remediate the landfill could exceed the land value, which would mean that there are costs [liabilities] not reflected in the 2015 financial statements.”

A consultant’s report released in September 2016 recommended a $538 million, 25-year investment in the landfill’s remediation, although not all of those costs would be borne by the public sector under the proposal and not all would be incurred directly at the George Town Landfill site.

The report, penned by U.K. consultants Amec Foster Wheeler, noted that those costs aren’t as staggering as they might initially seem.

Amec compared the current costs of maintaining the present remediation and management techniques for waste on the islands – largely just landfilling waste – and noted that would cost $418 million over the same 25-year period. The extra investment on the landfill solution might cost government less than $5 million a year, the Ministry of Health noted at the time.

The landfill is not the only environmental hazard site that requires remediation, according to auditors. Another site in Frank Sound was noted as having potential financial liabilities in the report which was made public last month in the Legislative Assembly.

The issue with the Frank Sound property involves arsenic contamination, according to auditors.

“Management has represented that there is no process in place to properly assess and account for its environmental liabilities,” Auditor General Sue Winspear wrote in her opinion on the government’s 2014/15 financial statements. “[The two sites identified] are the remediation and clean-up of the George Town Landfill site and [the] Frank Sound site. I believe that the liabilities … are more likely than not to be understated.”

The understatement of the environmental liabilities was one of several matters auditors raised that led government’s entire public sector financial statements to receive an “adverse” audit opinion – meaning the figures presented had significant gaps and errors in the information. The financial statements received that adverse opinion in 2014/15 for the second year in a row. However, it actually represented an improvement from prior years, when Cayman’s government had its financial statements disclaimed due to a lack of information provided.

The auditor general’s office has said in recent months that most individual government agencies are submitting far better quality financial statements than they ever have under the accrual accounting system Cayman has used since 2004. Most entities are either receiving “clean” audit opinions or audits with just a few missing pieces of necessary information.

“[There is a] general trend of continued improvement seen in the quality of financial reporting by government entities during 2015/16,” Ms. Winspear’s quarterly report issued in December said.

However, some wider problems across the public sector, particularly with government liabilities for pension and healthcare and in government revenue collections, have not been resolved, auditors noted. These issues have been revealed by Finance Minister Marco Archer over the past two years. He has said government is doing what it can to address them one-by-one.

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2 COMMENTS

  1. Environmental liability should include potential negligence lawsuits from the residents of Grand Cayman.
    Living within 3 miles of a landfill significantly increases the risk of developing lung cancer and other serious lung diseases.
    Grand Cayman residents living within 3 miles of the Dump may potentially bring a lawsuit(s) against CIG for putting them and their families at risk of cancer.
    It is appears that CIG knowingly and negligently continues to allow the disposal of hazardous chemicals, which are then released into the water, land and air around the Dump without taking any precautionary measures.
    If incinerator is built as proposed, the chemical load on the Cayman Islands residents may increase many folds as there are no regulation related to waste incineration in this country. ” The unintended and uncontrolled release of toxic substances into the environment from waste incineration can occur because of malfunctioning equipment, large changes in the waste feedstream, POOR MANAGEMENT of the incineration process, or inadequate maintenance or housekeeping. Off-normal operations (e.g., upsets and accidents) at various points in the incineration process might result in explosions; fires; the release of smoke, ash, or noxious odors into the atmosphere; and the spilling or leakage of contaminated or toxic substances.” (from NCBI resources Incineration & Public Health.)

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