Editor’s note: The following is the full text of a statement read by Opposition Leader Kurt Tibbetts Monday night regarding the recent award of a bid for US $185 million in financing by the Cayman Islands government.
“On Friday, October
22nd, the Government announced that it had secured financing for US$185,000,000
to fund the borrowings approved by the Legislative Assembly in the 2010/2011 budget. On the face of it, this is good news because
there is no question that this money is needed to finance government projects
underway, such as the new schools and the new Government Administration
Building, as well as to
bridge the continued shortfall in government revenues. But what is extremely concerning and highly
irregular, is that the Premier has contravened both the law and established
practice in choosing the company which will provide this financing to the
Government.
“The Premier has
unlawfully overridden the recommendation of the advisers in his own ministry, the
Ministry of Finance Technical Evaluating team, as well as the decision of the Central
Tenders Committee and has handpicked a New
York firm to provide this financing.
“The requirement to
tender for all government contracts of the value of CI$250,000 or greater is
contained in the Financial Regulations made under the Public Management and
Finance Law. The Financial Regulations
prescribe the process by which a tender is made and for the Central Tenders
Committee to evaluate the various bids and make an award. The Financial Regulations give no power or
authority to the Premier or any minister to award contracts. The decision to award contracts of this
nature is a matter entirely for the Central Tenders Committee.
“By ignoring the
decision of the Central Tenders Committee to award the financing contract to a joint
venture of two local banks, Royal Bank of Canada and FirstCaribbean and
instead awarding it to Cohen and Company the Premier, and by extension, the UDP
Government, has therefore acted unlawfully.
“This point was
confirmed recently in an e-mail sent by the Chairman of the Central Tenders
Committee, Mr. Ronnie Dunn, to the popular talk show, CrossTalk. In his e-mail
Mr. Dunn said the following;
“Recommendations are made to the CTC from an
Agency’s technical evaluating team. That team carries out the in-depth analysis
of the various bids received then writes a recommendation to the CTC. The CTC
then either accepts or reject those recommendations. If it accepts the
recommendation, it makes an award, if it doesn’t, it sends the report back to the
Agency with its concerns. The CTC process does not involve making
recommendations to Ministries or to Cabinet.
“There is no
provision in our legislation that I am aware of, which allows for the
overriding of the CTC decision. And I would invite anyone who knows different
to quote that section of the law which allows that.”
“In an address to
the country broadcast on Radio Cayman and Cayman 27 last Wednesday night the
Premier sought to justify his unlawful actions and those of his government claiming
that by breaking the law he had “acted in
the best interests of these Islands in
selecting Cohen and Company.” He says “That
decision, I’m sure, will save the Cayman Islands
many millions of dollars in interest costs.”
“It remains to be
seen whether or not the Premier’s unlawful actions will result in any savings to
the Cayman Islands Government. This is so because despite making and announcing
the award of the financing contract to Cohen and Company, the Premier has been
unable or unwilling to say what the terms of the arrangement with Cohen and
Company are. He simply repeats over and
over that the deal will save the Cayman Islands Government “tens of millions of dollars”.
“Curiously, it would
appear from what the Premier has said that the crucially important issue of the
interest rate that will be charged on this loan agreement has not yet been
agreed and is still being negotiated even after the financing contract has been
awarded. In his recent address the
Premier said:
“I received copies of an amended proposal
from Cohen and Company in mid- October. This proposal provided an innovative
solution that enables Government to limit its interest rate. So this proposal allows government to benefit
from the current low interest rates while guaranteeing that the interest rate
will never go above the agreed fixed rate.”
“Ladies and gentlemen… this saves the Cayman
Islands Government tens of millions of dollars.”
“But then,
astonishingly, the Premier went on to say:
“It is not possible to give an exact figure
until the long term financing facility is finalized.”
“Adding to the
mystery surrounding the interest rate is the fact that UDP Treasurer, Peter
Young, called CrossTalk this past Wednesday and in a discussion which lasted
the best part of an hour, Mr. Young described in considerable detail the
process involved in arriving at the decision of the Premier to choose Cohen and
Company. However, despite what appeared
to be intimate knowledge of the details which made the arrangement with Cohen
and Company such an attractive deal for the Cayman Islands Government, Mr.
Young was unable or unwilling to disclose what the interest rate on the loan
would be.
“Apart from the
unlawful nature of the award, there are other real concerns about whether this
deal is really in the best interests of the Cayman Islands
and the manner in which Cohen and Company was singled out for special treatment
by the Premier in his involvement with the tendering process.
