McLaughlin seeks Cohen report

Leader of the Opposition Alden McLaughlin has questioned the government on the whereabouts of an auditor general’s report into the Cohen and Company affair. 

During a parliamentary debate last week, Mr. McLaughlin asked what had happened to an investigation into the controversy surrounding a deal between the government and the New York-based firm Cohen and Company to secure funding of US$185 million last October. 

Premier McKeeva Bush acknowledged last year that he had decided not to go along with the recommendation of the Central Tenders Committee to secure the funding through two local banks – FirstCaribbean and Royal Bank of Canada – and chose to deal instead with Cohen and Company. However, that arrangement was later dropped and FirstCaribbean was subsequently awarded the funding contract. 

At the time of announcing the deal, Mr. Bush said Cohen and Company could guarantee low interest rates but said he could not disclose the precise figure until the long-term financing facility was finalised. 

Mr. McLaughlin said: “Adding to the mystery surrounding the interest rate was the fact that UDP treasurer Peter Young called [radio show] CrossTalk 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”, but that Mr. Young was “unable or unwilling” to disclose what the interest rate would be. 

He said Mr. Bush had acted unlawfully by going against the recommendation of the Central Tenders Committee. 

“When due process is not followed, it opens up the ominous prospect of corruption. The spectre of corruption has the capacity to undermine any government’s reputation, including ratings by Standard and Poor’s and Moody’s. 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 Leader of the Opposition said. 

Why Cohen was chosen 

Mr. Bush insisted at the time that he had not gone with the established bidding procedure because choosing Cohen and Company was in the best interests of Cayman. 

In a publicly broadcast statement in October, he said: “I had to decide whether to choose substance or to choose process… With the state of the economy as it is and the government still needing every dollar that it can save… I chose substance over process.”  

Mr. McLaughlin said his predecessor as leader of the People’s Progressive Movement, Kurt Tibbetts, had previously called for an “immediate full and frank disclosure” by the premier and government of the details and circumstances surrounding the awarding of the financing contract to Cohen and Company; an explanation why the company was singled out and other bidders excluded from a final round of negotiations; disclosure by the Central Tenders Committee, the premier and the government on all documentation relating to the tendering process on the deal; a report by the attorney general on the legality of the overriding of the Central Tenders Committee’s recommendation; and a special investigation by the auditor general into the tendering process and awarding of the contract to Cohen and Company. 

“We have never received a response to these calls other than an indication from the governor that the auditor general was looking into the matter. Thus far, no report has been forthcoming.” he said. 

Mr. McLaughlin added: “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 took in relation to this critically important matter of securing financing. 

“In light of the termination of the agreement, the premier as minister of finance should also explain how much the Cohen arrangement has cost the government. Nothing less will be satisfactory.” 

Premier Bush is expected to give his response to MLA’s speeches on his budget address this week.