In a Public Interest Report released to us Tuesday (22), but embargoed until 11am on Wednesday, the Auditor General, Alastair Swarbrick, said his office (OAG) had became aware of concerns raised  by a number of parties a bout the paving programme that was being carried out on Cayman Brac. The main concerns raised surrounded the legality of some of the work conducted and some of the decisions made around this project.

On the basis of these concerns and some preliminary work the OAG decided that there was a clear public interest in the OAG reporting on certain aspects of this project to the Legislative Assembly.

The concerns were the inclusion of 56 paved lots that belonged to commercial private premises and churches and not residential homes or driveways. Two others were the procurement of Hot Mixed Asphalt (HMA) Plant and the project manager, and the role of the National Roads Authority (NRA).

The OAG found that the estimated direct cost of the private paved lots work was $521,090 and this work had not been included in any budget. Swarbrick said that he would be passing it to the attorney general for his consideration.

The OAG found that the Ministry sought no financial contributions from the beneficiaries of the work or required any and they were led to understand in a number of instances the beneficiaries had offered to pay for the paving, BUT WERE INFORMED IT WAS NOT REQUIRED.

In reviewing the relevant legislation in respect to roads, specifically the “Roads Law (2005 Revision) and the National Roads Authority Law (NRA) – 2006 Revision – to identify whether they provided the legal basis for the paving of private parking lots, the OAG were unable to identify any statutory provisions that allowed for the paving of private lots. The OAG also reviewed relevant budget documents to identify whether Government had the relevant authorities to incur expenditure for this work and were unable to identify any.

The findings, therefore, were that this work was illegal.

The Ministry responded saying the NRA did not control road construction in the Sister Islands and they did not accept there was anything in the roads law that prevented the paving of private lots. The money had been allocated under the ministry’s road maintenance budget. The NRA had only been used as providers of contract labour and services.

Mr. Swarbrick did not accept the Ministry’s response. He said, “I have real concerns about their response as all expenditures have to be authorised by the Legislative Assembly and the budget allocation was approved for public roads and not private parking lots. There was no explanation and no legal authority for it.”

Regarding the HMA and the project manger, Colford Scott from the NRA, the OAG report outlined the background.

The Ministry had procured a portable HMA plant because the private sector had no appetite to execute the Cayman Brac road paving programme as the mobilisation costs of taking HMA plant from Grand Cayman and back would have been prohibitive and affect their ability to conduct their business in Grand Cayman. The HMA plant would also support the effective use of NRA and Cayman Brac Works employees.

The OAG said there had been no formal case prepared to demonstrate the value and benefit of the purchase of the HMA plant, including how it compared to other potential options for the work to be executed. Under he financial regulations a capital acquisition greater than $300,00 required a business case to be submitted to the Public Investment committee for review and approval. This was not done even though the plant cost more than $600,000

It was also not clear what would happen to the HMA plant after the road paving programming had been completed even though the useful life of the plant was approx.15 years. The Ministry had responded by saying the asphalt plant would remain on Cayman Brac for continued use as “there is too much work on the Brac and Little Cayman to do.”

Colford Scott, the project manager, was engaged without any formal procurement or other formal competitive recruitment and no documentation provided for their justification in employing him. As the value of the contract exceeded the tendering threshold of $50,000 the Ministry should have documented their justification for a single source supplier, copied to the Director of Internal Audit and the Auditor General, or opened the contract to competitive process.

Mr. Scott is the chairman of the NRA and the OAG considered there could be a perceived risk of a conflict of interest.

The OAG were told the project manager appointed was the best person for the job due to “his significant qualifications and experience and being locally based. The Ministry did not see any conflict of interest.

Under the NRA Law (2006 revision), the NRA is responsible for the management and maintenance of roads across all the Cayman Islands, including the sister islands. This makes the Ministry’s statement that the NRA “in practice” does not control road construction in Cayman Brac or Little Cayman incredulous. Are they saying that even though there is a law saying one thing it is OK to break it as that is the “practice”? This “in practice” makes it legal!

However, even though the Cayman Brac roads programming was significant (over $3 million) the District Administration had the responsibility for its management, although the majority of the equipment and road crew were obtained from the NRA! The OAG queried why, especially as they provided the technical services and the majority of the equipment and road crew.

The Auditor General said his report had been prepared to address his concerns and provide information for consideration by the LA, “in particular relating to the concerns regarding compliance with laws and regulations of the Cayman Islands.

It is understood that the OAG report will be sent to the Attorney General’s Office for him to determine if legal action was required regarding the OAG’s findings. If no action was taken by the Attorney General, Swarbrick said he would consider reporting the matter to the Anti-corruption Commission.