ESTABLISHED 1965 www.caymancompass.com – 50 CENTS – WEDNESDAY MAY 17, 2017 EDITORIAL | PAGE 4 TITLE OF EDITORIAL SECTION | PAGE ## TITLE FOR THE SPORT/ BUSINESS SKYBOX Rising healthcare costs: A burden for consumers, businesses and government MICHAEL KLEIN mklein@pinnaclemedialtd.com When Caymanian voters go to the polls on May 24, the cost of living will be one of the issues at the top of their minds. A significant factor pushing prices higher is healthcare. Devel- opments in other countries have shown that the cost burden related to healthcare for consumers, busi- nesses and government is unlikely to diminish, and some unpopular choices will have to be made to keep the costs somewhat in check. Surprisingly, consumer price index data from the Economics and Statistics Office shows that while prices overall increased only 2.8 percent over the past nine years, the cost related to health increased even less: 1.8 percent. However, the three categories that make up health-related prices developed quite differently over time. The cost of outpatient treat- ment, the largest cost factor in the health segment, is nearly 1 per- cent lower today than in June 2008, whereas hospital treatments are 15 percent more expensive, and hos- pital equipment is nearly 8 percent more costly than nine years ago. One reason for the discrepancy is that standard health insurance fees have not changed since they were created in 2005. Cabinet decided last November that it would not increase the min- imum fees health insurance com- panies pay for procedures, even though a report by consulting firm Morneau Shepell on health- care costs recommended adjusting the rate schedule by hiking fees 12.3 percent. Government argued the fee in- crease recommendation was based on an inconclusive report because not enough doctors and medical service providers had responded with sufficient data to the un- derlying survey. Health insurance The biggest health-related fi- nancial burden for the average con- sumer, however, is not the cost of medical procedures but the cost of health insurance. Consumer price data confirms what most people see in their pay- checks. Insurance costs jumped 14.9 percent during the past nine years, quickly outpacing general price increases. Although a detailed breakdown is not available, health insurance is by far the largest item in the group of insurance products that are used to calculate the con- sumer price index. At one point, in June 2013, when changes to the Health Insurance Law took effect, the cost of insur- ance spiked to 23.7 percent above the June 2008 level. The revision of the law man- dated improved coverage and addi- tional benefits under the Standard Health Insurance Contract, as well as a higher contribution to indigent care. But expanded services came at a price. In many cases, premiums increased 50 percent or more de- pending on risk factors and the type of coverage plan. Meanwhile, the revised health insurance law and efforts by the Health Insurance Commission were successful in broadening the health insurance coverage of the popu- lation. Health insurance for em- ployees has been mandatory in Cayman since 1997. Since the law was revised in 2013, less than 6 percent of Cayman residents are without health insurance, down from 12 percent in 2010, according to data from the Health Insur- ance Commission. A global phenomenon The explosion of healthcare-re- lated costs is a global phenom- enon. In the United States, the cost of healthcare is now a much bigger burden for companies than the cost of taxes, investor Warren Buffett said at his investment firm Berk- shire Hathaway’s annual meeting in May. Rather than focusing on tax cuts, businesses should be con- cerned with the cost of health- care, he said. In Cayman, the healthcare burden is not only evident in pri- vate businesses, but also in the public sector. Healthcare costs are immense for government, both as the country’s largest employer who, unlike most companies in the pri- vate sector, pays for civil servants’ full healthcare, and as a social wel- fare provider. A report by the Cayman Islands auditor general looking at figures from 2014/15 and released earlier this year found that government pays more than half – 51 percent – of all health-related expenditures in the territory. The remainder is funded by private sector health in- surance and out-of-pocket expenses. Nearly a fifth of the government budget goes to healthcare. For instance, in the 2014/15 budget year, about $70 million of government’s healthcare budget of $137.8 million paid for the pre- miums of public servants, em- ployees of statutory authorities and government companies, pensioners, seafarers and veterans. Expenses for treatment overseas came in at $20.4 million, and indigent and un- insured healthcare costs were about $32.2 million. The remainder went into district clinics, mental health services, residential care, drug reha- bilitation and other programs. The auditor general’s report also found that total health-re- lated expenditures in the islands grew by nearly 26 percent between 2010 and 2015, with private sector spending rising faster, at 37 per- cent, than public sector health payments, which jumped 16 per- cent. This means that the average person who spent $3,857 on health- care in 2010/11 had to pay $4,454 five years later. The healthcare liability threat Voters may be concerned that just as in other countries, health- care costs will not only outpace in- flation, but will also represent an PLEASE TURN TO PAGE 8 » The cost of healthcare in the Cayman Islands is among the major topics of debate in the general election on May 24. - PHOTO: TANEOS RAMSAY2 LOCAL&REGIONAL WEDNESDAY MAY 17, 2017 • CAYMAN COMPASS Daily Matinees Every Day $8.00 Seniors, Mon-Fri Before 6pm Cayman Cinema@cbcinema6cbcinema6 THE LOST CITY OF Z (PG13) 2:40 I 5:50 I 9:00 SNATCHED (R) 12:10 I 2:35 I 4:55 I 7:30 I 10:00 THE FATE OF THE FURIOUS 3D (PG13) 12:20 2D I 3:20 2D I 6:25 I 9:50 2D VIP KING ARTHUR: LEGEND OF THE SWORD 3D (PG13) 1:00 2D VIP I 1:05 I 7:00 2D VIP I 8:30 2D GUARDIANS OF THE GALAXY VOL. 2 3D (PG13) 1:20 2D I 4:00 2D VIP I 4:15 I 5:00 2D 7:20 I 9:30 2D - WEDNESDAY - SATURDAY NIGHT: For your viewing pleasure, minors under the age of 18 will not be admitted to any film starting after 6pm, unless accompanied by their parent. *Additional charges will apply per 3D ticket requested. 640-FILM (640-3456) Dog recovering after being set afire SPENCER FORDIN sfordin@pinnaclemedialtd.com The dog that was se- verely burned over the weekend is recovering well and has an excellent prog- nosis, Dr. Brenda Bush of Island Veterinary Ser- vices said Tuesday. The dog, named Dora, was brought to the veterinarian Saturday after suffering second- and third-degree burns on her flank and abdomen. “She’s a brave little dog. She’s recovering really well,” said Dr. Bush. “She is very sweet. Even with the pain of that kind of injury, she’s let- ting us care for her. She’s just a very grateful little dog.” The dog, which was alleg- edly set ablaze by its owner, was brought to Dr. Bush sev- eral hours after the incident and was immediately cared for via emergency surgical procedure. The dog had been pregnant, and Dr. Bush had to remove her uterus due to complications from dealing with the shock of the burns. The wounds were likely life-threatening had they not been treated, but Dr. Bush said it was hard to speculate as to what exactly would have happened had the animal not received medical care. “It’s hard to say,” she said on Tuesday morning. “A lot of dogs have amazing ability to heal even very traumatic wounds. She was at extreme high risk of dying from sepsis or bacterial inva- sion of those wounds. But I think more immediately, be- cause her abdominal cavity was in such shock and re- activity from the burns, that would probably have killed her had she not had abdom- inal surgery.” The Royal Cayman Is- lands Police Service said they are investigating the incident. The police issued a state- ment on Tuesday that read: “On Saturday, May 13, po- lice received a report of an- imal cruelty at a