ESTABLISHED 1965 www.caymancompass.com – 50 CENTS – WEDNESDAY AUGUST 30, 2017 High of 90 Low of 80 Slight with wave heights of 1 to 3 feet. EDITORIAL | PAGE 4 CONSERVATION LAW: REVISITING AN ‘UNNATURAL DISASTER’ BUSINESS | PAGE 8 SIR TURTLE FIRST BRAND PROTECTED UNDER NEW TRADE MARKS LAW New confusion in Liquor Board controversy JAMES WHITTAKER jwhittaker@pinnaclemedialtd.com Lawyers acting for Peanuts convenience store have written to the Liquor Board of Grand Cayman seeking clarification over a new notification from the board which sug- gests that the business was granted a liquor license to sell alcohol on Sundays. The Department of Commerce and In- vestment, in its list of license holders for July, recently published on its website, indi- cates that the store, at Red Bay Gas station, has both a package license and a retail li- cense, which would enable it to sell alcohol seven days a week. The Department of Commerce and Invest- ment publishes an official list of liquor license holders on its website every month, along with the type of licenses they hold and some brief details. Peanuts was listed as having both licenses in the April, May and June lists. Those lists were altered to remove the retail license after Liquor Board acting chairman Woody DaCosta said the permis- sion to sell on Sunday had been announced in error and claimed the application had actually been rejected. However, when the July list was published, Peanuts was inexplicably listed as holding PUBLIC SECTOR LOSING $38.5M ON HEALTH INSURANCE COSTS BRENT FULLER bfuller@pinnaclemedialtd.com Cayman Islands public sector entities will lose a combined $38.5 million over the next three years, largely because the govern- ment insurer expects to pay much more to cover future healthcare premiums for unin- sured residents. According to budget records released last week, the Cayman Islands National Insurance Company estimated its premiums will rise due to ever-increasing costs associated with providing healthcare to the territory’s indi- gent population, civil service retirees, seamen and veterans. The costs of providing those benefits is borne entirely by the government, which funds CINICO. The increased costs are anticipated to be the main contributor to overall operating losses for government statutory authorities and companies of $12 million per year in 2018 and 2019, and more than $14 million in 2020. Cayman students swim with world’s biggest sharks JAMES WHITTAKER jwhittaker@pinnaclemedialtd.com To 15-year-old Josh Weaver, the sight of a 40-foot whale shark drifting out of the blue was like a navy submarine emerging from the deep. But swimming next to the largest shark in the ocean was not an intimidating expe- rience for the St. Ignatius student. “It was nothing short of magical,” he said. “When you are in the water with the sharks, you have this amazing sense of peace and tranquility, which is not necessarily what you expect. They are completely harmless filter feeders, despite being the size of a bus.” Josh and Cassandra MacDowell, 16, from Layman E. Scott High School on Cayman Brac, were the winners of the Guy Harvey Ocean Foundation’s competition. They joined Guy Harvey on an expedi- tion to Isla Mujeres off Mexico, and will be featured swimming with whale sharks and manta rays in the conservationist’s next documentary, “It was incredible to be picked to have this experience,” said Cassandra, who hopes to study marine sciences. “It was not what I expected. It made me feel really small to be surrounded by these sharks and manta rays. It was so exciting to see them and they just swam by.” At one stage, the two students were in the water with five whale sharks. Tour boats converge on the open ocean site just off Isla Mujeres between May and September, when hundreds of the creatures aggregate to feed on the plankton. WONG TRIAL RESUMES FOR 2013 TRAFFIC CHARGES Trial resumed on Tuesday for se- nior immigration officer Garfield (Gary) Wong, who has pleaded not guilty to charges arising from a traffic accident in December 2013. See full story on page 2. PLEASE TURN TO PAGE 6 » PLEASE TURN TO PAGE 6 » PLEASE TURN TO PAGE 6 » Two Cayman Islands students come face to face with the biggest shark in the ocean on a trip to Mexico with Guy Harvey’s Ocean Foundation. Josh Weaver and Cassandra MacDowell got the chance to swim with whale sharks in clear blue water off Isla Mujeres. – PHOTO: GEORGE SCHELLENGER DCI’s July 2017 list of liquor licenses (above) indicates that Peanuts Ltd. holds two licenses, a package license and a retail license. Inexplicably, the list has now been removed from the DCI site.2 LOCAL&REGIONAL WEDNESDAY AUGUST 30, 2017 • CAYMAN COMPASS I Daily Matinees Every Day $8.00 Seniors, Mon-Fri Before 6pm Cayman Cinema@cbcinema6cbcinema6 *Additional charges will apply per 3D ticket requested. 640-FILM (640-3456) 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. - WEDNESDAY - THE HITMAN’S BODYGUARD (R) 1:00 VIP I 4:25 I 7:25 VIP I 10:00 ANNABELLE CREATION (R) 1:45 I 4:05 VIP I 7:20 I 10:10 VIP DARK TOWER (PG13) 4:55 I 10:15 THE NUT JOB 2 3D (PG) 12:30 I 2:50 2D I 5:10 I 7:30 2D ALL SAINTS (PG) 1:25 I 4:20 I 7:00 I 9:45 GLASS CASTLE (PG13) 12:35 I 3:40 I 7:20 I 9:50 GIRLS TRIP (R) 2:00 I 6:40 I 9:35 Senior immigration officer’s trial resumes for 2013 traffic charges Government official pleads guilty to damaging a police vehicle MONEY FROM DEPUTY GOVERNOR’S 5K SUPPORTS BRAC YOUTH MEXICAN SMUGGLER WHO HIT U.S. AGENT GETS 8 YEARS SPENCER FORDIN sfordin@pinnaclemedialtd.com Cory Martinson, the Cayman Islands’ acting deputy information com- missioner, pleaded guilty in Summary Court on Tuesday to disorderly conduct and causing damage to prop- erty, in this case a gov- ernment vehicle. Martinson allegedly used indecent language to a po- lice officer and caused $580 worth of damage to a police car with his head after an in- cident at Public Beach in late December last year. “It seems to be a very strong head he has, sir,” attorney John Furniss said to Magistrate Valdis Foldats on Tuesday. Martinson still has two cases awaiting disposition – a disorderly conduct charge and resisting a police officer – and is due back in court on Oct. 30. Magistrate Foldats or- dered a social inquiry report for Martinson, who previously worked for Citizenship and Immigration Canada before his stint in Cayman. Mr. Furniss said his client had reached an agree- ment with the owner of The Jungle, a local bar, after com- pensating the proprietor for damage to his property. The owner of The Jungle does not wish to pursue further charges against Martinson, according to Mr. Furniss. According to his govern- ment biography, Martinson was a commissioned officer with the Canadian Armed Forces Reserves and worked seven years at the Office of the Information and Privacy Commissioner for British Co- lumbia. He first came to the Cayman Islands to work in September 2009, and after working a one-year stint, he returned to work for the In- formation Commissioner’s Office in October 2013. Mar- tinson was named acting deputy information commis- sioner effective Jan. 1, 2014. Ten young people from Cayman Brac traveled to Grand Cayman for a YMCA summer camp and leadership program from Aug. 13-18. The trip was made pos- sible by a portion of the money raised for the YMCA at the Deputy Governor’s 5K Challenge in April. In ad- dition to a ropes challenge course that will be built for team and leadership develop- ment, Deputy Governor Franz Manderson requested that some of the proceeds be al- located for youth on the Brac. “We are delighted that the money raised by the 2017 DG’s 5K Challenge has bene- fited children in both Grand Cayman and Cayman Brac, and has made this trip pos- sible,” Mr. Manderson said in a press release. The visiting campers stayed overnight at the Pros- pect Youth Centre. YMCA or- ganizers said the communal living helped the kids with their team-building skills, and gaining a sense of re- sponsibility and indepen- dence. They participated in many activities during the day, including sports, arts and crafts, and swimming. In the evenings, they built a campfire, had games nights or went to the cinema. Three of the campers who are between the ages of 13 and 17 were counselors-in- training, which is part of the YMCA Teen Leaders program. “We were very excited to host the Cayman Brac campers, and to facilitate this opportunity to spend time with their Grand Cayman counterparts. We hope that lasting friendships have been formed and character-building lessons will stay with them always,” Gregory Smith, chief executive of the YMCA, said in the press release.” One of the counselors-in- training, Chanielle Connor, said, “I really enjoyed coming here. I think my favorite part would be interacting with the younger kids, just learning how to teach them and be a leader to them.” Camper Keira Bodden said her favorite part was making new friends. “I also enjoyed playing games and being ac- tive. This is the longest time being without my family, so the program has made me more independent.” On the last day of camp, Nancy Barnard of the Deputy Governor’s 5K Challenge Committee, attended an as- sembly at the Field of Dreams to greet the campers, and was presented with a YMCA gift bag and cards drawn by the campers in thanks for the assistance from the 5K Challenge. For more information about the YMCA, visit www.ymcacayman. ky or call 926-9622. SAN DIEGO (AP) – A noto- rious Mexican human smug- gler who hit a U.S. Border Patrol agent in the face with a rock two years ago after a foiled smuggling attempt in Southern California was sentenced Monday to more than eight years in prison. Agents spotted Martel Valencia-Cortez as he smug- gled 14 people through rocky terrain in the moun- tains of eastern San Diego County in November 2015. As agents moved in, Va- lencia-Cortez ran to higher ground. He hurled a soft- ball-sized rock, striking an agent in the face, the U.S. Border Patrol said. Valencia-Cortez ran back across the U.S.