Poor damage control on Rio Trip

One can only shake their head at today’s article regarding Sports Minister Richard’s defense of the expenses of his trip to Rio for the Olympics. It is a PR train wreck in slow motion.  Why would the One Bermuda Alliance not come out with complete details upfront rather than letting the paper drag it out with new revelations over weeks?

The OBA deserves a great deal of credit for making travel expenses more transparent.  Its a welcome improvement in governance to open travel expenses up to closer scrutiny by the public and ensure our money is well spent.

Unfortunately the Olympics happened and the OBA has created for themselves considerable controversy.  In the days of prosperity, many happily looked the other way while the Progressive Labour Party threw excessive money at things. Throwing $15 million at football is just one small example of actions that left us with a such a debt that we’re now squabbling over $32,000 in travel expenses.  It’s too bad we’re only realizing now that every dollar does count.

What doesn’t make sense is how the OBA is handling the PR fallout. It is getting to the point where Minister Richards may be best to resign his role and go back to the back bench.  If there were more details to be revealed, why not rip off the bandaid?  Having this issue dragged out over weeks with new revelations in the paper doesn’t seem to be a very good strategy.  Bermudians may have a short political memory, but not so if you ensure they think about it for a much longer period of time.

When news of this broke the OBA should have been more transparent and published a full explanation of how and why $32,000 was spent.  Even if the decisions were poor, it would have made far more sense than letting the paper discover it and turn it into a series of controversial articles.  That likely would have been more preferable than leaving everyone now wondering what else has been bungled by poor decision making which hasn’t yet come to light?

When qualified Bermudians are overlooked

In theory, qualified Bermudians and spouses of Bermudians are to be considered first when it comes to job applications.  In practice, this doesn’t always happen.  The recently introduced job board is supposed to improve the process but seems to only be used as evidence for the basis of a formal complaint.  The trouble with filing a complaint is that Bermuda is too small and it won’t necessarily yield the best results for an individual.  Sadly the immigration process penalizes good companies with bureaucracy and isn’t terribly effective at penalizing bad companies who discriminate against qualified locals.  Is it any wonder that many Bermudians still feel disadvantaged?

Honourable companies looking to comply with immigration policies face daunting hurdles.  They must document every applicant and what stages of the process they made it to, regardless of whether those applicants were even remotely qualified for the role.  It is a large burden for companies who face a growing number of desperate Bermudians who adopt the “apply for everything” route to finding a job.

Dishonourable companies flout the process and look for means to intentionally avoid hiring individuals who are actually qualified.  They tailor or inflate job descriptions to match a pre selected candidate.  They create extravagant and unrealistic interview requirements.  Or, they simply ignore a candidate’s submission.  Don’t be fooled into thinking only international business companies do it, local companies do it too.

The paths available to a qualified candidate are to apply via all possible avenues and then submit a formal complaint.  The introduction of the Bermuda Job Board allows a candidate to apply for a job directly via the Department of Workforce Development.  One would think that this would ensure candidates are not overlooked or ignored but unfortunately this doesn’t seem to be the case.  Applying via the job board provides documented evidence that you’ve applied, but it doesn’t seem to be checked during the approval process to ensure a candidate was considered prior to granting a work permit.

The only recourse for an individual who feels they’ve been overlooked is to file a formal complaint with immigration.  The problem though is that it can be fairly easy to be identified regardless of whether the complaint is submitted anonymously and it can be uncertain what the repercussions could be.  What protections does an individual really have against future discrimination?  Does it result in the individual getting what they are truly seeking – a fair chance at a job?  Would someone even want to work for a company that is so intent on not hiring Bermudians?

We may think that qualified locals are considered first before foreigners but that isn’t how immigration really works.  It is a shame that good companies are burdened with a great deal of paperwork while bad companies are free to flout the system.  Sure one could file a complaint, but what of the personal risks involved in doing so?  The immigration process doesn’t seem to work the way it should. Given the prospect of being qualified but overlooked it is sadly no wonder that more and more Bermudians are choosing to leave the island in search of opportunity elsewhere.