residential address in North Side where a dog had allegedly been set afire. Officers responded to the location and gathered in- formation from those in the area, but the dog could not be located. Personnel from the Cayman Islands’ Hu- mane Society also arrived and searched for the dog. “Several hours later that day the animal was located and police were informed that the dog had been badly burned but was alive and being treated.” Dr. Bush said Tuesday she has not yet spoken to the police, and she also said that normal procedure usu- ally entails investigators vis- iting the clinic to check in on the animal and make a re- port. Island Veterinary Ser- vices originally believed it had treated this dog before, but that does not appear to be the case. “I’m thinking that isn’t correct,” said Dr. Bush. “We had a dog for this owner called Dora listed and the dog would’ve been five years old when we treated it two years ago. The dog that came in that’s now called Dora is a young dog. She’s probably one, not over two years old. We really don’t think it’s the same dog now. Some owners do have a habit of using the same name for a lot of dogs that they get. “At the time of the emer- gency, we really didn’t deal with that information, so we need to backtrack and try to see what the owner says as far as the age of the dog. But I don’t think we’d seen this dog before.” The Cayman Islands Hu- mane Society has repeat- edly declined comment in order to allow the police to make progress in their investigation. Dr. Bush said she is not sure what would happen when she was asked if the dog would be discharged to her previous owner. “That is under investi- gation right now,” she said. “It would definitely depend on the information that the police is given or the an- imal welfare officer, hope- fully, will get involved to make that decision. I guess it depends on the circum- stances on the burns and how they happened and who was involved.” Police ask that anyone with information about the case call the George Town Police Station at 949-4222, or leave anonymous tips at 949-7777 or via Crime Stoppers at 800-8477(TIPS). Pink Ladies make charitable contributions The Pink Ladies Volunteer Corps has announced more than $35,000 worth of dona- tions from fundraising work through the organization’s annual bazaar and tea party, among other efforts. Contributions include $10,000 for The Pines retire- ment home, $15,000 for the National Council of Volun- tary Organisations, $5,000 for Lighthouse School, $1,000 for the National Trust and $5,000 for HospiceCare. Additional funds were given alongside the Garden Club of Grand Cayman to the Queen Eliza- beth II Botanic Park’s chil- dren’s garden. The HospiceCare dona- tion honors two Pink La- dies volunteers who passed away last year, Patsy Alberga and Jilly Stone. The October Telethon will receive $10,000 from the do- nation the NCVO received. The Pink Ladies annual Christmas Bazaar will be held Dec. 2 at the Camana Bay Arts and Recreation Centre. Motorbike driver still at large after crash Police are still searching for a man who was involved in a motorcycle collision with a car after revving his bike and shouting obscenities outside a George Town polit- ical meeting last week. The incident on May 9 took place outside of a meeting held by Progressives party George Town Central candi- date Marco Archer. The driver was allegedly causing a dis- turbance before his motorbike collided with a black Cadillac on Crewe Road near the inter- section with Ella Ray Gardens. The motorcycle driver ran off on foot on Crewe Road and has not been apprehended. HospiceCare receives a donation from Pink Ladies. - PHOTO: COURTESY OF PINK LADIES CLARIFICATION A story on page 9 in Tuesday’s Cayman Compass titled “John Gray school gymnasium completed within $8.8M budget,” stated the size of the new gym is 22,000 square feet. The Ministry of Education clarified that that figure re- fers to the footage of the gym hall alone, excluding lobby- classroom, bathrooms, changing rooms, vending area, etc. The size of the entire facility is 34,442 square feet. REPORT PAINTS HARROWING PICTURE OF CENTRAL AMERICA MIGRATION MEXICO CITY (AP) – Mi- grants from Central Amer- ica’s violence-plagued Northern Triangle region endure harrowing abuses while trying to make their way through Mexico to- ward the United States, a report from an inter- national medical group said Thursday. Doctors Without Bor- ders, or MSF for its initials in French, called the situa- tion a “humanitarian crisis” that demands the U.S. and Mexican governments do more to process applica- tions for asylum and hu- manitarian visas. It said the study was based on surveys and med- ical data from the last two years and documents “a pattern of violent displace- ment, persecution, sexual violence and forced repa- triation akin to the condi- tions found in the dead- liest armed conflicts in the world today.” Almost 40 percent of those interviewed said they left home due to at- tacks, threats, extortion or attempts at forced re- cruitment by gangs in Cen- tral America. About 44 percent of the migrants had a relative who had died in the last two years due to violence, and that rose to 56 percent for those from El Salvador. Nearly 70 percent of those entering Mexico re- ported suffering violence during transit toward the United States, and nearly a third of women reported being sexually abused. They said the perpetra- tors “included members of gangs and other criminal organizations, as well as members of the Mexican security forces responsible for their protection.” Of the 166 female mi- grants treated by MSF for sexual violence, 60 percent had been raped and the rest were subjected to other kinds of assault such as forced nudity. The report showed that El Salvador, Honduras and Guatemala have some of the highest homicide rates in the world. Violent gangs reign over many parts of the countries and are often able to kill, extort and carry out other crimes with impunity.3 LOCAL NEWS CAYMAN COMPASS • WEDNESDAY MAY 17, 2017 *Applies to KYD lending only. Limited time offer. ®Registered trademark of The Bank of Nova Scotia, used under licence. With a Scotiabank mortgage you could benefit from: • Fixed mortgage rates as low as 4.5% • Scotiabank Insurance (Home, Health and Life Insurance) • Home Equity Loans for home renovations or purchase of a new vehicle Limited time offer! Visit a Scotiabank branch or call 949 7666 AS LOW AS VARIABLE INTEREST RATE* .25 4 Health City breaks ground on apartment complex Five-story complex for medical tourists JAMES WHITTAKER jwhittaker@pinnaclemedialtd.com The vision of Health City as a world-class med- ical tourism destination has taken another step forward with construction under way on apartments for patients at the East End facility. Health City Develop- ment has begun work on 59 apartments for staff and longer-stay patients, as well as a commercial building which will house banks, stores and offices. Gene Thompson, director of Health City and one of the principals of Health City De- velopment, said the support services and surrounding in- frastructure of the hospital is starting to take shape. “We are growing exponen- tially,” he said. “We are seeing international patients from across the region, from the U.S. and Canada. The timing is right. If anything, we are behind where we should be. We need to get on it and get this done.” The apartments are largely geared toward longer- stay patients, who have been discharged from hospital but need to remain close by for physiotherapy and follow-up appointments. The five-story building will also include a recreation room, basketball and volley- ball courts and a lagoon-style pool, shaped around the nat- ural vegetation. The two-story commercial building is aimed at creating a supporting infrastructure around the hospital and for the eastern districts in gen- eral as business grows. Andria Souza, operations manager for the develop- ment, said talks are under way with various businesses, including banks and re- tailers. Planning permission was granted last month, and construction crews have