-Mexico border and escaped but turned himself in to au- thorities six months later at the San Ysidro border crossing that connects San Diego to Tijuana. The agent was disori- ented and thought he would pass out. He received treat- ment for cuts and bruises, according to court docu- ments and trial testimony. Valencia-Cortez, 39, was convicted in May of as- sault on a federal officer and three counts of human smuggling for financial gain. A federal judge handed down a sentence Monday of eight years and three months in prison, the San Diego Union-Tribune news- paper reported. During his time as a fu- gitive, Border Patrol officials called Valencia-Cortez one of San Diego’s most dan- gerous human smugglers. He was known for as- saulting agents, and threatening and intimi- dating people he smuggled, officials said. CAROL WINKER cwinker@pinnaclemedialtd.com Trial resumed on Tuesday for senior immigration of- ficer Garfield Wong, who has pleaded not guilty to charges arising from a traffic acci- dent in December 2013. Wong is charged with driving under the influence of alcohol, careless driving and leaving the scene of the accident. Defense attorney Dennis Brady, who has questioned the workings of the “Intoxilyzer” equipment that measures the proportion of alcohol in a per- son’s blood, urged Magistrate Grace Donalds to have the de- vice brought to court. When Wong’s breath was tested, the machine produced a reading of 0.184. The legal limit in Cayman is 0.100. Expert witness Charles Smith said the device in question would weigh about 40 pounds. After further discussion, the magistrate said she did not feel the need to examine the ma- chine or see a demonstration of how it works. “I didn’t have any problem understanding what the pages explained,” she said, referring to pages from the In- toxilyzer manual that have al- ready been submitted as part of the Crown’s case. Mr. Brady pointed out that he had received a certificate stating when the machine had been last calibrated be- fore it was used on the defen- dant, but he had not received any extracts from the book in which the calibrations were said to be recorded. Crown counsel Scott Wain- wright said he expected to pro- duce the book on Wednesday. The trial has been sched- uled for three days this week, but Magistrate Donalds had a four-page list of cases to deal with on Tuesday before she could continue with Wong’s matter. This trial began in January and has carried over to additional dates de- pending on the availability of expert witnesses and coun- sels’ schedules. The trial has been scheduled for three days this week. Martinson allegedly used indecent language to a police officer and caused $580 worth of damage to a police car with his head. YMCA campers join with the Brac exchange children, front, center, along with Nancy Barnard from the DG5k Challenge committee, center, behind the Brac visitors.3 LOCAL NEWS CAYMAN COMPASS • WEDNESDAY AUGUST 30, 2017 Police staff to increase to 450 officers BRENT FULLER bfuller@pinnaclemedialtd.com The Royal Cayman Is- lands Police Service is slated to hire more officers within the next three years than it ever has, according to gov- ernment budget plans. A flurry of hiring earlier this year has put the number of uniformed officers up to 379. The figure does not in- clude civilian employees who work at the service. Premier Alden McLaughlin has pledged to provide funding to hire another 75 police officers over the next three years. If current staff levels are maintained during that period, the RCIPS will have 454 police of- ficers by 2020. The additional officers do not represent the full number requested by Police Commissioner Derek Byrne in the upcoming budget. Mr. McLaughlin said the re- quest “exceeded the avail- able funding.” The RCIPS, under former Commissioner David Baines, had just more than 400 of- ficers. In 2015, Mr. Baines said that although he had the budget to hire another 30 to 40 personnel, “bureaucratic red tape” had prevented him from doing so. The RCIPS has had to weigh the need to hire of- ficers quickly to meet com- munity demands and replace those retiring or leaving, against the desire to have more local police officers on the force. In March, with 356 offi- cers on staff – about 10 fewer than the department had a decade ago – a combination of local recruits and foreign officers were hired. The ma- jority, about 20, came from outside the Cayman Islands. The police cadet class that graduated in May had a total of six probationary officers. A cadet class of local officers that graduated in November 2015 sent seven new recruits to the police. Mr. McLaughlin expressed the government’s desire to hire local officers during his Strategic Policy State- ment to the Legislative As- sembly last week. “We … had concerns with the request to increase the officer count by a significant number – requiring overseas recruitment – without sight of an overall plan of action,” the premier said. Including the new hires this year, the RCIPS now has 167 Caymanian police of- ficers and 212 non-Cayma- nians, meaning uniformed officers are 44 percent Cay- manian at present. Police civilian personnel include 45 Caymanians and 23 non-Caymanians, so the entire police service is about 47 percent Caymanian. Community policing Since arriving in Cayman from Ireland last year, Com- missioner Byrne has pro- posed that the department make about 10 percent of its force neighborhood police. During separate community meetings in East End, George Town and West Bay, Mr. Byrne has heard repeated de- mands for more police to “get out of their cars” and go talk to neighbors. “We’re a lovable district, we don’t try to harm no one up here,” John McLean Jr. said of East End. “If they’re not socializing, they’re not going to get any information out of the community.” Last month, a number of Scranton residents ex- pressed concerns about com- munity “beat” officers being reassigned or promoted during times when crime reports spike. “You put one here this month, and then next month you move them out,” one resi- dent told Mr. Byrne. An RCIPS officer stands at a roadblock during the 2016 holiday season. 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Switch your mortgage to CIBC FirstCaribbean and we’ll pay your switching cost.* Talk to one of our Sales Specialists today or email CX48CaymanRetailBanking@cibcfcib.com CLICK cibcfcib.com CALL 949-7300 POST cibcfcib TWEET cibc_fcib Webb attorneys ‘conflict’ case heard, issue dismissed BRENT FULLER bfuller@pinnaclemedialtd.com Cayman’s Jeffrey Webb waived his legal right to “un- conflicted counsel,” agreeing to continue with his cur- rent law firm, though it is also representing an- other defendant in the FIFA corruption case. A hearing on the matter was held in Webb’s absence on Tuesday in U.S. federal court in Brooklyn. The same firm, although not the same attorneys, rep- resents another defendant in the ongoing corruption probe in which Webb pleaded guilty to seven charges in No- vember 2015. The defendant, Jorge Luis Arzuaga, pleaded guilty in federal court to one charge of money laundering conspiracy in connection with the FIFA investigation and faces sentencing in Jan- uary, the same month set for Webb’s sentencing. According to federal court records, Webb, through his attorneys, agreed to continue with his current lawyers. There are several poten- tial difficulties in having the same counsel represent dif- ferent defendants in a related case, according to court re- cords. Chief among them is a concern that attorneys who receive privileged or confiden- tial information on behalf of one defendant could not dis- close or use that information to assist the other defendant. Such conflicts can also be grounds for appeal.The 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. 