Government's financial crisis. Why It doesn't add up.

All rumors to the contrary no British MI5 agent held a gun to anybody's head in Cayman and said "Spend like there is no tomorrow or there will be no tomorrow".

The government's funding gap was incubated and hatched by the Finance Department of the Civil Service which lost financial control after introducing new accounting procedures into an environment prone to profligate spending. The cure proved worse than the disease. Allowing inadequate accounting to persist for years compounded the problem and emboldened the overspenders.

As recently as last year the Financial Secretary said there wasn't an accounting problem, only some technical issues surrounding the new accounting rules; some departmental Accounting Officers had experienced difficulty in distinguishing their inputs from their outputs. In an organization where arses and elbows are routinely confused this excuse may have been expected but it should not have been accepted.

While money flowed into government coffers quicker than it flowed out all seemed well with the world until, under a little extra financial stress, the facade collapsed like any other Ponzi scheme. To tip the financial balance far into the red all it took was a foreseeable and oft predicted drop in overall income combined with the usual year end blowout, "Spend everything left in the budget this year or they'll cut your budget for next year". For sure all that money will now be cut for the next financial year and a few jobs too for good measure.

Though the Governor (titular head of the CI Civil Service) has investigated several petty professional squabbles at great length and expense he hasn't pressed the "good governance" nuclear button on something as serious as this financial crisis is supposed to be.

It's no good the Governor delegating his authority or relying for advice on the same people who were supposed to improve financial control and/or have management oversight, they weren't up to the job the first time around.

Get an FOI request in for the senior people involved in implementing the new financial controls, including those "retired" but panhandling as the Governor's advisors. In at least one very senior case they have not only no professional financial or managerial qualifications but no post high school professional or academic attainments of any kind. And I don't mean Bush although that is true of him too. Is it a case of those who pray together stay together?

Until government's financial accountability problem is fixed any money that Cayman borrows will be spent exactly the same way as the first wad was. Unaccountably. Who is going to lend money to a borrower like that even if the UK lifted borrowing restrictions?

Loan sharks maybe?

If something needs to be cut quickly then the governor should cut out the McKeevanomics and, since Bush owns Jefferson, get some independent oversight of the Finance Department and some insight into Government's true financial position. It may not be as black, or should that be red, as it's being painted.

Elections are expensive and hyping up this financial crisis lends itself to all manner of players thinking the unthinkable and finding opportunities to slip in some payback. The Ritz will be getting a casino and the Brac and Little Cayman development plans will be ripped up to allow for more real estate activity. The environmental corner cutting in the haste to construct a cruise terminal may destroy for good one of the mainstays of stopover tourism, 7 Mile Beach.

To avoid more debt going on the government balance sheet future capital schemes will probably be privately financed like Boatswain's Beach and we won't ask too carefully about where the money is actually coming from. Probably the lion's share will be via a locally fronted shell company based in one of the less transparent offshore jurisdictions. Whose money it really is who knows?