Clement Reid

A report finding potential fraud risks and alleging breaches of hiring rules at the Cayman Islands Port Authority was released by Auditor General Sue Winspear Friday, following numerous open records requests for the document.

The report details a number of questionable employment practices occurring between 2016 and 2017, including a reported misstatement of how much was spent to bring in new hires for the authority – staff costs that went $400,000 over budget in one year.

Port managers denied there had been any errors with the budget figures and insisted new hires came in well under budget.

The report further recounts an incident where four boat engines belonging to the port were taken from Harbour House Marina without any apparent authorization. The engines were removed by port employees in a manner that auditors said “would suggest theft.”

The report also reveals that more than $130,000 was spent on “office upgrades” for two senior port staffers, including more than $30,000 for vases, lounge chairs, rugs and “poufs” [ottomans].

In addition, one port staffer was allowed to take “special leave” to attend a member of the Legislative Assembly on trips overseas for a total of 63 days between March 2016 and March 2017. Auditors noted there were no provisions in the Port Authority employee guidelines to allow for such trips to accompany an MLA.

The existence of the auditor’s report has been known about for some time and members of the Port Authority Board of Directors were briefed on its findings earlier this year.

Board Chairman Errol Bush sent a communication to port employees in February seeking to clarify rumors swirling around the agency, which operates separately from the central government under a board appointed by Cabinet.

“The Office of the Auditor General submitted a special report to the board that identified a number of concerning irregularities relating to human resources, finance and other administrative decisions at the port authority,” Mr. Bush wrote in the staff email, dated Feb. 22.

“The board takes these matters very seriously and spent many hours considering the [auditor general’s] report and contemplating what action was necessary to properly address the irregularities.”

Port Director Clement Reid was contacted by the Cayman Compass in April and again this weekend about the report. He sent a detailed 85-page response to the Compass – apparently a copy of what he presented to the port board in January concerning the same issues.

“Despite the fact that [the] auditor general’s report raises concerns about my personal decisions and actions, it is to be welcomed in the interests of good governance going forward,” Mr. Reid said in summary of his response. Specific responses to each issue given by the port director to each issue raised are included.

Hiring budget

In response to questions from the auditor general’s office about expenses incurred during the government’s 2016/17 budget year, Mr. Reid told auditors that $1.1 million spent on the new hires was well within the $2 million budget provided for the period.

In his detailed statement sent to the Compass, Mr. Reid said he still believes these figures to be accurate and had no reason to believe they were otherwise.

“On Aug. 31, 2017, the [port] chief financial officer presented his own authored August financial report to the board,” Mr. Reid wrote. “The contents are entirely consistent with the facts as I represented and believed them to be. At no time did the chief financial officer alert me as to whether there were any errors or inaccuracies in his monthly reports.”

Auditors said the $1.9 million provided in the budget for Port Authority hiring covered 18 months between July 1, 2016, and Dec. 31, 2017, because the government was operating an unusual 18-month one-time budget during the period.

The provided budget increase for the new employees was actually $1.3 million on an annual basis, auditors said.

Yet the port’s projected annual cost for the new employees it hired during 2016/17 was around $1.7 million, including healthcare and pension allotments.

“This amount exceeds the budgeted annual increase by $400,000 per year,” the audit office report noted.

Sue Winspear

“I cannot explain why the auditors are reporting an excess spend from the 2016/17 budget, in the amount of $400,000,” Mr. Reid said. “As a result of a decision by the Board in the meeting on Aug. 31, 2017, there has been no further recruitment by [the] Port Authority of the Cayman Islands.

“I can only surmise, that the auditors have been presented with different financial information, from that which I received and contained in the monthly reports of the chief financial officer.”

Hiring practices

Auditors pointed to several examples where port employees were hired at salaries greater than advertised, as well as instances where people were hired for new positions where no advertising was done at all.

They alleged that this was done outside of the provisions of the newly adopted Public Authorities Law, which puts stricter controls over hiring and recruitment within statutory authorities such as the port.

However, Mr. Reid said the provisions of that law had not come into force at the time most of the hires covered in the auditor’s report were made.

“There has been criticism that, in certain instances, I was in breach of [the] Public Authorities Law,” Mr. Reid said. “The fact that most of my decisions regarding recruitment took place before the law came into force, is highly relevant for explanation. Further, this is a new piece of legislation (not a revision of a previous law) and neither myself nor other members of the Authority, had any training until December 2017.”

The auditors’ concerns about port hiring decisions included a number of situations between late 2016 and 2017:

A deputy director for human resources was paid at a salary scale above the advertised range of $88,000 to $125,000 per year for a post that did not originally exist in the port’s 2016/17 budget. Three other Caymanians scored higher than the successful candidate on the interview matrix used for the position, auditors said.