al- ready begun shaping the land for development. Mr. Thompson targeted a six- to nine-month con- struction period for the two buildings and vowed to hire mostly Caymanian workers for the job. “We will follow the same model as when we built the hospital. We won’t require reference letters, police clear- ances – we are going to give people opportunities.” As fu- ture phases of the Health City development unfold, he ex- pects that policy to continue. “With what we have in mind, there will be continued expansion over a number of years,” he said. “We believe in giving opportunities to Cay- manians and particularly to those who might not usually get a chance because of the list of requirements.” The development will fea- ture solar power, saltwater air conditioning and other in- novations to ensure sustain- able use of resources, he said. TIE A YELLOW RIBBON AROUND THE AEGIPHILA CAYMANENSIS TREE JAMES WHITTAKER jwhittaker@pinnaclemedialtd.com Health City Development construction crews must tread carefully as they work to build a new apartment complex to serve medical tourists at the growing facility. A quirk of the develop- ment approval is a list of con- ditions that must be complied with under the National Con- servation Law. The five-story building is being erected around one of the last remaining trees of its kind found anywhere in the world. As a condition of planning permission, the developer has agreed to build a wall around the tree and maintain a 15- foot buffer zone. At the site last week, a yellow ribbon had been tied around the tree and a white exclusion zone painted around the perimeter of the tree, where it sits, close to what will be a large swimming pool on the edge of the apartment complex. According to the Depart- ment of Environment’s re- sponse to the planning appli- cation, published with agenda papers for the April 26 Central Planning Authority meeting, the tree is one of only two Ae- giphila caymanensis found anywhere in the world. The tree, only found in Grand Cayman, is listed as critically endangered, and it would be an offense under the National Conservation law to jeopardize its survival, the DOE notes. It states that the root struc- ture makes it impossible to move and recommends condi- tions including the construc- tion of a wall around the tree and the maintenance of other vegetation in that area to pro- vide shade and shelter. Workers level the ground in readiness for construction of two new buildings at Health City Cayman Islands. – PHOTO: JAMES WHITTAKER Marked with a yellow ribbon and surrounded by a protective barrier, a rare species of tree will be preserved amid the construction. – PHOTO: JAMES WHITTAKERThe islands’ most-trusted news source 4 – EDITORIAL – Opinion&Letters The Cayman Compass welcomes comments, opinions and viewpoints from readers. Letters to the editor can be emailed to editor@pinnaclemedialtd.com, submitted via www.caymancompass.com, sent by post or hand-delivered to the Compass office. We have only seven days to go until a historic elec- tion in the Cayman Islands. Maybe everyone has made up his/her mind already, but I felt compelled to share the following thoughts and hope you will find it relevant and helpful in this very impor- tant decision. I am most heartened to see a large number of young, mature, seasoned, educated professionals that have de- cided to offer themselves to their country at a time when they have so much to give, so much time to give, so much to learn, and so much to tackle. I am heartened that many of them have been trained in Creative Christian Character and that gives me reason to feel optimistic. Most politicians are viewed as selfish, over-con- fident, untrustworthy, and in it for the money. We have had some reason to believe that eyes are dazzled by the money, the prestige, and the power, and I am not naive enough to believe that some are not like that but I choose to take a different view. Although I have had a number of disappointments in our representatives, I choose to believe that many are unselfish, sacrificial and passionate about this small island country and its people. It takes both a lot of pride and a lot of hu- mility to ask the people to give you a job every four years, to brag about yourself and your accomplishments and to take the “abuse” from the naysayers. This election is historic in many ways, not the least of which is that choice has been greatly reduced and we are no longer able to vote for the person in our dis- tricts that we feel is best for the country. Our choice has been limited to a very small group who has chosen to become candidates in a mini-constituency of ap- proximately 1,500 people. Regrettably I am hearing far too often that the choice limitation is discouraging people from voting. I needed a checklist so created one. I urge voters to consider the following as you choose that person who will be your/our representative: Character: Look for a person of character. One who cannot be corrupted or bought, who will not look for loopholes for personal or family aggrandizement. Look for a person who can be trusted and who is hard- working, ethical, honest and truthful. Don’t seek a can- didate that fits “my” per- sonal interest or “fall for” the candidate that will pay your electricity bill or buy you a new stove. That reeks of vote-buying and leads to corruption. Representa- tives are not chosen to rep- resent individuals, but the constituency, the district, the island, the country. Leadership Experience: He/she may be a novice in the political/legislative arena, but he/she must have leader- ship experience that is real. We need people that know how to vision, motivate, work, and implement, and who have held a leadership role in an institution, a pro- fession, a business, a service organization, and/or a non- profit organization etc. They need to be tenacious, bold, yet respectful. Christian Values: Re- gardless of your religious convictions, there is no better example than the one taught by Jesus. Following his instruction will lead to personal and national suc- cess. Consider someone who espouses and lives Christian values. Education: Education cannot replace experience, but neither can experience replace education. Choose a candidate who is well-edu- cated, with a first degree as the preferred minimum. Iden- tify a candidate who can ana- lyze and articulately present his/her thoughts, not just lo- cally but globally. Heart: Identify a can- didate who knows how to listen, who keeps prom- ises, who feels deeply about people and their con- cerns, who communicates with people on a regular basis rather than every four years. Choose someone who knows the people, knows their individual and commu- nity concerns. National Thinker: Find a candidate who has a sense of commitment to the country and not just a district or a mini-district. Is he/she pa- rochial in his/her thinking or can he/she think in the best interests of the many? Find someone who cares about our culture and honors and respects it. Professional: Look for someone who can conduct himself/herself in a manner that makes the country proud, even when you dis- agree with his/her stand or decision. Identify someone who has good manners, treats people with respect, and knows how to conduct himself/herself properly in his/her personal/community life and in the House. Involvement: Consider a person who just did not “come out of the woodwork,” but has a proven track record for community concern and involvement. What has she/ he cared about and in what is he/she involved. Did this person go an extra mile for the community or someone in the community? You may not have all the information you need about your candidates, nor will you find any candidate meeting all of the criteria above, but find out what you can, estab- lish your priorities, rate them and then finally, pray for guidance in making a choice. You have only ONE vote. Choose thoughtfully, criti- cally, prayerfully. Marjorie Ebanks WEDNESDAY MAY 17, 2017 • CAYMAN COMPASS The country’s unfunded healthcare liability, now estimated at $1.7 billion for retiring and retired public