Our broken political system

The Commission of Inquiry is raising serious concerns of how badly our money was wasted and whether actions undertaken by former Ministers were less than admirable. It demonstrates how shockingly broken our policies and controls are and how we have given far too much control to politicians. If anything, it demonstrates a very clear need for good governance reform of which both parties have promised but neither have fully delivered on.

Rather than refuting the testimony and evidence provided with facts and reason former Minister of Works and Engineering Derrick Burgess’ is attacking the legitimacy of the Commission of Inquiry.  Doing so suggests he has no ability or evidence to refute the claims made.

Mr. Burgess’ stated intent to award more contracts to smaller Bermudian companies is admirable.  It is understandable that he would have wanted to push this agenda as it is the very premise by which the PLP was elected.  The trouble is that the evidence and testimony provided suggest that may not have been the only motive. Controls put in place to ensure fair bidding were ignored. Advice and recommendations provided by civil servants were ignored. Projects were not put out to tender. There were questionable possible conflicts of interest. Projects went so far over budget that it begs belief.

Given two comparable bids it is understandable to select a predominantly black owned Bermudian firm over a white or foreign one. That was what the PLP was elected to do. Disrupting process and procedures while omitting details, adjusting requirements and watching projects go 20x over budget is not what the PLP was elected to do.

While Mr. Burgess may have started out with honourable intentions, the evidence and testimony provided sadly puts those intentions into question.

Mr Matvey confirmed in evidence that Vincent Hollinsid, a half-brother of Dr Brown, owned a 20 per cent equity share in Landmark Lisgar and picked up a $6,000-a-month salary. Winters George Burgess, whom Derrick Burgess has described as a close friend and relative, owned a 22 per cent equity stake and was paid $11,000 a month.

The question of how a $46,000 contract could possibly become a $902,000 bill begs belief.

The Auditor found that the original contract sum for the Central Laboratory Building project was about $46,000. She wrote: “In 2010, the contract did not receive prior Cabinet approval. Additionally, W&E noted that the services were not tendered but were negotiated with the knowledge of the PS. Additional services of $856,000 resulted in a final contract amount of $902,000.”

Mr. Burgess seems to evade many of the questions while claiming he is unaware of what actually occurred as he does not recall it.  His only rebuttal to the testimonies and evidence is to resort to attacking the legitimacy of the Commission of Inquiry on the basis of racism. While the Commission of Inquiry may be comprised of 3 of 4 individuals who are white, that doesn’t change the testimony provided by civil servants and the evidence provided by the audits.

There are certainly those who will heed his calls of racism if that is what they want to hear. There are others who will be very concerned by this evidence and will question whether we’ve given our politicians far too much power. There were many allegations made against the UBP and their predecessors which were never investigated with a Commission of Inquiry. Though some may disagree, most did not vote for the PLP in order for them to practice more of the same.  Finally, the OBA, while elected on many promises of establishing good governance are short on delivering on those promises. As a result, it should be of no surprise that the people have limited confidence in either party.  We the people have lost faith that politicians really deserve their “Honourable” title.

What could Hurricane Matthew mean for Bermuda reinsurance and insurtech?  

One of the problems facing the Bermuda’s reinsurance industry is that there haven’t been serious catastrophes recently. Another is that due to limited options for investment returns, capital has flooded into the reinsurance space.  As a result, reinsurance rates are quite low and companies have been pressured with a great deal of competition. Hurricane Matthew could change this.

It is hoped that those in Florida are heeding the evacuation warnings.  Hurricane Matthew looks like it could be a very serious Hurricane leading to much damage and possible loss of life.  Hopefully this will not be the case, but the reality we face is that occasionally we do face catastrophes and Bermuda offers reinsurance products which help reduce the burden of rebuilding after they strike.

If Hurricane Matthew causes significant damage it will push up rates and could collapse a few reinsurers who are most exposed to losses. When this has happened in the past it has caused a rush of new startups as the industry capacity is weakened and rates are pushed up. Traditionally many of these startups have founded in Bermuda and can lead to economic growth as reinsurers recapitalize.