A port employee was promoted to deputy director-chief logistics officer without the position being advertised and at a higher salary than the range used for port deputy directors. This position also did not exist within the 2016/17 budget, auditors said.

A manager for operations and events was hired without an interview process, and the successful candidate was not required to submit medical exam forms or police clearances as is normal practice.

Another port employee was promoted to deputy director/chief operating officer with no notification or internal advertising for the job.

A port manager received a salary increase of $21,000 per year after completing the probationary period on the job, putting the overall salary well in excess of the position’s advertised pay.

An office manager hired in 2016 was paid above the advertised salary range, but quit the job two months later. This led to a situation where another person was recruited, at a higher salary, without advertising the job. This was done without consulting the port’s human resources manager, auditors said.

Boat engine ‘theft’

The report alluded to other non-budget related incidents involving port staff, including what it termed the “theft of four boat engines” from Harbour House Marina in George Town.

No date is given for the incident, but it is alleged that port employees removed four engines being stored at the marina, valued at $6,000, without prior authorization to do so.

“No one claims to be aware of authority being given to release these engines,” auditors stated.

The report then opines that the actions of the authority employees, without authorization, “would suggest theft.”

“But there is no evidence of further actions being taken by senior management in spite of knowing of this loss following its reporting by the manager of cruise operations and security,” the report states.

Mr. Reid acknowledged the auditor’s comments that he gave no authority for anyone to remove the engines.

“Although this matter is ongoing, it clearly identifies the need for an asset management policy,” he said. “Asset management is the responsibility of the chief financial officer and, as such, that office will be accountable for developing and delivering a draft asset management policy for the board’s consideration.”


The port paid $135,773.62 for furniture, decorations and upgrades to two manager’s offices during the 2016/17 budget year, including the port director’s office, auditors reported.

These expenses do not appear in the Port Authority’s capital costs [$2.7 million budget] for 2016/17, nor was any business case done to justify the need for these expenses, the report states.

Purchase orders were found for $14,332 for office furniture and accessories, $90,514 for patio and office development “upgrades” and an additional US$37,716.16 [CI$30,927.62] in “design costs” for items including rugs, vases, lounge chairs, ottomans, and dining tabes.

The board of directors did not approve the purchase of any of these items, auditors said, nor was any bidding done to consult alternate suppliers for the items before their purchase.

During the time the renovations were being done, Mr. Reid said he had taken a smaller office and that a meeting room had been created which needed furniture. He said his patio door in the office had deteriorated and also needed replacing.

“Unfortunately, these additional expenses escalated the costs beyond what is required for tender,” Mr. Reid said. “During the period of this renovation, I was performing the role of port director, deputy director, cargo operations, port engineer, facilities manager and project manager. This resulted in me being conflicted, having in effect, to authorize and certify my own work.”

He said employing a facilities manager, as the port has now done, should prevent similar situations from occurring in the future.

Employee travel

Between March 2016 and March 2017, a Port Authority employee, who was not identified, was authorized to take a total of 63 days off for the stated purpose of attending then-Leader of the Opposition McKeeva Bush on various travel.

The trips ranged from five to 15 days and all appeared to have been approved by the port director.

The Cayman Islands government service allows employees who are representing the islands in cultural, sporting or other events to be granted “special leave” outside of their normal vacation or bereavement leave time.

However, auditors note there was nothing authorizing the port to grant leave to an employee to “travel/assist the Leader of the Opposition.” In documentation attached to the auditor’s report, it appears the employee traveled with Mr. Bush on certain occasions as a “driver.”

The audit later notes the employee was placed on suspension for about four months between June 2017 and October 2017, but this was over a separate matter.

“My only explanation is that I was placed in a difficult position, to which I felt compelled to agree and was not entirely comfortable,” Mr. Reid said. “In view of his public standing, I assumed that Mr. McKeeva Bush’s requests were matters of significant importance and simply felt bound to agree.”

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  1. I am totally surprised that the Leaders/Ministers can’t straighten all the problems /deficiencies in the government departments out . Where’s the responsibility in this government ? When we have problems in every department of government. When are we going to hold these Leader/Ministers accountable ?

  2. As bad as this catalogue of mismanagement and possibly worse is, is the fact that the report was only released after numerous FOI requests. Without these the whole sorry saga in typical government fashion would have been swept under the carpet. This is but one of many situations and regretfully they all seem to involve one common denominator.

  3. Those 2 offices must have been the size of the old Glass House to take $135,000. to furnish . With all the rest that is said in the article, doesn’t surprise me one bit that it takes that kind of money to furnish two offices .