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” Four years after the Legislative Assembly hurriedly enacted a convoluted National Conservation Law, it appears poised to hurriedly alter it. We urge them to proceed, but with care and deliberation. We have never supported the law – in fact, we have vigorously opposed it since its chaotic conception, which produced a piece of legislation distorted and bent by some three dozen amendments that legislators, at the time they voted on it, could have had no real idea what they were voting on. It passed unanimously. Readers may recall that the Compass published a 12-page section (without advertising) to print the law in its opaque entirety, an unprecedented event in the annals of Cayman journalism. We did so because of our judgment that the radical law potentially was so damaging to the future of these islands. While the law purportedly was to protect the natural environment, the result might best be described as an “unnatural disaster.” Premier Alden McLaughlin recently identified as a priority the removal of certain elements of the law, in par- ticular describing the law’s Environmental Impact Assess- ment process as “ridiculous.” He was correct. In the letter to editor printed alongside this editorial, attorney/writer Paul Simon delineates just how “ridicu- lous” (and dangerous) parts of the law are. It is certain that major portions of the law cry out for revision or repeal. The salient question in our minds is whether law- makers should overhaul the existing law … or scrap it completely and start over. The premier’s recent statements rekindled the ire of environmentalists who doubt government’s commitment to conservation (some of whom go online to leave outra- geously worded, often hateful, potentially defamatory and usually anonymous comments). Protecting the Cayman Islands’ natural resources and delicate habitats is a noble goal – but one that must be considered in the context of fundamental private property rights and the importance of the country’s continuing economic development. The current law, shepherded through the Legisla- tive Assembly in late 2013 by a handful of influencers (most notably Department of Environment Director Gina Ebanks-Petrie and then-Minister of Environment Wayne Panton), is wildly out of balance. The law bestows an inordinate amount of authority and discretion to a single unelected board – including the power to demand a developer conduct an expensive and time-consuming Environmental Impact Assessment (and pay for it) before a project can be approved. Council president Christine Rose-Smyth has said the council has been judicious in selecting which projects should require such assessments, mandating EIAs for a mere six projects out of the 368 projects reviewed through June. To us, that is cause for concern rather than comfort, and is a sign of the council’s discretionary (i.e., arbitrary) wielding of its outsize influence. Did legislators actually intend to imbue the council with such power? It’s difficult to tell, but if they did, they should not have. Even though the framework of the Conservation Law was a decade in the making, the 2013 bill was subjected to a flurry of eleventh-hour amendments, and it took more than a month for the governor to sign the final version into law. The public did not get the opportunity to see the final language of the law until two weeks after that. The law was so cumbersome and complex that all the provisions were not fully implemented until August 2016, two-and-half years later. Now that they have had ample opportunity to read the law that they passed and observe its effects, it is entirely appropriate for the new Progressives-led government to reshape the legislation into a statute that is sensible, balanced and fair, and that protects Cayman’s environ- ment without bulldozing the economy and usurping the private property rights of Caymanian landowners. Conservation Law: Revisiting an ‘unnatural disaster’ WEDNESDAY AUGUST 30, 2017 • CAYMAN COMPASS Parts of law really are ‘ridiculous’ Following an Aug. 24 Cayman News Service article (“Conservation Law ‘ridicu- lous’ says premier”), there was a great outpouring of venom on the part of persons hiding behind the “anony- mous” label. Unfortunately, most of the comments did not understand that the sub- ject of the Premier’s comment was not the entire National Conservation Law (Law) but only sections 41 and 43; in labelling the sections “ri- diculous,” in my opinion, the Premier was correct. The reasons for my support of the Premier’s comments are as follows: 1. Subsection 41(1) of the Law imposes duties on all en- tities (any body of government and includes the Cabinet, any ministry, portfolio, statutory authority, government com- pany or any other body which exercises a public function): (1) to comply with the Law; and (2) to ensure that its de- cisions, actions and undertak- ings are consistent with and do not jeopardise the protec- tion and conservation of a pro- tected area or any protected species or its critical habitat; the duties apply to the Cab- inet as well as to other enti- ties. As a general statement, subsection 41(1) is acceptable subject to the proviso that cur- rently, we do not know where the critical habitats are of pro- tected species. 2. Subsection 41(2) of the Law states that for the pur- poses of subsection 41(1), the National Conservation Council (Council) shall formulate and issue guidance notes to enti- ties on their duties under the Law, and any action taken in full accordance with such guidance shall be deemed to be in compliance with the Law. There are two problems with subsection 41(2): (1) it is unusual for an entity like the Council to interpret the Law and tell other entities, in- cluding the Cabinet, what their duties are under the Law; and (2) if the Council’s interpreta- tion of the Law is incorrect, full compliance with an in- correct interpretation is to be deemed compliance with the Law; this sets up an unten- able situation. 3. Subsection 41(3) of the Law states that every entity (including the Cabinet), in ac- cordance with guidance notes issued by the Council shall: (1) consult with the Council; and (2) take into account any views of the Council, before: (a) taking any action, including the grant of a permit or li- cense; (b) the making of any decision; (c) the giving of any undertaking; or (d) the giving of any approval, that would or would be likely to have an adverse effect on the envi- ronment generally or on any natural resource. There are a number of problems with subsection 41(3); first, it binds the Cabinet; second, the defi- nition of adverse effect is so broad that every action, grant, decision, undertaking and ap- proval of an entity would be held up waiting for Council input. For example, the defini- tion of adverse effect includes “alterations which may hinder or impede the movement or migration of wildlife” in a pro- tected area, conservation area or an area of critical habitat. Third, because of the way ad- verse effect is defined in the Law, the use of the term with respect to natural resource is not appropriate. Fourth, the word environment is not de- fined in the Law. Fifth, and perhaps the most important, is that subsection 43(1) of the Law states that in con- sultations pursuant to sub- section 41(3), the Council has the power to require an envi- ronmental impact assessment (EIA) to be carried out on the proposed action. There is no appeal from such a decision/ requirement imposed by the Council; there may be an ap- plication to the Grand Court for judicial review, a long and costly process. Subsec- tion 43(1) of the Law gives the Council the power to require that the Cabinet undertake an EIA on proposed action even though the duty imposed by subsection 41(3) of the Law is only to consult the Council and take its views into ac- count. The mandatory scope of the EIA is stated in subsec- tion 43(2) of the Law; however, the Council must approve the person carrying out the EIA and the person carrying out the EIA must comply with the directives issued by the Council. Directives are Law under the definition of Law. The cost of the EIA, which can be in the hundreds of thousands of dollars, is to be paid by the person who pro- poses the development (pro- posed action). 4. Subsection 41(4) of the Law imposes a duty on every entity, except the Cab- inet, in accordance with guid- ance notes issued by the Council, to: (1) apply for; and (2) obtain the approval of the Council before (a) taking any action, including the grant of any permit or license; (b) the making of any decision; (c) the giving of any under- taking; or (d) the giving of any approval that would or would be likely to have an adverse effect, whether di- rectly or indirectly, on a pro- tected area or on the critical habitat of a protected spe- cies. Subsection 41(4), subject to a right of appeal against the Council’s decision to the Cabinet, gives the Council a veto power over the deci- sions of all entities except the Cabinet. Currently, there are a number of protected areas; however, the areas of land which are the critical habitat of protected species have not been defined. Currently, an applicant to the Central Plan- ning Authority for permis- sion to develop land does not know if his or her land is the critical habitat of a protected species. Subsection 43(1) of the Law gives the Council the power to require an EIA be- fore the Council grants its ap- proval to a proposed action. 