employees, is an aneurysm that is going to burst. On the front page of today’s Compass, economics writer Michael Klein offers up this bitter pill (not the sugar-coated prescriptions of politicians): “The biggest financial threat to government comes from the liability that arises from the obligation to provide civil service retirees, veterans and seamen with healthcare benefits during their retirement.” Here’s a fair question: Why are you hearing this news from the Compass rather than the Cayman Islands government? Has any candidate highlighted this issue in his or her campaign? (To be fair and to give credit, Minister of Finance Marco Archer has urged that these dire forecasts be made public. However, his is a lone and lonely voice.) Consider this: From 2004 to 2014, there was no audit or public accounting whatsoever of Cayman’s massive, and growing, public healthcare liability. In 2004, the shortfall was estimated at $654 million, and then there was “radio silence” for a decade. In 2014, the estimate had risen to $1.2 billion. A mere two years later, Cayman had added another $500 million to our healthcare obligation. According to one tally, the Cayman Islands should be setting aside $120 million each and every year to service this ballooning liability, which will come due progressively (not all at once) over the next 20 years. We aren’t doing that. In fact, according to a recent government report, “For all intents and purposes, the government is on a ‘pay-as-you-go’ plan in respect of post-retirement healthcare liabilities. Currently, no long-term assets have been established to start off- setting the government’s post-retirement healthcare liability.” (This might be a good time to note that the public sector pension fund is also underfunded by approximately $220 million.) Make no mistake: Healthcare and pension liabilities, left unattended and untreated, kill economies, private enterprises – and countries. Expanding balloons, filled with promissory notes or hot air (really the same thing), do what aneurysms do: They eventually explode. How, you might ask, did Cayman find itself in these circumstances? The answer can be as complex as an economist, accountant or politician wants to make it, but the straightforward explanation is this: • In the last 20 years, the public sector (meaning the civil service, authorities and government-owned businesses) expanded far out of proportion to the growth of the population. We currently have 6,500 administrators and staff on the public payroll. • Government employee compensation, both salaries and benefits (healthcare and pensions, in partic- ular), was overly generous compared to the private sector, thus “unbalancing” a supply and-demand, market-based, economy. • Politicians hoping to gain, or remain, in office had every incentive to expand and enrich govern- ment workers, since collectively, this segment of the population constitutes the country’s largest voting block. • The promises, especially regarding retirement benefits, were made (and continue to be made) far in advance of when the payouts become due. Every government employee should be asking every candidate running in their districts what they intend to do about funding their promised retirement benefits. Regardless of what they hear in response, they would be well-advised to take ownership of their own (and their family’s) future. A good place to start would be a thorough examination – both physical and fiscal. Government liabilities: When the bills approach the billions … LETTER TO THE EDITOR Qualities to look for in political candidates PRINTED AND PUBLISHED BY: Caymanian Compass Limited (a subsidiary of Pinnacle Media Ltd) Compass Centre Shedden Road, George Town SEND US YOUR VIEWS OR NEWS: P.O. Box 1365 Grand Cayman KY1-1108, Cayman Islands Telephone: (345) 815-0095 Email: newsdesk@pinnaclemedialtd.com ADVERTISE WITH US: Telephone: (345) 949-5111 Email: sales@pinnaclemedialtd.com Website: www.caymancompass.com PUBLISHERS DAVID R. LEGGE AND VICKI L. LEGGE EDITOR-IN-CHIEF DAVID R. LEGGE EXECUTIVE EDITOR PATRICK BRENDEL A MEMBER OF THE INTER-AMERICAN PRESS ASSOCIATION “Give light and the people will findtheirownway”The islands’ most-trusted news source 5 CAYMAN COMPASS • WEDNESDAY MAY 17, 2017 PUBLIC MEETING TODAY 7PM SOUTH SOUND COMMUNITY CENTRE Is the Government Sincere About Gas Prices? While my friends were enjoying a long weekend, I had the pleasure of reviewing The Fuel Market Regulation Law, 2017 which I understand will “go live” on such date (to be published in the Cayman Islands Gazette) as the Cabinet of the Cayman Islands Government may determine (the “Fuel Law”). Interesting observations under the Fuel Law include a description of the functions of Utility Regulation and Competition Office (“OfReg”), the role of Cabinet in designing policies and the list of the fuel providers considered to have significant market power in the Cayman Islands. The findings will surprise you. The basics of fuel Under the Fuel Law, fuel includes petrol, diesel, kerosene, natural gas, petroleum gas, ethanol and biodiesel. Different fuel mixtures exist around the world and some have designated numbers. For example, E10 relates to the percentage of ethanol fuel in a mixture and means 10% ethanol and 90% gasoline. E10 is renewable and used by several countries around the world. It may also be priced at a lower level than other fuel mixes. Regarding the benefits of E10, a report by Gary Z. Whitten, PhD, states that “many studies have shown that the oxygen in ethanol leads to a significant reduction in mobile carbon monoxide emissions”. The 10% ethanol blend with gasoline may also reduce the amount of benzene produced by vehicles (benzene is a significant toxic compound emitted from vehicles). Put in a very clear way, E10 gasoline can result in less harm to the Cayman public. We could literally breathe better. Cabinet’s prices The next question you may ask is that, if E10 is good for us, what kind of price should be attached to it? The price setting methods are alluded to under the Fuel Law and it seems like Cabinet will have the ability to establish and maintain policies designed to ensure the importation and selling of fuels are carried out in a manner consistent with public interest. Not being a fuel expert or a scientist, I assume that the mention of public interest is an indication that Cabinet will do its endeavour best to achieve low prices, which would result in a reduction in the cost of living. But I could be wrong here, so I looked at the other provisions of the Fuel Law. On one hand, it states that one of the objectives to be attained is to ensure that we have a supply of fuel under the most economical and competitive terms. On the other hand, the Fuel Law states that its other objective is to ensure that persons in the fuel sector obtain fair and reasonable returns. Not being an expert, I interpret “reasonable returns” as a lean towards Government guaranteed profits for some providers. If guaranteed returns exist, then how high are they, are the numbers available in publicly disclosed documentation and can the Government be said to be making a good deal for the people if the Government’s energy is concentrated on the achievement of high returns for service providers rather than acting in the public’s interest in accomplishing the “most economical and competitive terms”? Perhaps I am too critical here though. We need more information. If we ignore that guaranteed returns may exist and assume that we are being treated fairly, we are obliged to query whether there are other things that impact fuel prices. Glossing over the Customs Tariff Law published in the Cayman Islands Gazette, I noticed that Motor Gas attracts an import duty of 75 cents per gallon and diesel oil is charged a duty of 85 cents per gallon. This is amazing, no? I wonder what would happen to fuel prices at the pump if the Government reduced these duties by 25 cents per gallon? Would there be an immediate reduction in the cost of living? Would less “transportation costs” be incurred in relation to the shipment of products from