A Cayman Islands Port Authority spending spree on new hires last year left the agency about $400,000 over budget and did not end up covering all the positions the authority said it needed to fill.
Yet, Port Authority managers told Auditor General Sue Winspear that their new hires cost only $1.1 million during the 2016/17 fiscal period – far less than the budget provided.
Auditors clarified last week that port managers were apparently looking at the wrong numbers.
“Based on the 2017 [annual] budget, the expected increase in payroll cost was $1.3 million,” the audit office noted in a follow-up report issued Friday. “Based on [employment] contracts entered into, that amount was $1.7 million … and all budgeted posts were not filled.”
The annual costs for the new staff went about $400,000 over budget. However, auditors said many of the port’s new hires during 2017 did not work the full 12 months of the year, making it appear that the agency had a “cash savings” during the year.
“What impact [will] these new hires have on the Port Authority Cayman Islands payroll for the next two budget cycles?” auditors asked.
Auditors sought clarification from Port Director Clement Reid on the issue as part of their follow-up work.
“[Mr. Reid] acknowledged that the increase in the following years [2018, 2019] was not considered in his decisions and if he had been so advised by the chief financial officer, he would have made different decisions,” the audit report noted.
Mr. Reid also noted the 2016/17 budget, consisting of a one-time 18-month spending period, was “a bit confusing.”
The auditor general’s office had earlier 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.
Auditors 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 law came into force on June 1, 2017.
In the follow-up report issued Friday, auditors noted they did not find that the port director was unclear about the establishment of the Public Authorities Law at the times the various hiring decisions were made.
“We therefore maintain our view that his actions in hiring [two referenced employees] and subsequently promoting [a third employee] contravened the Public Authorities Law,” the report noted.
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 just two months later. This led to a situation where another person was recruited, at a higher salary, without the job being advertised. This was done without consulting the port’s human resources manager, auditors said.