5. The veto power granted the Council in subsection 41(4) is qualified in subsec- tion 41(5) (a) to the extent that the Council a proposed action (development) subject to such conditions as it considers reasonable (regardless of whether they are reasonable in fact); in such a case, the en- tity in question shall ensure that the proposed action be- fore the entity is made sub- ject to such conditions. How- ever, this qualification is itself qualified by the statement in subsection 41(5)(b) that if the Council considers that the ad- verse effect of the proposed action cannot be satisfacto- rily mitigated by conditions, the Council shall so direct the entity (originating authority) and the latter shall refuse to agree to or refuse to proceed with the proposed action. If the foregoing seems very complex, it is because it is. However, the bottom line is the too much power is given to the Council which is a non- elected body and the Council is granted too much discre- tion to block or unduly inter- fere with decisions not only of the Cabinet but all other enti- ties. Therefore, the provisions of sections 41 and 43, in my opinion, do not meet the test, mandated by the Constitution, of a reasonable balance be- tween protecting the environ- ment and development for the benefit of the Islands. Paul Simon5 LOCAL NEWS CAYMAN COMPASS • WEDNESDAY AUGUST 30, 2017 *The Promotion Period will start on July 1, 2017 and end at midnight on September 15, 2017. During the Promotion Period Special Rates will apply to Scotia Plan Loans. Customers agree to be bound by the Bank’s operating processes and procedures, account operating terms and conditions and confidentiality requirements. 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But once he is off duty, the chief superintendent changes out of his uniform and dons his overalls to play a very different role. Mr. Graham gained a rep- utation in the U.K. as one of the country’s most ac- complished wildlife artists, painting stunning, lifelike pictures of everything from big cats and orangutans to magpies and peacocks. Now in Cayman, he has picked up the paintbrush once again. His first major work, of a turtle drifting past Amphitrite, the famous un- derwater mermaid statue off Sunset House, will be auc- tioned at the Cayman Islands Crisis Centre’s gala next month. The proceeds will go to the charity, which runs a help-line and shelter for vic- tims of domestic abuse. Mr. Graham said he had painted professionally in the U.K. during the interlude from retiring from the po- lice in Kent and taking up the job in Cayman. He has sold work all over the world and raised money for nonprofits dealing with diverse organizations, in- cluding human trafficking and tiger conservation. He wants his work in Cayman to have a sim- ilar impact and will do- nate his next work, a pair of ballerinas, to the Breast Cancer Foundation. Mr. Graham said he first picked up a brush 15 years ago as a way to relax be- tween shifts. Now it provides a release and a contrast to the world of policing. “I started painting purely as a means of relaxation,” he said. “It is the one chance you have to switch off and drift away as you immerse your- self in something. “If I don’t get my paint brushes out and have the smell of paint, I get these withdrawal symptoms. I have to do it.” Julie Hughes, one of the organizers of the Crisis Cen- tre’s Greek-themed gala on Sept. 16, said the organization is thrilled to have the painting as part of its auction. She said guests are being asked to don togas or dress as Greek gods for the event, under the theme “Opa! My Big Fat Greek Gala” at Ris- torante Pappagallo in West Bay. It will also included plate-smashing and Greek dancing as part of the night of fundraising. She hopes to raise around $30,000 for the organization. Executive Director of the Crisis Centre Ania Mila- nowska said the shelter re- lies on fundraising for much of its operating costs. “We are a charitable orga- nization and we need all the help we can get,” he said. “We have a shelter which helps women and children coming from abusive relationships to find a safe haven with us and work towards a life free of violence through all the services and help we pro- vide for them.” She said the charity has a new office off Eastern Av- enue in George Town, where it also offers a drop-in center for young people and advo- cacy and support for people in abusive relationships. Chief Superintendent Robbie Graham poses alongside his painting of a sea turtle and the Amphitrite mermaid statue, with Ania Milanowska, executive director of the Crisis Centre, and Julie Hughes, organizer of the Crisis Center gala, right. - PHOTO: ALVARO SEREY JAMAICA DAY FUNDS DONATED TO CRISIS CENTER The Jamaican Con- sulate shared money from its Aug. 6 Indepen- dence Day celebration with the Cayman Islands Crisis Centre. The consulate raised $625 for the center through an ecumen- ical thanksgiving ser- vice at the Church of God of Prophecy on Eastern Avenue. The donation was presented to center staff on Friday. “It is our pleasure on these occasions when we get together as a commu- nity to give back to or- ganizations such as the Cayman Crisis Centre. The Crisis Centre’s exten- sive support, programs and outreach can only re- main effective and suc- cessful through continued support,” said honorary vice consul Elaine Harris. Crisis Centre Executive Director Ania Milanowska said the donation will support shelter and ser- vices for women in need. “We are immensely grateful to the Jamaican Consulate and the Church of God of Prophecy for their financial support. Because of their gener- osity, we can continue to offer a safe haven to women and children at our shelter, where they receive valuable services to help alleviate their difficult situations and live lives free from fear and violence,” Ms. Mi- lanowska said. On Sept. 16, the crisis center will host a fund- raiser, “Opa! My Big Fat Greek Gala,” an evening of food and entertainment at Ristorante Pappagallo. For the Dec. 10 Jingle Bell Walk/Run, the center is encouraging businesses to donate to support its services. “The money we raise each year goes to sup- port the Centre’s 24-Hour Emergency Shelter for women and their chil- dren who are victims of domestic abuse and/or sexual assault and to our new walk-in office Estel- la’s Place in Crown Square on Eastern Avenue, where we offer support and as- sistance to all victims of domestic violence, in- cluding men,” a letter from the center’s fund- raising committee says. Those interested in donating can contact info@cicc.ky. Prep graduate receives Dart college scholarship Dominic Dyer, a gifted student and athlete, is the re- cipient of Dart’s 2017 Minds Inspired William A. Dart Me- morial Scholarship. The scholarship, valued at up to US$40,000, is awarded annually to a Caymanian stu- dent who demonstrates ac- ademic excellence and is well-rounded in extracurric- ular activities. Selected from a group of nearly 40 applicants, Dyer heads to New York City in September to study economics at Co- lumbia University. Dyer recently completed his A-levels at Cayman Prep and High School where he was president of the Stu- dent Council in his last year; Deputy Head Boy, leading a team of prefects and man- aging school assemblies; and House Captain during his last two years. In athletics, Dyer most re- cently won gold and bronze medals at the 2017 CARIFTA Games in April in the 5000- meter and 1500m events, re- spectively. Cayman Prep and High School recog- nized Dyer as their 2017 Ath- lete of the year. Mark VanDevelde, chief executive officer of Dart En- terprises said, “I am im- pressed by all of our Minds Inspired scholars. Their focus on success at such a young age is admirable, especially in Dominic’s case, as he demonstrated extraordinary time-management and pri- oritization skills. Even as he studied and excelled academ- ically, Dominic – an accom- plished athlete – maintained a rigorous training schedule, emerged as a student leader at school and participated in a number of philanthropic activities. These skills will serve him well as he bal- ances his academic and ath- letic aspirations throughout college and later in his chosen career.” In his free time, Dyer vol- unteers for Race Caribbean and assists with the adminis- tration of long-distance races in Grand Cayman. He also vol- unteers with Cayman’s ARK (Acts of Random Kindness) and the 345 Athletic Club. The recipient of this year’s William A. Dart Memorial Scholarship, Dominic Dyer, center, is congratulated by, from left, Alasdair Foster, president of Active Investments; Mark VanDevelde, CEO of Dart Enterprises Ltd.; Cameron Graham, president of DECCO/Dart Development; and Glenda McTaggart, manager of Education Programmes, Dart Enterprises. Mr. Graham gained a reputation in the U.K. as one of the country’s most accomplished wildlife artists.The islands’ most-trusted news source 6 WEDNESDAY AUGUST 30, 2017 • CAYMAN COMPASS both licenses. Now, attorneys for the business are trying to deter- mine if the new listing rep- resents a change in position from the board or another administrative error. No one had responded to the letter by press time Tuesday. How- ever, by Tuesday afternoon, the July list appeared to have been removed completely from the DCI website. Mr. Rutty said he had been advised by his legal team that in the absence of any response to the contrary, the inclusion of Peanuts on the July list of license holders could be accepted as confirmation that he had per- mission to serve alcohol to customers on Sunday. He said the situation was impacting his business. “We have now had three different declarations on this from the board,” he said. “This level of confu- sion makes it very difficult for us and creates stocking and staffing issues that we have to manage.” He said the latest list of li- cense holders supported the original decision communi- cated to him from the board secretary that the Sunday li- cense had been granted. He added that DCI had also accepted his renewal ap- plication form and payment for the disputed retail license. He said his lawyers had written to the board to ask that they issue the offi- cial “form 3,” confirming