the airport or a ship to your dinner table? This would be great, right? OfReg’s Role We accept from the above that Government has the ability to lower duties on fuel and may encourage the use of fuel types like E10 which could result in less harm to the air we breathe. You may then ask who helps Government to achieve its objectives. Well, OfReg helps. In fact, the Fuel Law states that the functions of OfReg include the promotion of fair competition, to provide consumer protection, to monitor the prices of fuel, to facilitate the introduction of alternative fuels into the economy and to minimise barriers to entry for new participation and investors in the fuel markets. On the face of it, OfReg sounds fair. But, if you take a step back and count the small number of suppliers of bulk fuel and how the rules affect certain providers, you will wonder to yourself what could have motivated the manner in which the Fuel Law was written. For example, what would happen if a greater number of people or companies had a licence to import fuel? The Islands could have more fuel supplies. Perhaps, more competition. Competition could drive down prices. Maybe? As another example, look at the ways that are permitted for the loading of fuel onto those super big tanker trucks and containers. In an optimal world, people could use the bottom loading method (loading fuel onto trucks through a connection at the bottom of the tank truck) or the top loading method (loading fuel onto trucks through the dome that covers on top of the tank). But the Fuel Law absolutely prohibits the use of the top loading method. Why? Is it because small providers might use the top loading method? It is a mystery to me and may, inadvertently, create a barrier to entry. Getting Your Fuel In Let’s say you take a different view. Fuel is a dangerous substance (as defined under The Dangerous Substances Regulations, 2017 (the “Dangerous Regulations”)) and importation and loading should be restricted. Under The Dangerous Regulations, OfReg will provide an application for a permit to import fuel. The application must state the grade, type, classification and quantity of fuel. So, assuming that the importer meets the standards of the Fuel Standards Committee, he or she should be ok to import the fuel. And in the case of fuel products like E10 gasoline which reduces the harmful effects to the air we breathe (and which should be cheaper), the grant of a licence should be more straightforward. I mean, I am just guessing. I cannot do the job of OfReg. But, let’s imagine that they would act swiftly to allow less harmful products into our environment and at a lower price. That would be a welcomed change. Summary According to the Fuel Law and the Dangerous Regulations, it seems that the Government has full control over the direction of prices, barriers to entry and general policies related to the fuel sector. However, there is a looming question whether the Government has a genuine interest to achieve lower prices for consumers. If Government was sincere about this, it would have (on its own) reduced the import duties on Motor Gas from 75 cents per gallon to 50 cents per gallon and diesel from 85 cents per gallon to 60 cents per gallon. The cost of living problem would be partially nipped in the bud. In addition, by importing products which are less harmful to the environment, our overall lives could get better. Finally, if the Government were to increase the number of fuel suppliers, this could foster friendly competition and encourage better prices at the pump. If you can imagine that Government has refused to do these things to date, then it is clear why we need new people in Government who are actual representatives of the people that serve the best interests of the people. As a representative, I would address this type of interest. I too want to see fairness, realise opportunities for all and I sincerely hope that as many of us as possible can participate in any resulting prosperity. DISTRICT DAYS 6 District Days Sister Islands WEDNESDAY MAY 17, 2017 • CAYMAN COMPASS Family Fun Day on Little Cayman Activities to mark Child Month continued Saturday on Little Cayman with a poolside Family Fun Day hosted by the Department of Children and Family Services at the Pirates Point resort. Debbi Truchan helped the DCFS team secure the venue and supplied the games and ribbons. Refreshments were spon- sored by the Baha’i community, and the Southern Cross Club do- nated the prizes. Under the theme “Our Children, Today and To- morrow,” activities are taking place at preschool centers, elementary and high schools and businesses throughout the islands.Debbi Truchan paints the face of Deah Tatum, who then returns the favor by painting Ms. Truchan’s face. Children show off the prizes and gifts they received at the Family Fun Day at Pirates Point on Saturday. 50 YEARS AGO: History of Brac’s Beach Boys revealed In the May 17 edition of the Cay- manian Weekly, a precursor of the Cayman Compass, Sister Islands news included: “The much talked about ‘Beach Boys’ dance band flew from Cayman Brac to Grand Cayman to play God Save the Queen at the official opening of the Commonwealth Parliamentary Association conference at the buffet dinner and dance for the delegates at the Coral Caymanian Hotel last Thursday night. “The boys have really improved from a motley group of stringed in- strumentalists to an appealing ca- lypso band. The have certainly come a long way since 1963. “The band was formed by its present leader, Eddie Scott, a ver- satile banjo stylist, in 1963. At that time the ska was the latest dance craze in Jamaica, and the band took the name the Skatellites. The boys played good town ‘n’ country music, but specialized in calypso and ska. The band made a big hit in the Brac, playing at first only the Sea View and Rafaldo’s Club. “It was especially popular when the spellbinding guitar-vocalist Hinton Connolly, now a foreman with Cable & Wireless, was a key member of the band. “Before the Skatellites was formed in Cayman Brac, Jamaica had a top band by that same name. World-fa- mous Don Drummond, now confined to a mental institution in Kingston after being found guilty of murdering his sweetheart, [and] the equally pop- ular rhumba dancer, Marguerita, were the key figures in the band. “After Drummond, a frequent pa- tient in the mental institution, was convicted on the capital charge, the band began losing popularity. The Cayman Brac band also split and some of the members formed Hinton and the Boys, and the rest linked up with Eddie and the Beach Boys. “Cayman Brac is too small to ac- commodate two bands, and so after a month of keen rivalry Hinton and the Boys collapsed. “Eddie and the Beach Boys have since dominated the scene, playing at all the clubs and hotels. RECLINERS DONATED TO FAITH HOSPITAL The Cayman Brac Vet- erans and Seamen’s Society has donated two recliners to Faith Hospital. The recliners, which fea- ture a touch-button reclining mechanism, are being used in the inpatient unit. Veterans and Seamen’s Society President Royce Dilbert and Deputy Presi- dent Ivan Whittaker handed over the chairs to Faith Hos- pital Director Dr. Srirangan Velusamy, Health Services Authority CEO Lizzette Year- wood, Faith Hospital Ad- ministrator Yvette Dilbert and Nurse Manager Suzette Young-Watson. Veterans and Seamen’s Society President Royce Dilbert, right, presents the HSA’s Lizzette Yearwood and Faith Hospital Director Dr. Srirangan Velusamy with the new recliners. - PHOTO: JAMES TIBBETTS7 LOCAL NEWS CAYMAN COMPASS • WEDNESDAY MAY 17, 2017 Hon. Anthony S. Eden Independent Candidate for the Electoral District of Savannah Dear Voters/Friends in the Electoral Districts of Savannah and Newlands It has come to our attention that the Progressives have been making baseless allegations about our political a liations and standing as independent candidates. It is alleged that we have both deceived the public by claiming to be Independent candidates and that we are secretly a liated with the Cayman Democratic Party (CDP). We both wish to advise the public that The Hon. Leader