Cayman Islands Premier McKeeva Bush released a copy of a letter on Friday addressed to newly-appointed British Overseas Territories Minister Mark Simmonds rejecting a number of UK demands and raising fears locally that Britain may thereby be forced to impose direct rule as was done in relation to the Turks and Caicos Islands in 2009.
The letter – purportedly dated October 30 – told Simmonds that “…you will find the government of the Cayman Islands may be led, but are much more difficult to push.”
“I think you will find that we stand by our convictions, unless and until proven wrong (even if that must be in a court of law which I will not hesitate to undertake)…” Bush added.
However, in another letter released on Friday, this time from Simmonds to Bush, the British minister said he had received no such earlier communication from the Cayman Islands regarding the various outstanding issues.
The issues in question relate to a financial management agreement known as the Framework for Fiscal Responsibility (FFR); whether the Cayman Islands should proceed with a port redevelopment project, and the respective roles of the governor and an appointed budget committee.
Simmonds told Bush on Friday not to proceed with a plan to bring a revised version of the FFR to the Legislative Assembly this week.
Bush said recently that he wanted Britain to take responsibility for any reputational or financial damage that adhering to the framework might cause Cayman and he has inserted a clause doing just that.
He has also increased the value of projects that require UK approval from $10 million in the agreement itself to $25 million in the bill, without the consent of the Foreign and Commonwealth Office (FCO).
In his letter to the premier, Simmonds stated that he understands that Bush plans to proceed to the Legislative Assembly on Monday “to transpose a version of the FFR which does not accord with that which you have signed”.
“This is not acceptable,” Simmonds added.
He continued: “Should you go through with this course of action, I will have no choice but to conclude that you are disregarding good governance and continue to be in breach of a series of commitments you have made. This is disappointing for the Cayman people.”
The minister said he told Bush in an earlier correspondence on 1 October that the “continued breach” of commitment left him (Simmonds) with “no alternative but to give detailed consideration to alternatives”. He did not state what those alternatives would be.
However, Bush, in his purported letter dated 30 October, said that the FFR – which he agreed and signed with the UK last year – would be passed into law at the next meeting of the Legislative Assembly.
The Premier said the bill that transposes the FFR into law will meet “the necessary requirements to which we are committed”. However, Bush said that the two documents – the signed agreement and the law – cannot be identical.
“In the transposition, essential commercial tests must be passed for the mandatory performance that the legislation, as a law, would require,” Bush wrote. “We cannot afford the collapse of our entire structure of budgetary obligations under the weight of unwieldy processes.”
In his letter on Friday, Simmonds also said he would not allow Bush to proceed with the procurement of a new cruise ship terminal “unless the proper procedures have been followed”.
“Should you push ahead regardless, I will have no choice but to ask the secretary of state to instruct the governor to reject the proposals,” Simmonds said in the letter.
The Cayman Islands government is in talks with China Harbour Engineering Company (CHEC) to expand cruise ship facilities in Grand Cayman.
According to a statement from the governor’s office, both Simmonds and his predecessor, Henry Bellingham, raised the concerns over the cruise ship project procurement a number of times in meetings and in correspondence with Bush over the past year.
“Mr Simmonds has now found it necessary to write to the premier again about this and the outstanding issue of the transposition into law of the Framework for Fiscal Responsibility,” the statement from Governor Duncan Taylor’s office read.
The statement said Simmonds had asked that his letter be made available to the people of the Cayman Islands so that there is “no misunderstanding of the UK government’s position on both issues”.
“The UK government supports the aim of enhanced cruise ship facilities and fully understands the potential economic benefit to the Cayman Islands. The nationalities of the parties involved have no bearing on this case. We encourage investment in the Cayman Islands by China and other countries. It is of critical long-term importance to all parties that proper procurement processes are followed in line with international best practice,” the statement said.
Bush addressed this issue in his letter of 30 October, assuring the UK that “value for money” on the cruise project would be achieved, and that an outside review, undertaken by the KPMG accounting firm, would assist in providing support for those claims.
“I disagree that the auditor general or chairman of the Central Tenders Committee (useful though their input will be) can be the final arbiters of how we should achieve such fundamental objectives,” Bush wrote. “I believe KPMG, who is doing our ‘value for money’ test, to be much more competent in these matters.”
Bush said “micro-management” of a project like the port proposal by the UK Foreign and Commonwealth Office “is no more necessary, nor desirable at this time”.
“Your concerns over contingent liability are duly noted, but with all due respect, Cayman has not got this far through the micro-management of the FCO, nor its successive commissioners, administrators or governors from the 1930s until today,” Bush said.
Although Governor Taylor appeared to be trying to stay above the fray by merely passing on comments made by Simmonds, he was also attacked by Bush in the letter of October 30.
“His job should be to help the Islands,” Bush wrote. “So far, the only ‘help’ coming from the present governor has been to keep our economy flat, people unemployed and unable to pay their mortgages and lose their homes; all of which has exacerbated the rise in the level of crime at gunpoint.”
“To stop the [port] project will cause hundreds of people not to be employed which would be yet another effort to stop our economy from any growth of jobs, and loss of revenue, which the government badly needs,” Bush added.
Bush also sought to address the role of the recently-appointed Budget Delivery Committee, chaired by Cayman Islands Deputy Governor Franz Manderson.
“Cabinet must and will retain authority to steer the budget,” Bush wrote to Simmonds. “Their analysis and reporting functions must support the work of Cabinet accordingly. If this is the sort of understanding you share, then the [committee] may be encouraged to get on with it, without further questions as their terms of reference.”
Opposition politicians have questioned whether the budget committee would be taking away one of the key responsibilities of the Minister of Finance – namely, future financial planning.
However, Bush asserted that he would remain Minister of Finance, despite the formation of the committee and that his office would appoint the committee’s members.
In the meantime, the opposition People’s Progressive Movement (PPM) has warned that Bush’s defiance could result in direct rule being imposed on the Cayman Islands by the UK.
“We have only to consider what has happened in the Turks and Caicos Islands to understand what the need for intervention by the UK government will do to investor confidence in Cayman,” the opposition party said in a statement released on Saturday. “The UK’s suspension of the constitution of the Turks and Caicos Islands derailed its financial industry, destroyed small businesses and ruined the quality of life of its residents and citizens.”
“…his foolishness is drawing the country into a completely unnecessary crisis, with no upside for Cayman, and a very deep downside. He is playing brinkmanship with the stability and economic fortunes of the country and in doing so he is inciting the UK to take actions which ought not to be necessary. This is more than merely irresponsible, it borders on treacherous,” the PPM said.
The opposition described Bush’s “determination to sign on to the CHEC project in defiance of the obvious principles of good governance set out in the FFR (which he signed last year) is inexplicable and irrational — except on the basis that he has lost his senses altogether, or that there is something in it for him personally.”