the terms and conditions of the license. The Liquor Licensing Law requires that the form be issued by the chairman once a decision is taken by the board. Whether the board actu- ally granted the license re- mains in dispute. Following its March meeting, then- board secretary Marva Scott issued a release to the media and to Peanuts saying the ap- plication had been granted. However, when the offi- cial minutes to the March meeting were published in June, they indicated that the application had been re- jected, and a new policy cre- ated restricting businesses to one type of liquor license per premises. Liquor Board acting chairman Mr. DaCosta claimed, in a written re- sponse to questions from the Cayman Compass, that the original decision, indicating that the license had been granted, had been sent out in error. He attributed this to an “untimely and unauthorized release” by a member of De- partment of Commerce and Investment staff. He claimed the decision had been postponed and later rejected following a separate meeting later in the quarter. He later clarified that this was an “electronic meeting.” The minutes made no reference to any elec- tronic meeting and indicated that the decision had been taken and the meeting con- cluded on March 28. Commerce, Planning and Infrastructure Minister Joey Hew ordered an independent investigation to be carried out by the Internal Audit Services department. That investigation is being led by the service’s acting director, Andy Bonner. Mr. Bonner said Thursday his team was making prog- ress on examining documents and interviewing board mem- bers and civil servants. He said he plans to have a report to the minister by mid-September. Jessica Harvey, project manager at foundation, said the purpose of the competi- tion, which challenged stu- dents to write an essay and make a short video audition for the trip, was to inspire them to care about the ocean, and sharks in particular. “We wanted the stu- dents to have an amazing in- teraction with sharks in a safe environment and bring them into an outside class- room,” she said. “We also wanted to ex- pose them to what shark eco-tourism is all about. The interesting thing about Isla Mujeres is that a lot of the people who are now tour guides were once shark fishermen.” She said the short docu- mentary will be screened in Cayman during Ocean Con- servation Month in November. That means when the earnings and losses of all 16 statutory authorities and government compa- nies are pooled together, health insurance premiums overrun any profits made in those years. The problem, ac- cording to Premier Alden McLaughlin, is one that is often described by legisla- tors addressing healthcare costs: Private sector insur- ance companies cover the working-age population, leaving government to pick up everyone else. “At the moment, it falls to CINICO to cover those who are unable to afford private insurance cover – essentially with govern- ment picking up the full cost,” Mr. McLaughlin said last week. “This is unsustainable.” Mr. McLaughlin said in order to combat the rising costs, government intends to make CINICO a more ac- tive player in the health in- surance market, allowing it to cover a broader section of the market. “The increasing cost of CINICO premiums [is] in large part due to govern- ment providing insurance cover to the market seg- ment that the private sector will not serve,” he said. Typically, healthcare premiums shared across a larger number of insured individuals lead to reduced costs for those covered. Although it is generally known as the government insurer and covers civil servants in their working years and in retirement, CINICO currently does not even cover all employees of the separate statu- tory authorities and gov- ernment companies. For example, one of govern- ment’s largest outside au- thorities, the Health Ser- vices Authority, does not use CINICO to insure its employees. It is just one of 15 outside authorities that opted for private insurers as of last year. CINICO Chief Execu- tive Lonny Tibbetts told the Cayman Compass at that time the insurer es- timated there were 3,000 people – including chil- dren and spouses of public sector employees – who were receiving in- surance coverage from somewhere else. There are various rea- sons why the public sector healthcare insurer is not used by certain authorities. In the case of the Health Services Authority, it’s a “moral hazard,” according to Mr. Tibbetts. “They could potentially treat their staff to profit- ability,” Mr. Tibbetts said. “It’s always a [healthcare] industry dilemma.” In the case of other public agencies, partic- ularly those with larger numbers of employees, pri- vate sector insurers are used by the public author- ities because they offer a wider selection of health- care providers. “The majority of them … felt they wanted choice,” Mr. Tibbetts said. CINICO- insured patients, who may get waivers to receive treat- ment at other hospitals or medical facilities, must use the Health Services Au- thority as their first “point of contact” for healthcare. Currently, civil ser- vants insured by CINICO do not pay anything for their healthcare, either in monthly premiums or in co-pay costs for a doctor or clinic visit. A plan to require those employees to contribute to monthly premiums has been under discus- sion since 2014, and was planned for implemen- tation next year. How- ever, civil servants have said they would want any such plan to provide choice of service providers, similar to private sector health plans. MOSQUITO SPRAYING PLANNED FOR COMING WEEKS The Mosquito Control and Research Unit will con- duct aerial spraying over mosquito breeding swamps in the coming weeks in Grand Cayman and the Sister Islands. The seasonal spraying in Little Cayman and Cayman Brac will take place Aug. 29 to Sept. 1. Islandwide spraying in Grand Cayman will be Sept. 4-15. The low-level flights are scheduled for mornings and late afternoons. Operators will drop pel- lets designed to stop mos- quito larvae development in the water. Rain acti- vates the pellets. Cayman’s main mos- quito season is September and October. Cayman is no longer under no- tice for Zika. Public sector losing $38.5 million on health insurance costs CONTINUED FROM PAGE 1 CONTINUED FROM PAGE 1 New confusion in Liquor Board controversy CONTINUED FROM PAGE 1 Cayman students swim with world’s biggest sharks Disputed Iraqi province to vote on Kurdish independence BAGHDAD (AP) – Iraq’s eth- nically mixed Kirkuk prov- ince, long claimed by both the Arab-led central gov- ernment and the autono- mous Kurdish region, voted Tuesday to take part in a vote on Kurdish independence slated for next month. Iraq’s Kurds plan to hold the referendum on Sept. 25 in three governorates that make up their region as well as disputed areas that are con- trolled by Kurdish forces but claimed by Baghdad. Iraq’s central government is opposed to the referendum. Iraqi Prime Minister Haider al-Abadi on Tuesday said Kirkuk’s decision to take part in the vote was “unconstitu- tional” and “illegal,” and that the referendum would “lead to more conflicts.” Kirkuk’s provincial council said the proposal to vote in the referendum won a “majority,” without providing further details, according to a statement released after Tuesday’s session. Arab and Turkmen councilmen boy- cotted the meeting, ac- cording to local councilman Burhan Mizhir Assi. Oil-rich Kirkuk is home to a mix of Arabs, Kurds, Turkmen and Christians. Kurdish forces took control of the province and other dis- puted areas in the summer of 2014, when the Islamic State group swept across northern and central Iraq and the Iraqi armed forces crumbled. Turkey and Iran are also opposed to the referendum, fearing it could inspire Kurdish separatists within their own borders. The U.N. mission to Iraq has said it will not be “engaged in any way or form” in the vote. Turkey said the Kirkuk vote was “unacceptable,” calling it “another link in the chain of mistakes” and a violation of the Iraqi constitution. “Insisting on pursuing this dangerous course will not serve the interest of (the autonomous Kurdish region) or of Iraq, it will not be ac- cepted by the international community, and will not con- tribute to regional peace and stability,” The Turkish Foreign ministry said in a statement. The vote has even faced criticism inside Iraq’s Kurdish region, from those who say it should be post- poned until new parlia- mentary and presidential elections have been held. Kurdish regional President Masoud Barzani’s term ex- pired in 2015. The expedition team, Cassandra MacDowell and Josh Weaver, with Louisa Gibson, Guy Harvey and Jessica Harvey of the Guy Harvey Foundation. - PHOTO: GEORGE SCHELLENGER7 WORLD&REGIONAL CAYMAN COMPASS • WEDNESDAY AUGUST 30, 2017 Register online: Ready. Set. Register for the FIDELITY www.caymanactive.com/fidelityfunrun 7:30 a.m. on Walkers Rd opposite the former John Gray High School Divisions: M/F: U12, 12-14, 15-19, 20-29, 30-39, 40-49, 50-59, 60-69 and 70+; Stroller & Pet. Series Dates: September 9th, 2017 September 16th, 2017 September 23rd, 2017 FIDELITY In a first, N. Korea fires missile over Japan in aggressive test SEOUL, South Korea (AP) – In a first, North Korea on Tuesday fired a ballistic missile de- signed to carry a nuclear pay- load that flew over Japan and splashed into the northern