of the CDP has stated he will work with us and some other independents. We are however unequivocally stating that we are and have been over the last 1 ½ years ‘Independents’. If elected, we will continue to work with any Government that puts Caymanians rst, as we have always done. It is NOT our intention to join any other political party. We hope that the public will remember the events of late 2015 when we both stood against the Government on behalf of the people and resigned from the Progressives. Our stand for family values, and our Christian Heritage demonstrated our commitment to, and respect for, the Caymanian people. We were prepared to personally sacri ce our political futures protecting the rights of Caymanians and we are prepared to do so whenever we are called upon to stand for our people. We pray that the good people of the Cayman Islands will see these attacks on our characters for what they are; simple political posturing and propaganda. We ask that you continue to support us and assure you that our commitment is to our people. Our love for our country and desire to adhere to the strictest moral and ethical standards prevents us from being anything less than honest and transparent in the representation of our people. May God continue to bless these beloved Cayman Islands. Alva H. Suckoo Jr Independent Candidate for the Electoral District of Newlands VOTE Eden, Anthony Samuel Independent Candidate SAVANNAH A LEADER THAT IS ALWAYS THERE FOR YOU email: edenbm@candw.ky Phone: H. 947-2367 C. 916-2038 Alva Suckoo www.suckoo2017.ky Representing Newlands Securing Our Future Global cyberattack puts Cayman businesses on alert KAYLA YOUNG kyoung@pinnaclemedialtd.com Cayman Islands IT de- partments worked overtime during the holiday weekend as businesses scrambled to protect their data against a global ransomware attack that affected an estimated 200,000 victims in more than 150 countries. While Cayman’s Finan- cial Crime Unit reported no local complaints, the “Wann- aCry” malware attack set off alarms and forced many businesses to implement last- minute protection measures. KPMG cybersecurity prin- cipal Micho Schumann said the cyberattack exploited a flaw in older Microsoft oper- ating systems, like Windows XP. Users who had not in- stalled proper updates and followed the malware link found their files encrypted and a demand for US$300 to US$600 in bitcoins to have their data released. “The way this ransom- ware was different from pre- vious ones we’ve seen is it’s also a worm. It re-propagates itself. Once it’s on your net- work, it’ll jump and go in- fect other computers and systems. It won’t hit just one desktop. It will look for other stuff,” he said. Mr. Schumann warned that another attack could be imminent, and that compa- nies should not assume they are safe from infiltration. He said proper staff training, system updates and adequate backup files can prevent po- tential headaches. “This isn’t going away anytime soon. Companies need to be vigilant,” he said. EShore CEO Polly Pick- ering spent the weekend working to address the at- tack. She said fear of em- barrassment prevents many companies from coming for- ward about cybercrimes, making it difficult to measure the true local impact. She said businesses, es- pecially those that pro- tect stakeholder data, must take such threats seriously and implement an emer- gency response plan, just as they would for a hurricane or earthquake. “People used to think their assets were dollars in the bank, [but] now it’s digital assets that need to be pro- tected,” she said. She compared cyber de- fense to outrunning a zombie. Hackers exploit weakness and will target the easiest victims. “You don’t have to run fast, just faster than the other guy,” she said. Ms. Pickering recom- mends companies pursue multiple lines of defense, including firewalls, anti- phishing programs, backup files and staff training. She said 91 percent of attacks come from emails, empha- sizing the human factor in cyber breaches. “We think humans should become the first line of de- fense, not the last line. If hu- mans don’t click on it, it’s not going to get in,” she said. Mr. Schumann added that companies should move away from outdated operating sys- tems like Windows XP, which no longer receive regular Mi- crosoft updates. “Updates [for these sys- tems] are just buying time because these operating sys- tems are dying,” he said. Regarding whether vic- tims should pay their hackers, Ms. Pickering said the answer is complicated. In some juris- dictions, she warned, pay- ment is illegal and turns the victim into an accomplice of organized crime. “This isn’t just some kid in a hoodie. This is big business now. … People have pensions and health plans. They go to work. For them, this is a job,” she said. DAMAGE TO POLICEMAN’S CAR WAS MORE THAN $3,000 CAROL WINKER cwinker@pinnaclemedialtd.com A man accused of dam- aging a policeman’s personal vehicle returned to Sum- mary Court Tuesday, when the charge against him was amended to show that the value of the damage was more than $3,000. Elvert Mark McFarlane, 30, is charged with causing the damage in East End on May 3. The car owner was the officer who responded first to a two-car crash that re- sulted in the deaths of four people in the district the night before. Attorney Prathna Bodden said McFarlane had applied for legal aid, but it had not yet been approved. She was therefore attending on an informal basis. Magistrate Valdis Foldats pointed out that the original charge against McFarlane did not specify the amount of damage alleged. He said this would determine whether the matter might go to Grand Court or would be dealt with in Summary Court. Crown counsel Greg Walcolm was able to pro- vide the information – that the value of the damage was more than $3,000. The magistrate set the matter for mention again on Tuesday, May 30. Bail condi- tions were continued as be- fore: reporting to police three times per week and staying 100 yards away from the complainant’s residence. McFarlane also faces a charge of causing ha- rassment, alarm or dis- tress, arising from the same incident. According to the Crim- inal Procedure Code, a charge involving less than $3,000 damage can be tried only in Summary Court. A charge involving more than $3,000 damage may be tried in either Summary Court or Grand Court. The sentence on convic- tion for causing damage less than $3,000 is a fine of up to $5,000 and imprison- ment for up to five years. If the value of the damage is more than $3,000, the sen- tence can be up to 10 years’ imprisonment and a fine of up to $10,000.The islands’ most-trusted news source 8 WEDNESDAY MAY 17, 2017 • CAYMAN COMPASS ever-growing share of their expenses and the govern- ment’s budget. The biggest financial threat to government comes from the liability that arises from the obligation to pro- vide civil services retirees, veterans and seamen with healthcare benefits during their retirement. A valuation completed in September 2016 estimates government will have to pay $1.7 billion, at present value, over the next 20 years in post-retirement health- care obligations. A similar valuation done in mid-2014 was $500 mil- lion lower and put the 20- year healthcare liability at $1.18 billion. In its pre-election eco- nomic and financial update, government disputed the assumptions of the latest actuarial valuation. “For all intents and purposes, the government is on a ‘pay- as-you-go’ plan in respect of post-retirement health- care liabilities. Currently, no long-term assets have been established to start offsetting the government’s post-retirement health- care liability,” the finan- cial update said. Government has made one change to lessen the impact of post-retirement healthcare costs: Increasing the retirement age for civil servants to 65. The main adjustment ex- pected to be put in place in 2018 is the requirement that civil servants contribute a portion of their salaries to monthly healthcare pre- miums. Currently, neither re- tired civil servants nor active government workers are re- quired to make co-payments; their