A government ministry has denied accusations made by the Internal Audit Unit
FMI: Cayman Islands News


In a report it conducted around ten months ago about shop leases at the government owned Royal Watler cruise terminal. The report suggested that 13 out of 14 tenants were operating without leases and that over $200,000 was owed to government in outstanding rent. The audit unit said that Lands & Survey needed to issue the missing lease agreements and the Port needed to chase the money. The ministry in question claims, however, that the audit “contains some serious inaccuracies” and leases had been issued by Lands & Survey. James Parsons, the financial director of the Port Authority, told CNS Monday morning that all outstanding rents have now been collected.

The Internal Audit report on the Royal Watler leases was published in October 2009 but, as is the case with most of the unit’s reports, it was not circulated for public consumption. However, following an FOI request by a journalist on The Caymanian Compass the report was released into the public domain. It states that most of the tenants in the cruise terminal in downtown George Town were operating without a lease during 2008-2009 and as a result had paid no rent for their prime spots catering to the lucrative cruise market.

The chief officer in the Ministry for District Administration and Works, which has responsibility for Lands & Survey, issued a release on Friday saying it was not true that tenants did not have leases.

Kearney Gomez said all but one of the rental agreements “were duly executed” for the 14 units between December 2006 and January 2008 and no one was allowed into their shop without paying their first month’s rent. “The final unit remained unoccupied due to planning issues until October 2009. Contrary to statements contained in the report, no tenant was permitted into occupation prior to signing a lease and paying a first rent cheque,” Gomez stated.

He said, however, that the signed leases were not registered for almost three years as that could not happen until ownership of the parcel was vested to the Port Authority, and the fact that it took that long was largely outside the control of the department.

“Most importantly, this had no effect on day to day management of the tenants nor did it in any way affect the legality and contractual nature of the lease agreements which had been signed,” Gomez said in the statement. “Once tenants had been signed up for each unit, the role of the Lands & Survey Department was complete. Thereafter, the Port Authority undertook to directly manage all Royal Watler units itself, taking full responsibility for all rent collection, rent delinquency, and its own decision to award rent reductions across the board.”

According to the internal audit, five of the tenants at the terminal owed rent amounting to $210,364.76, which ranged from 4 to 15 months of rent arrears. “One of these tenants has not paid rent from the rent commencement date of their signed lease. To date no specific allowance for bad debts has been established against these outstanding rents,” the government auditors stated. “Furthermore, interest on the arrears was not being accrued by the Authority in accordance with the lease agreement.”

In the report the Lands & Survey department did not offer any management response since it was not given the opportunity to do so by the Audit Unit, but the Port Authority, which now has control of the leases and responsibility for collecting the rent for the public purse, said the it was working closely with Lands and Survey and its attorneys to collect any and all outstanding lease payments.

“Although this process could take some time since lawyers are involved, the Port has embarked on actions to collect outstanding lease payments ... the Board is of the opinion that a resolution to all the Royal Watler Cruise Terminal leases should be forthcoming by November 30, 2009.”

Port Authority Internal Audit Report October 2009