Pacific Ocean, officials said. The aggressive missile launch – likely the longest ever from North Korea – over the terri- tory of a close U.S. ally sends a clear message of defiance as Washington and Seoul conduct war games nearby. In a statement, U.S. Pres- ident Donald Trump said North Korea had signaled its “contempt for its neigh- bors” and that “all options are on the table” in terms of a U.S. response. South Korea’s Joint Chiefs of Staff said the missile trav- eled around 2,700 kilometers (1,677 miles) and reached a maximum height of 550 ki- lometers (341 miles) as it flew over the northern Japa- nese island of Hokkaido. The distance and type of missile tested seemed designed to show that North Korea can back up a threat to target the U.S. territory of Guam, if it chooses to do so, while also establishing a poten- tially dangerous precedent that could see future missiles flying over Japan. Any new test worries Washington and its allies because it presumably puts North Korea a step closer to its goal of an arsenal of nuclear missiles that can reliably target the United States. Tuesday’s test, how- ever, looks especially ag- gressive to Washington, Seoul and Tokyo. North Korea has con- ducted launches at an un- usually fast pace this year – 13 times, Seoul says – and some analysts believe it could have viable long-range nuclear missiles before the end of Trump’s first term in early 2021. Seoul says that while North Korea has twice be- fore fired rockets it said were carrying satellites over Japan – in 1998 and 2009 – it has never before used a bal- listic missile, which is unam- biguously designed for mili- tary strikes. North Korea also chose not to fire its most re- cent missile at a lofted angle, as it did in previous launches to avoid other countries, and Seoul’s spy service said the North launched from an unusual spot: the inter- national airport in its cap- ital, Pyongyang. Some outside observers said launching a road-mo- bile missile from an airport runway could demonstrate the North’s ability to fire its missiles from anywhere in the country. The South Korean military was analyzing whether North Korea had launched a Hwa- song-12, a new intermediate- range missile that it recently threatened to fire into waters near Guam, which hosts a major U.S. military base that the North considers a threat. The launch is also an- other rebuke to Trump, who suggested last week that his tough approach to North Korea, which included threats to unleash “fire and fury,” meant leader Kim Jong Un “is starting to respect us.” Tuesday’s missile landed nowhere near Guam, but firing a Hwasong-12 so soon after the Guam threat may be a way for North Korea to show it could follow through if it chose to do so. Guam is 2,110 miles from North Korea, but South Korea’s mili- tary said the North may have fired the most recent missile at a shorter range. North Korea will no doubt be watching the world’s reac- tion to see if it can use Tues- day’s flight over Japan as a precedent for future launches. Trump said in his state- ment that “Threatening and destabilizing actions only in- crease the North Korean re- gime’s isolation in the region and among all nations of the world,” and that “All options are on the table.” Japanese officials made their usual strongly worded condemnations of the launch. “We will do our utmost to protect people’s lives,” Japa- nese Prime Minister Shinzo Abe said. “This reckless act of launching a missile that flies over our country is an un- precedented, serious and im- portant threat.” The launch was also con- demned by U.N. Secretary- General Antonio Guterres, Britain, France, Germany, Russia, and a number of other countries. Tokyo said there was no reported damage from the missile. Residents on Hok- kaido were warned of a North Korean missile launch by an alert on their cellphones, with loud alarms and an email that told people to stay indoors. Speakers broadcast an alert saying “missile is passing, missile is passing.” Tuesday’s launch came days after North Korea fired what was assessed as three short-range ballistic missiles into the sea, and a month after its second test of an in- tercontinental ballistic mis- sile, which analysts say could reach deep into the U.S. main- land when perfected. In an unusual move, the military in Seoul released videos of three South Ko- rean missile tests conducted last week. They showed two types of new missiles with ranges of 500 miles and 310 miles being fired from truck- mounted launchers. South Korea’s Agency for Defense Development said the launches represented the last flight test for the longer- range missile before it is op- erationally deployed. Such missiles, which would be the latest additions to South Ko- rea’s Hyumoo family of mis- siles, are considered key components of the so-called “kill chain” pre-emptive strike capability that South Korea is pursuing to counter North Korea’s nuclear and missile threat. South Korea also said its air force conducted a live- fire drill involving four F-15 fighter jets dropping eight MK-84 bombs that accu- rately hit targets at a mili- tary field near the country’s eastern coast. Yoon Young- chan, chief press secretary of South Korean President Moon Jae-in, said the ex- ercise was conducted after Moon directed the mili- tary to “display a strong ca- pability to punish” North Korea if need be. The North’s launch over Japan should not be a total surprise. Earlier this month, when threatening to lob four Hwasong-12s into the waters near Guam, North Korea spe- cifically said they would fly over Japanese territory. North Korea in June also angrily re- acted to the launch of a Jap- anese satellite it said was aimed at spying on the North and said Tokyo was no longer entitled to fault North Korea “no matter what it launches or whether that crosses the sky above Japan.” North Korea typically re- acts with anger to U.S.-South Korean military drills, which are happening now, often testing weapons and threat- ening Seoul and Washington in its state-controlled media. But animosity is higher than usual following threats traded between Trump and the North. North Korea regularly says U.S.-South Korean mili- tary drills are a rehearsal for invasion, and North Korea’s U.N. ambassador, Ja Song Nam, wrote recently that the exercises are “provoca- tive and aggressive” at a time when the Korean Peninsula is “like a time bomb.” The Japanese Air Self Defense Force on Tuesday demonstrates training for using the PAC-3 surface-to-air interceptors, at the U.S. Yokota Air Base in Fussa, on the outskirts of Tokyo. - PHOTO: APThe islands’ most-trusted news source 8 Business WEDNESDAY AUGUST 30, 2017 • CAYMAN COMPASS US consumer confidence improves American consumers give today’s economy the highest grade in more than 16 years. The Conference Board said Tuesday that consumers’ assessment of current economic conditions hit the highest level this month since July 2001. GRAND COURT: Madoff-invested fund’s administrator and custodian negligent but not liable Sir Turtle first brand protected under new Trade Marks Law KEN SILVA ksilva@pinnaclemedialtd.com The Cayman Islands gov- ernment on Tuesday cele- brated the commencement of the new Trade Marks Law, which has been touted as necessary for overhauling the territory’s intellectual prop- erty legal framework. The first to brand under the new law were the Depart- ment of Tourism and Cayman Airways, which filed to pro- tect the Sir Turtle logo. Suzy Soto, who created the image in 1963 and sold it to the Department of Tourism several years later for $1, said at the Tuesday morning press conference, “I do a lot of artwork and I don’t feel like I’m a worthy artist … this today shocked me. I’m really shocked and honored. This has been so near and dear to my heart.” The main change to the trademark regime was aimed at allowing local busi- nesses to more easily register their brands. Previously, any company seeking to register a trade- mark had to first go through the United Kingdom or Euro- pean Union registration pro- cess. If the same brands were already registered in those jurisdictions, then local busi- nesses would be out of luck. “Government has long heard the concerns of busi- ness owners and local cre- ative persons who wanted to protect their work,” said Financial Services Minister Tara Rivers. “Now, we can offer them the tools to do so.” The new law has already led to a major uptick in trademark registrations, with more than 150 brands filing applications since the law went into effect on Aug. 1, ac- cording to government. Typi- cally, the Register of Patents and Trademarks only receives about 300 applications in an entire given year. Registry officials at the conference did not have the exact figures for how many new trademarks have been filed by local companies versus international corpora- tions, but said that the first six applications were filed by local entities. The new legislation also provides businesses a way to use their trademarks to obtain loans from financial institutions. “You can now take your trademark to the bank and cash it, and get a loan from the bank,” a Registry official said at the press conference. “The banks are willing to do it now because you have a securities register where you can register the trade- mark as a security owned by the bank.” The new legislation should create more local em- ployment