“In his e-mail to
CrossTalk referred to earlier, the Chairman of the Central Tenders Committee,
Mr. Ronnie Dunn, pointed out the following:
“The decision of the CTC to accept the recommendation
that was made to us by the Ministry of Finance technical evaluating team
was one which, from the information received through the open tendering
process, provided the people of the Cayman Islands with the best value for
money. The CTC did have concerns with the initial recommendation, the Committee
investigated, did its due diligence and were then satisfied with the
recommendation.”
“In choosing Cohen
and Company over a joint venture by two local banks, the Premier went against the
recommendation of his own ministry’s technical advisors and, in his own words,
overrode the decision of the Central Tenders Committee. In doing so he acted
unlawfully. This is a grave and monumental step for the elected leader of the
country to take. The first obvious question therefore is why? The Premier says
it was to save the country money. But he
has not said how. Nor has he explained
why he personally went to Cohen and Company’s offices in New York and invited them to make another
proposal after the Central
Tenders Committee had already decided to award the financing contract to Royal
Bank and FirstCaribbean. Neither has he
explained why he did not invite all the other bidders to engage in negotiations
or to present another proposal to government in the way that Cohen and Company
was invited to do. Nor has he told the country why Cohen and Company was
singled out for special treatment in this way.
“Let there be no doubt
about it. There is a lot at stake here. The government is borrowing the single
largest sum ever. It is therefore critically important that the country gets
the best possible deal. And that means
what is really in the best
interests of the Cayman Islands in the long term, not just what may appear
attractive at the moment.
“The Premier said he
“…had to decide whether to choose
substance or to choose process”. Well the jury is still very much out as
regards ‘substance’ since the Premier has provided so very little in terms of
the details of the Cohen and Company arrangement and certainly nothing by which
we are able to compare the various bids.
Certainly, unconfirmed information reaching us indicates that at least one
bid contained a proposal with a 3.5% interest fixed for 15 years with no
associated fees.
“But contrary to
what the Premier seems to believe, the process is also critically important and
not just for compliance with the rule of law reasons. When due process is not followed it opens up
the ominous prospect of corruption. There
are huge reputational implications for the Cayman Islands Government here. It should not be forgotten by the Premier in
his desire to have his financier of choice, that it is the Cayman Islands
Government’s reputation for probity and reliability that has made it relatively
easy for it to secure financing even in these hard economic times. The spectre
of corruption has the capacity to undermine any government’s reputation,
including ratings by Standard and Poors and Moodys. If potential bidders come to believe that the
process of awarding contracts is not fair, predictable and transparent then the
attractiveness of this jurisdiction as a place to invest is lost, with
potentially dire consequences.
“The servicing of
this debt will undoubtedly require the Government to remit millions of dollars
annually outside the jurisdiction to cover not only interest but principal
repayments. An award to local banks
would have provided ample opportunity for the re-deployment of such funding by way of local lending and
investment, all of which would have helped to spur economic activity and drive
growth in our own economy thereby generating revenue for Government from import
duties and other fees paid by those carrying on business within the
islands. While it is difficult to
quantify the potential long term loss to the jurisdiction, and by extension to
Government’s own revenue base from awarding the financing to an overseas
institution, there is no escaping the conclusion that there will be a price to
be paid by our own economy as a consequence thereof.
“Given the apparent
unlawful nature of the Premier’s and Government’s handling of this matter and
the serious issues which this transaction raises as Leader of the opposition I
am hereby calling for the following;
“An immediate full and frank disclosure by the Premier and
the Government of the details and circumstances surrounding the purported award
of the financing contract for
US$185,000,00 to Cohen and Company;
“An explanation by the Premier and the Government of the
reasons why Cohen and Company were singled out and the other bidders excluded
from the final round of negotiations which resulted in the purported award of
the financing contract for US$185,000,000 to Cohen and Company.
“Disclosure by the Central Tenders Committee and the Premier
and Government of all documentation related or connected to the tendering
process which has resulted in the purported award by Government of the
financing contract for US$185,000,000 to Cohen and Company;
“A report by the Attorney General regarding the legality of
the Premier’s and the Government’s action in overriding the decision of the
Central Tenders Committee to award the financing contract to Royal Bank of
Canada and FirstCaribbean and purporting to award it to Cohen and Company.
“A Special Investigation by the Auditor General into the
circumstances surrounding the tendering process and the purported award by the
Premier and/or the Government of the financing contract for US$185,000,000 to
Cohen and Company.
“The people of the
country are owed a proper explanation and accounting by the Premier and the
Government for the irregular and apparently unlawful course of action which it
has taken in relation to this critically important matter of securing financing. Nothing less will be satisfactory.
“God bless you all
and may God continue to protect these beloved Cayman Islands.”
Related Videos
