Cayman Islands government workers learn some lessons in scandal avoidance from the experts at a weeklong conference to which the media were invited for the first time.
U.S. Inspector General Brian Miller knows, up close and personal, how ugly public sector scandals can get.
The federal government’s General Services Administration left taxpayers with an $800,000 bill from a Las Vegas conference in October 2010.
Embarrassing videos that showed GSA employees at the conference having a rap music video competition went viral on the web. Then came the congressional hearings, during which other costly, taxpayer-funded junkets were revealed.
Those included a five-day conference at a Palm Springs, California, resort in May 2010 – attended by 120 GSA interns.
Miller’s investigation recovered 115 “missing” iPods, originally purchased for an employee-rewards program.
Miller spoke to about 100 private and public sector finance workers during a conference last month at the Westin Resort on Grand Cayman. He said administrative issues like those revealed in the U.S. General Services Administration don’t happen overnight. They’re only allowed to occur over time as the culture of an organization deteriorates, he says.
“Our agency, for years, had been cutting corners,” Miller says. “Don’t cut corners, very simple. It creates a culture that, eventually, will come to a scandal.”
One key issue that all organizations – public and private – need to address is the tendency to blame avoidance, Miller says.
“’We did nothing wrong’ is the common managerial refrain,” he says. “That’s wrong and it’s not helpful.
“Everybody makes mistakes, the trick is to admit that. Don’t hold onto it, don’t think that nobody’s going to notice. Get it dealt with immediately.”
Another general problem revealed by Miller’s investigation of the GSA was the tendency of managers to rush through the process of contracting.
“They were just trying to get it done, rather than do it right,” Miller says. “I don’t blame managers for wanting results, but they should do it the right way.”
Attendees at the professional development conference asked Miller how public officers should manage situations where something urgent needs to be done, but doing so may conflict with procurement rules.
Miller says the U.S. government will suspend its own procurement rules in the case of a national emergency. For instance, the federal government did so in 2005 when Hurricane Katrina hit New Orleans.
However, those instances should be reserved for true emergencies and, generally, Miller says, following three overarching rules will lead to the avoidance of scandal in public and private entities.
First, create a culture of integrity and adherence to the rules. Miller says there has to be a belief within any organization that wrongdoing will be detected and punished.
Second, acknowledge problems and admit mistakes.
Third, support oversight and accountability.
“The culture [of an organization] does go bad bit by bit,” Miller says. “After a while, you don’t notice it. But somebody else comes in the room and they notice it right away.”
Cayman not too small for integrity
Previous Cayman Islands governments have argued with the United Kingdom over more stringent bidding and budgeting procedures recently implemented here by the overseas territory’s monitoring power, the Foreign and Commonwealth Office.
However, Governor Helen Kilpatrick told Westin conference attendees that, in her view, the idea that good governance measures are too costly and require too much work for smaller entities is “complete rubbish.”
“If you’re running a small charity or a sports club, you want to give people assurances that the monies you raised are used for the purposes people have given it to you for,” Kilpatrick says.
The governor’s statements were made in response to a question asked during the conference by Auditor General Alastair Swarbrick, who said he had often heard, during his tenure in Cayman, that good governance is only suitable for larger countries.
“In one person’s view, it’s unadulterated bureaucratic harassment,” Swarbrick joked, referencing a comment made in 2012 by former Premier McKeeva Bush regarding the work of the audit office.
Then-Premier Bush’s comments were made in relation to various government projects his administration was trying to complete, which he felt were being blocked by the overbearing hand of the United Kingdom in certain instances.
Kilpatrick says it’s important to consider whether the conditions under which good governance measures are set out, proper financial accounting, accountability for those in charge, public reporting and the like, were proportionate to the situation.
“We’re all used to the idea that, if you’re a very, very small organization, you don’t get your accounts audited by a professional set of accountants,” she says. “However, you still have to say what money you received and what money you dispersed.”
Cayman is revising its public sector financial governance law – the Public Management and Finance Law – to make budget reporting and analysis simpler and easier for the public to understand.
Within that system, proper accountability measures can be adjusted, Kilpatrick says.
“You can have a lighter touch in terms of regulation and governance, as long as it is in proportion to what you’re trying to do,” she said. “On a government scale, some organizations, because of their own internal control systems, can be more trusted by government than others.”
The governor says she supports the idea of having “earned autonomy” for certain organizations within the government, but in the end the public trust still has to be there.
“The Cayman Islands economy depends heavily on financial services and international reputation. If you’re going to put your money somewhere,” she says, “you want to be sure the government is behind that.”