opportunities, said Dax Basdeo, chief officer for the Ministry of Financial Ser- vices and Home Affairs. “As persons exercise their rights to protect their intel- lectual property against in- fringement from others, they will need Cayman-based agents and counsel to assist with this process,” he said. “This new field of employ- ment may be small, but it will strengthen the attractiveness of our jurisdiction to global businesses that want to make sure they have a strong in- ternational portfolio of pro- tected intellectual property.” MICHAEL KLEIN mklein@pinnaclemedialtd.com Two service providers to Primeo, a fund that in- vested all of its money with Ponzi scheme fraudster Ber- nard Madoff, were negligent in their duties as admin- istrator and custodian, ac- cording to the Cayman Is- lands Grand Court. But in his Aug. 23 judg- ment, Justice Andrew Jones concluded that any liability by the service providers for the $2 billion in losses claimed by the liquidators of Primeo was partly time-barred and that it was not established that the conduct of the adminis- trator and the custodian had caused the fund’s losses. “If I had found in favor of Primeo, I would have concluded that its damages be reduced by 75 percent because it was, to a large extent, the author of its own misfortune,” Justice Jones wrote in his judgment. The judge concluded that Primeo’s administrator had adopted grossly negligent procedures to calculate the value of the assets of the fund, and that the custodian had failed to ensure that Ber- nard L. Madoff Investment Securities (BLMIS) was suit- able to act as sub-custodian and failed to give any con- sideration or make any rec- ommendations to Primeo in relation to safeguarding the assets of the fund. Despite the dismissal of the liability claim, the deci- sion is relevant to the respon- sibilities of Cayman services providers to hedge funds, es- pecially those that service funds with unusual or high- risk investment structures. Madoff, who was sen- tenced to 150 years in prison for the infamous fraud in 2009, admitted that he had not traded at all since the early 1990s and that all his returns since then had been fabricated. Because Madoff’s wealth management firm BLMIS acted as investment adviser, broker and de-facto custo- dian for all its clients, other professional service pro- viders for those clients had to rely on a single source of information to perform their duties: Madoff. “[Madoff Investment Se- curities’] unique business model was essential for the purposes of running a Ponzi scheme, but this is of course one of the reasons why it was (and still is) conventional practice for the core func- tions involved in the man- agement of hedge funds to be segregated amongst multiple independent professional ser- vice providers,” Justice Jones wrote in his judgment. The plaintiffs in the case alleged that Bank of Bermuda (Cayman) Ltd., which later became HSBC, and HSBC Se- curities Services (Luxem- bourg) SA (HSSL) had been grossly negligent in their du- ties as administrator and custodian of the fund. Although HSSL was ap- pointed as the custodian, Primeo’s assets were held by Madoff, who had a sub-cus- tody agreement with the Lux- embourg-based firm. Under the agreement, Primeo’s cus- todian HSSL had a contrac- tual duty to assess the on- going suitability of the sub-custodian and to en- sure that effective safeguards were in place at the sub-cus- todian to protect the assets. The custodian breached these duties, according to the court, because it failed to rec- ommend that Madoff Invest- ment Securities establish a separate account for Primeo’s securities at the Depository Trust Corp. and to establish a separate sub-account at Bank of New York to hold Primeo’s Treasury bills. In addition, “HSSL was in breach of con- tract when it failed […] to give any consideration or make recommendations to Primeo about safeguards which were readily available and, if implemented, would have been effective to safe- guard Primeo’s assets.” Justice Jones also held that HSSL became liable to Primeo under a 2002 sub-cus- tody agreement for any willful default of Madoff Investment Securities as sub-custodian. Meanwhile, the fund’s ad- ministrator, BoB Cayman, was not required to inde- pendently confirm the cor- rectness of the information it received from Madoff. But when the administrator was unable to reconcile the in- formation received from Madoff with any informa- tion received from an inde- pendent source, it could no longer rely on the unqualified opinion of Madoff’s auditor, the judgment noted. “The relatively high risk of fraud or error inherent in the [Madoff] business model must have been manifestly obvious to all concerned,” Justice Jones noted. “The procedure adopted by BoB Cayman in April 2005 remained unchanged and was, in all circumstances, grossly negligent, with the re- sult that BoB Cayman is in breach of contract in respect of the NAV per share calcula- tions performed in April 2005 and every month thereafter.” Cause of losses Despite the negligence of the service providers which made it, in the opinion of the court, easier for Madoff to perpetrate his Ponzi scheme, the judge argued that “Primeo has not established that the defendants’ breaches of contract were an effec- tive or dominant cause of its lost investment.” The legal argument hinges in part on the 2007 restruc- turing of Primeo’s investment from a direct investment with Madoff into an indi- rect one through the Madoff feeder fund Herald. The judge argued that at the time that Primeo fully realized its in- vestment and reinvested it with Herald even though in practical terms the invest- ment was merely reassigned. “Primeo’s claims against the defendants in respect of the breaches of contract oc- curred prior to Feb. 20, 2007, and are statute barred,” the judge ruled. Justice Jones also held that Primeo’s loss claim is irrecoverable because it in- fringes on the rule of reflective loss, which states that only a company, in this case Herald, can sue for a loss it incurred, but not its shareholders. Primeo’s liquidators have until Sept. 6 to file an appeal. Author of its own misfortune Justice Jones made plain that the fund as the in- vestor rather than the negli- gent service providers should shoulder most of the blame. “Primeo, like all the other Madoff feeder funds, accepted the uniquely high operational risk inherent in [Madoff Secu- rities Investments’] business model as the price to be paid for Madoff’s uniquely consis- tent investment performance and they did so for almost 20 years,” he said. Even if the fund’s cus- todian had not issued any custody confirmations to Madoff’s auditor and the au- ditor had been unable to per- form the audit in a satisfac- tory way, the judge wrote, Primeo would, in all likeli- hood, “still have continued with the same investment strategy by investing in the shares of one or more Madoff feeder funds.” The main change to the trademark regime was aimed at allowing local businesses to more easily register their brands. Previously, companies seeking to register a trademark had to go through the U.K. or EU process. Bernie Madoff Suzy Soto is pictured with Sir Turtle, whose image she created in the 1960s. The logo is the first local brand to be trademarked under Cayman’s new law. - PHOTO: KEN SILVA9 BUSINESS CAYMAN COMPASS • WEDNESDAY AUGUST 30, 2017 KIMPTON SEAFIRE GETS AAA FIVE DIAMOND RANKING BUSINESS IN BRIEF Investor lawsuits mounting for ZTO Express Bank’s back-to- school drive helps 100 students Donations by staff at CIBC Bank and Trust Co. from a fundraiser helped provide students with school supplies at the be- ginning of this school year. CIBC employees met with Leanora Wynter- Young from the Depart- ment of Children and Family Services earlier this month to present 100 backpacks filled with school supplies to 38 high school and 62 primary school students. The supplies were do- nated by CIBC staff to ben- efit families in the Commu- nity Development Program. “This was an idea that was originally gener- ated by our staff and the back-to-school drive was a huge success,” said Daniel Wright, chairman of CIBC Bank & Trust. New deputy head of CIMA Banking Division The Cayman Islands Monetary Authority has appointed Shakira Cox as deputy head of the Banking Supervision Division. Ms. Cox is responsible for providing support to the overall operation and man- agement of the division. Ms. Cox began her ca- reer with the Ernst & Young office in Barbados in 2007. She joined the EY offices in the Cayman Islands in 2011 and the Bahamas office in 2015, where she primarily served assurance clients ranging from large mul- tinational retail banks to private banks, trust com- panies, pension plans and hedge funds. At EY she was also re- sponsible for executing and managing financial and regulatory audits of entities supervised by re- gional bodies. Caymanian students intern at Mourant Ozannes Sixteen young Cay- manians gained expo- sure to the world of off- shore law during Mourant Ozannes’ Summer In- ternship Program. The law firm’s program provides a learning oppor- tunity for students inter- ested in a career in the off- shore legal industry. The students, depending on their studies, either worked alongside lawyers in areas including funds, finance and commercial litigation, or worked with the firm’s corporate services and marketing and