monthly premiums are paid by government. Late last year, Finance Minister Marco Archer called the change “unavoidable,” re- gardless of who forms the next government. However, the Cayman Is- lands Civil Service Associ- ation is holding out so far, saying its membership has not agreed to any such co- payment without a choice in healthcare providers being offered to plan participants. Such a move would effec- tively constitute a “pay cut” for civil servants and, if it includes wider medical cov- erage, limit the savings that government can achieve in the long term. Some tough choices will have to be made, as ei- ther way healthcare is likely becoming more expen- sive. It is just a matter of how much more. CONTINUED FROM PAGE 1 Rising healthcare costs: A burden for consumers, businesses and government Sentencing explained for repeat offender Magistrate considers previous convictions, allows for time in custody and on curfew CAROL WINKER cwinker@pinnaclemedialtd.com A sentence for attempted burglary became a lengthy procedure last week when Magistrate Kirsty-Ann Gunn and defense attorney Nich- olas Dixey aired all the fac- tors pertaining to Levi Am- brose Powell, who was found guilty in February after trial. Mr. Dixey acknowledged that Powell, 24, had pleaded not guilty because he had re- ceived a two-year suspended sentence for burglary in July, 2015 – just three months be- fore his new offending – and he feared that the suspended sentence would be activated. The attempted burglary charge against Powell, along with two other males, arose after an incident on Oct. 5, 2015, when a Bodden Town resident observed three fig- ures trying to pry open the rear door with a hammer and screwdriver. One, who was 17 years old at the time, pleaded guilty and received a six-month sentence. The other, who was days away from turning 19, pleaded guilty to crim- inal trespass and re- ceived four months. The magistrate set Pow- ell’s sentence for this offense at 16 months, directing that he be given credit for five months in custody plus 200 days in consideration of 14 months on curfew. She ac- tivated the suspended sen- tence, to be served consecu- tively and in full. In calculating Powell’s sentence, the magistrate noted that the new guidelines suggest a sentence of three to seven years for burglary, but they do not refer to attempted burglary. She decided on a 50 percent reduction and ar- rived at a sentencing range of 18 months to three and a half years. Then, she said, she had to consider the sentences of Powell’s co-defendants. Their sentences fell outside that range, but they were younger than Powell and had no pre- vious convictions. The starting point for their sentences must have been between 12 and 16 months, she concluded, adding that sentencing was not an exact science. The magistrate deter- mined that Powell’s starting point would be 14 months, but he had “very, very signif- icant aggravating features.” He had five previous convic- tions for burglary and had been to prison, but that had not deterred him. She said there had to be a significant uplift and raised the starting point to two years. There was no discount for his plea because he had chosen to go to trial. Then she considered the mitigation by Mr. Dixey. He pointed out that Powell was holding down a job while awaiting sentence and was being responsible for his family, who were a posi- tive influence on him. “I ask you to consider what he has achieved since being granted bail 14 months ago,” Mr. Dixey said. He suggested that fur- ther imprisonment would dis- rupt Powell’s rehabilitation and could damage his family. Mr. Dixey told the court that the defendant was devel- oping good judgment. When his family could not afford their rent, they had moved to a less expensive place. “He didn’t look for a quick fix. He didn’t burgle a house. He is finally growing up,” the at- torney submitted. Powell had also tested negative for ganja before sen- tencing. The magistrate ac- cepted that were it not for his previous ganja use, she could say he had been a law- abiding citizen. She agreed with Mr. Dixey that Powell had spent five months in custody and was then granted bail with a curfew and an electronic monitor. The first part of the curfew had been very strin- gent, 6 p.m. to 6 a.m., and she gave Powell 50 percent credit. The curfew was then relaxed to 9 p.m. With a total of 412 days on curfew, she said she would allow credit for 200 days. Mr. Dixey asked how the prison authorities would apply the credit for the curfew time. The magistrate replied that if she gave credit in arriving at Powell’s sentence, the final sentence could be disproportionate. She indi- cated that the sentencing procedure needed to be set out in detail so that when Powell went before a re- view committee, its members would understand why the sentence had been imposed. The Conditional Release Law provides for review of sentences of more than one year after a convicted person has served 60 percent. The offense for which Powell received a suspended sentence of two years was the burglary of the First Assembly of God Church on Old Crewe Road in February 2015. The suspension was for a period of two years, with a number of conditions. Those conditions were breached when Powell committed the attempted bur- glary. Any time spent in cus- tody on the burglary charge is to be deducted. THERESA MAY RECRUITING AN ARMY OF COMMITTED BREXIT BACKERS U.K. Prime Minister The- resa May is packing her Con- servative Party with an army of Euroskeptic candidates for next month’s election as she seeks reinforcements for her battle to deliver a hard Brexit. Bloomberg News sur- veyed the views of the Tory candidates standing in 60 of the most winnable seats for May’s party and found a clear majority voted a year ago to pull Britain out of the European Union. Of the 52 candidates in this group – whose views could be veri- fied by public statements or interviews – 34 backed Brexit last June, 17 wanted to stay in the EU and one abstained. The almost two-to-one margin in favor of leaving the EU shows how the June 8 election could herald a dra- matic shift in May’s parlia- mentary party, with more Brexit-supporting lawmakers in her team than ever. This outcome would give May greater power at home to pursue a divorce that is focused on reclaiming con- trol of lawmaking and immi- gration, rather than fostering trade. The analysis also damps speculation that May might soften her approach if she secures the crushing ma- jority polls are predicting. “The overall balance of Parliament looks like it will lean toward the harder side of Brexit than had May not called the election,” said Mu- jtaba Rahman, managing di- rector at the Eurasia Group. More lawmakers who backed Brexit early on would make it easier for May – who only had a majority of 17 in the previous Parliament – to pass legislation related to the split and secure ap- proval of the final deal she negotiates. After becoming premier last July some of her own side challenged her Brexit strategy. Bloomberg studied can- didates in the 12 seats where a sitting Tory law- maker stepped down and the 48 seats the Conservatives lost most narrowly in the 2015 election. In the latter, 27 candidates voted for Brexit, 13 against it and one could not decide. The rest would not comment or couldn’t be reached. The results suggest an in- flux of new Tory lawmakers who are more biased toward Brexit than either the country as a whole, or the previous House of Commons. Britain split 52 percent to 48 percent in last June’s ref- erendum and an analysis by the ConservativeHome web- site at the time found 185 Tory lawmakers were Re- mainers while 128 were Leavers: a 56 percent versus 39 percent divide. A YouGov poll released this week suggested 68 per- cent of the electorate now be- lieves the government has a duty to deliver Brexit. “I’m a supporter of Brexit and truly believe that al- though the road may have a few bumps ahead, the out- come will be beneficial,” said Peter Anthony, the Tory can- didate in Blackpool South, which the opposition Labour Party won by just 2,585 votes