business development teams to gain an understanding of how the business operates. The firm also partners with Cayman Finance’s Work Experience Program to provide real-world ex- perience to students seeking careers in the fi- nancial services industry. The four students from the Cayman Finance pro- gram are enrolled at the University College of the Cayman Islands and are pursuing their associate degrees in a range of fields, from environmental science to business ad- ministration. Another 12 students applied directly for the summer intern- ship, with six students currently studying law abroad and the remainder studying marketing, busi- ness development, con- sumer behavior and busi- ness management. This year the firm wel- comed three returning stu- dents who have been a part of the program for the last two to three years. Intern David Ramsaran said, “I have completed three consecutive summer internships with the firm and I have found it to be thoroughly beneficial to me as a law student. My colleagues have welcomed me back and helped with work that is related to my studies, and I have learnt something new every day. I would definitely rec- ommend the Mourant Ozannes’ internship to anyone interested in a career in law.” Cayman Managing Partner Peter Hayden said Mourant Ozannes “is committed to supporting bright young talent in the Cayman Islands, and we take great pleasure from helping to develop and progress local students’ ca- reers. We aim to provide an experience that will better prepare students for the future, and our intern pro- gram also helps us to iden- tify promising young in- dividuals who may be offered the opportunity to progress to our Chantal Whittaker Memorial Schol- arship and articled clerk training programs.” Collas Crill advises on $77 million buyout Offshore law firm Collas Crill has advised Cirtek Holdings Philip- pines Corp. on its acqui- sition of Quintel Cayman Ltd. by way of statu- tory merger with Cirtek’s Cayman subsidiary, Cirtek Cayman Ltd. The transac- tion is valued at approxi- mately $77 million. Founded in the Phil- ippines and listed on the Philippines stock ex- change, Cirtek is engaged in providing manufac- turing solutions for value- added, highly integrated radio frequency micro- wave and millimeter wave technology products. Founded in the U.S. in 2007 and based in New York, Quintel supplies an- tenna solutions to North America’s telecom carriers. The Collas Crill team, comprised of partner Ste- phen Nelson and asso- ciate Aoife Madden, ad- vised Cirtek on all Cayman Islands legal aspects of the acquisition. “This merger reflects an ongoing trend of large mul- tinational entities choosing to carry out mergers and acquisitions through Cayman Islands subsid- iaries due to the flexibility and certainty afforded by Cayman Islands legal and regulatory framework as well as the sophistication of its legal services pro- viders,” Mr. Nelson said. Ogier acts on merger Offshore law firm Ogier has acted as both British Virgin Islands and Cayman counsel to Pacific Special Acquisition Corp. on its merger with Borqs International Holding Co., which is signifi- cantly involved in the in- ternet of things and smart devices sector. The merger, which closed on Aug. 18, made Borqs a wholly owned subsidiary of Pacific. In re- turn, Borqs former share- holders received a ma- jority stake in Pacific. Pacific, as holding com- pany of the new group, changed its name to Borqs Technologies Inc. Borqs, headquar- tered in Beijing, China, is a leading global provider of smart connected de- vices and cloud service applications. MICHAEL KLEIN mklein@pinnaclemedialtd.com A Cayman-registered Chi- nese delivery service that saw the largest initial public offering in the United States last year is accused in class- action lawsuits of misleading investors in connection with the fundraising. Investors have sued ZTO Express and its underwriters in at least two class-action suits alleging the company inflated its profit margins in the offering documents for the IPO by omitting less profitable “network partners” from its financial statements. The plaintiffs in the cases further claim that the un- derwriting investment banks that sold ZTO Express shares during the offering should have uncovered the false ac- counting and the failure to report material information. ZTO’s American deposi- tary shares currently trade at around $13. The IPO price was $19.50. The two class-action suits, filed in May by the city of Bir- mingham’s pension fund in Alabama and in mid-August by law firm Bottini & Bot- tini in the District Court for the Southern District of New York, seek to recover dam- ages under U.S. federal secu- rities laws. Other law firms have announced they intend to file similar suits. In its registration state- ment, Shanghai-based ZTO ex- plained that it uses a partner network to “provide pickup and last-mile delivery services, while [the company controls] the mission-critical line-haul transportation and sorting network within the express delivery service value chain.” The plaintiffs claim that ZTO, which gets most of its delivery business from Chi- nese e-commerce firm Ali- baba, had issued “untrue statements” and omitted “cru- cial realities” in its registra- tion statement. They also said ZTO inflated profit margins by keeping certain low-margin segments of its business out of its financial statements. “ZTO used a system of ‘network partners’ to handle lower-margin pickup and de- livery services, while main- taining ownership of core hub operations. By keeping the ‘network partners’ busi- nesses off its own books, the company was able to exag- gerate its profit margins to investors,” they said. In its pre-IPO filing ZTO claimed: “We have achieved superior profitability along with our rapid growth. Our operating margin, which is the ratio of our income from operations to revenues, in 2015 was 25.1 percent, which was one of the highest among the major publicly listed lo- gistics companies globally.” The plaintiffs said they relied on this and other state- ments in the offering docu- ments, only to suffer a mate- rial loss from the subsequent share price drop. ZTO rejects the allegations and stated it would vigor- ously defend itself. The underwriters who assisted the Chinese com- pany in the public offering are also named as defen- dants in the suits. The plain- tiffs argue that lead under- writers Morgan Stanley and Goldman Sachs together with China Renaissance Securi- ties, Credit Suisse, Citigroup and JP Morgan Chase should have conducted reasonable due diligence on the business and operations of ZTO. Because of their inside ac- cess to information and reg- ular communication with the logistics company’s manage- ment “the underwriter defen- dants were negligent in not knowing of the company’s undisclosed existing prob- lems and plans and the ma- terially untrue statements and omissions contained in the registration statement,” the Alabama pension fund said in its suit. Lawsuits for allegedly mis- leading investors are not un- common following lackluster IPOs. Facebook and Snapchat faced lawsuits when their share price headed in the wrong direction after an of- fering, and earlier this year Blue Apron was sued for failing to recognize the risk that Amazon would enter its industry with the acquisi- tion of Whole Foods, a move that led Blue Apron to cut its market valuation by half. The Kimpton Seafire Resort + Spa has been awarded the American Au- tomobile Association’s Five Diamond Rating – the highest possible rating from the travel authority. The accolade is the first AAA Five Diamond Rating for the Kimpton brand and establishes the prop- erty as a premier resort, a press release states. Fewer than half a percent of the nearly 28,000 properties approved by AAA achieve this distinction. “This recognition is a testament to Kimpton’s brand evolution,” said Nick Gregory, senior vice presi- dent of Hotel Operations, Kimpton Hotels & Restau- rants. “Seafire’s opening marked our first interna- tional luxury resort and paves the way for our ex- pansion into global re- sort markets.” The AAA Five Diamond Rating singles out world- class hotels that provide unparalleled luxury, sophis- tication, and impeccable standards of excellence, from extraordinary facili- ties and grounds to per- sonalized guest service, ac- cording to a press release. The organization con- ducts in-person property inspections as a service to AAA members, according to guidelines weighted by member priorities. The in- spections are unannounced. “We couldn’t be prouder and more honored to have received the AAA Five Dia- mond Rating,” said Steven André, general manager, Kimpton Seafire Resort + Spa. “Since opening our doors in November 2016, we’ve established Seafire as the preeminent Grand Cayman destination and in- troduced Kimpton’s signa- ture heartfelt care to the is- land – it’s what makes us so unique in this category and so beloved by those who stay with us.” The AAA Five Diamond rating will soon be displayed in the AAA travel informa- tion products members use to make trip planning deci- sions and reservations. Fewer than half a percent of the nearly 28,000 properties approved by AAA achieve this distinction. Investors have sued ZTO Express and its underwriters in at least two class-action suits. The Kimpton Seafire resort has been awarded AAA’s highest rating.Next >