in 2015. “Being in charge of your own borders, laws and destiny is paramount in a democratic country.” That is the prevalent mood in the dozen constitu- encies where Tory lawmakers have retired to make way for new blood. In those, seven of the candidates voted “Leave” and four “Remain.” Five – including the Tatton seat of former Chancellor of the Exchequer George Os- borne – were previously rep- resented by Tories who op- posed Brexit, but now have candidates who voted for it. By contrast, there are only two seats set to pass from Tories who wanted out to those who wanted in. Asked by Sky News last week about the criteria for picking candidates, May said: “We are selecting the candi- dates who will do a good job for their constituencies when they’re elected.” All Tory members of Par- liament will have been elected on the coattails of her personal appeal and signed up to the party’s manifesto, which will make them more loyal and likely to back her version of Brexit. That could well include pledges to end free movement of labor, leave the EU single market and end the oversight of the European Court of Justice. “I don’t know how many new Tory MPs are going to take on the PM regardless of what they think of Brexit,” said Anand Menon, director of the U.K. in a Changing Eu- rope network of academics, in a telephone interview. “I’ve always thought she was for a hard Brexit.” © 2017, Bloomberg Prime Minister Theresa May, leader of the Conservative Party, speaks during a general election campaign event in Nottingham, England, on May 10. - PHOTO: BLOOMBERG/SIMON DAWSON9 WORLD&REGIONAL CAYMAN COMPASS • WEDNESDAY MAY 17, 2017 Financial Services Foundation Seminar Part 1 9am - 4pm | 23rd May 2017 Ritz Carlton, Grand Cayman Lunch and Refreshments Provided Book parts 1 and 2 together and receive a 10% discount (US$855). The Financial Services Foundation Seminar is a two-part series which provides a comprehensive introduction to the Cayman Islands financial services industry. Part 1 of the Financial Services Foundation Seminar will give delegates an introduction to Trust Services, Investment Funds, Banking and the Regulatory Framework. • Learn about the main types of trusts offered in Cayman and why clients use them. • Get to know the basics of an investment fund; what lawyers, accountants and fund administrators do to service them and why clients use the Cayman Islands as the number one funds domicile. • Discover the differences between private banking, commercial banking, investment banking and how these services have helped to earn the Cayman Islands top banking awards over the years. • Understand why and how CIMA does what it does and how it fits into the Cayman Islands international obligations, without all the jargon. Register online at www.ftscayman.com Registration Fee: US$475 per seminar Experts see possible N. Korea links to global cyberattack SEOUL, South Korea (AP) – Cybersecurity experts are pointing to circumstantial ev- idence that North Korea may be behind the global “ran- somware” attack: the way the hackers took hostage com- puters and servers across the world was similar to pre- vious cyberattacks attributed to North Korea. Simon Choi, a director at South Korean anti-virus soft- ware company Hauri Inc. who has analyzed North Korean malware since 2008 and ad- vises the government, said Tuesday that the North is no newcomer to the world of bit- coins. It has been mining the digital currency using ma- licious computer programs since as early as 2013, he said. In the attack, hackers de- mand payment from victims in bitcoins to regain access to their encrypted computers. The malware has scram- bled data at hospitals, fac- tories, government agencies, banks and other businesses since Friday, but an expected second-wave outbreak largely failed to materialize after the weekend, in part because se- curity researchers had al- ready defanged it. Choi is one of a number of researchers around the world who have suggested a possible link between the “ransomware” known as WannaCry and hackers linked to North Korea. Researchers at Symantec and Kaspersky Lab have found similarities between Wann- aCry and previous attacks blamed on North Korea. The evidence is still far from conclusive, however. Au- thorities are working to catch the extortionists behind the global cyberattack, searching for digital clues and fol- lowing the money. “We are talking about a possibility, not that this was done by North Korea,” Choi said. How it worked WannaCry paralyzed com- puters running mostly older versions of Microsoft Win- dows in some 150 countries. It encrypted users’ com- puter files and displayed a message demanding $300 to $600 worth of the digital cur- rency bitcoin to release them; failure to pay would leave the data scrambled and likely beyond repair. The hackers appeared to have taken control of com- puters and servers around the world by sending a type of malicious code known as a worm. The worms quickly scanned computers with vul- nerability, in this case the older versions of Microsoft Windows, and used those computers as hackers’ com- mand and control centers. Experts say that the rapid spread of the worm globally suggests it did not rely on phishing, a method whereby an email is sent to people with the aim of having them click on infected docu- ments or links. Rather, analysts at the Eu- ropean Union cybersecurity agency say the hackers likely scanned the internet for sys- tems that were vulnerable to infection and exploited those computers remotely. The worm then is likely to have spread through a channel that links computers running Microsoft Windows in a network. The channel is typically used to share files within a network or to link to a printer, for example. The North Korea link This method has been found in previously known North Korean cyberattacks, including the Sony hack in 2014 blamed on North Korea. “Since a July 2009 cyber- attack by North Korea, they used the same method,” Choi said. “It’s not unique in North Korea but it’s also not a very common method.” Choi also cited an acci- dental communication he had last year with a hacker traced to a North Korean Internet address who admitted devel- opment of ransomware. The Russian security firm Kaspersky Lab has said por- tions of the WannaCry pro- gram use the same code as malware previously distrib- uted by the Lazarus Group, a hacker collective behind the 2014 Sony hack. Another se- curity company, Symantec, has also found similari- ties between WannaCry and Lazarus tools. But it’s possible the code was simply copied from the Lazarus malware without any other direct connection. If North Korea, believed to be training cyber warriors at schools, is indeed respon- sible for the latest attack, Choi said the world should stop underestimating its ca- pabilities and work together to think of a new way to re- spond to cyber threats, such as having China pull the plug on North Korea’s Internet. “We have underestimated North Korea so far that since North Korea is poor, it wouldn’t have any technol- ogies. But North Korea has been preparing cyber skills for more than 10 years and its skill is significant. We should never underestimate it,” Choi said. Follow the money Researchers might find some additional clues in the bitcoin accounts accepting the ransom payments. There have been three accounts identi- fied so far, and there’s no in- dication yet that the criminals have touched the funds. Although bitcoin is anonymized, researchers can watch it flow from user to user. So investigators can follow the transactions until an anonymous account matches with a real person, said Steve Grobman, chief technology of- ficer with the California secu- rity company McAfee. But that technique is no sure bet. There are ways to convert bitcoins into cash on the sly through third par- ties. And even finding a real person might be no help if they’re in a jurisdiction that will not cooperate. In the attack, hackers demand payment from victims in bitcoins to regain access to their encrypted computers. U.S. Homeland Security and coun- terterrorism adviser Tom BossertNext >