The question is, could it be different this time?  The reinsurance industry has evolved quite a bit in recent years.  Introduction of spin off “sidecar” companies designed to contain and isolate losses has improved the ability of reinsurance companies to survive catastrophe losses.  Insurance linked securities, the ability to make reinsurance risk more easily trade able, has allowed companies to more readily diversify risk as well.  Another question is, should there be a boost of new business, what potential will there be for founding of new technology focused reinsurance startups?

Hurricane Matthew unfortunately has the potential to be quite a devastating storm. According to Weather Underground, it has the potential to run up the coast of Florida causing significant damage.  For those unaware, weather underground writes a blog that is one of the best sources for information on Hurricanes.  They write that one of the big risks for this hurricane is that it’s track takes it to areas that have almost never faced hurricanes in the last couple hundred years.

Traditionally (considering tracked hurricanes since 1851), few hurricanes have struck the central and northern coast of Florida.  These areas have usually only faced hurricane that tracked from the Gulf of Florida across the state to the Atlantic side. Hurricanes which travel over land tend to weaken so they haven’t traditionally faced strong hurricanes.  Hopefully people in Florida heed the evacuation calls and get themselves out of harms way.  Sadly, if hurricane Matthew takes its suggested path it will cause a great amount of destruction in areas that have little experience with hurricanes.

Will Hurricane Matthew be a devastating catastrophe or will Florida get lucky?  What could Hurricane Matthew mean for Bermuda reinsurance and insurtech?  How has the industry evolved to handle these sorts of catastrophes?  Will we see a new class of re-insurers and tech focused re-insurers as a result?  Time will tell.

Played for fools

The really sad thing about the suggestions of fraud and mismanagement arising from the commission of inquiry is that it is really no surprise. It isn’t shocking that projects weren’t put to tender and somehow ended up being awarded to “friends and family”. It isn’t shocking that we’re billions in debt as a result while a select few got richer on it. What is shocking is the current government’s rather consistent ability to ruin a perfectly good opportunity with bad PR and poor actions

The PLP was narrowly voted out because the people wanted something different.  We aren’t getting it and it is why we are unhappy with both parties. The OBA promised at great length to be something different but they aren’t measuring up. We’re tired of ego driven politicians who care more about themselves than our island’s future.  We’re tired of being played the fool.

Our politicans are still busy jet-setting around the world. Premier Dunkley is consistently in the newspaper for being off island, throwing baseballs, ringing the bell at the New York Stock Exchange, among other things.  He gives the impression that he spends more time off island than on island and that is a terrible message to send to voters who are told we need to raise taxes and reign in spending. It’s the wrong message to be sending.

The Olympics trip of two ministers and a permanent secretary costing $40k is a perfect example of where they just don’t get it.  It is not clear what value they added by their attendance aside from boosting their own egos.  It should have been patiently obvious to the current minister that spending $20k+ on flights is a bad idea and he should be relegated to the back bench as a result.  The fact that the former minister “went anyway” since her tickets were non-refundable suggests it became a personal trip and she was no longer there in official capacity.  She should not have gone. It is terrible PR that highlights that though the OBA may not be as bad as the PLP was in waste and excess, they’re still cut from the same cloth and not delivering on their pledge to be different.

Finally there is the objection to the airport project being included in the commission of inquiry.  Why?  It raises serious questions of what the government has to hide with regards to this project.  It is understandable why we need it, the cost of renovation of the current airport is too high and we’d need to take on debt to do it.  The proposed method means we don’t take on debt and ultimately own the airport in 30 years.  However, the OBA really can’t afford secrecy with regard to this project.  If they want to be taken seriously as something different, they must be transparent.  Until they are, they will raise a tremendous amount of skepticism of how they really are much different from the PLP during their “platinum period”.  We want something better, not a diet PLP.

It is unlikely we’re going to get our billions back. We were cheated by our politicans who leveraged lax corruption laws and ignored policy while leaving us with a huge bill that current and future generations will struggle to pay off. It sadly isn’t surprising that we were played the fool. What is surprising is that the OBA really doesn’t get that many aren’t interested in being fooled twice. It doesn’t matter if the OBA’s transgressions are far less than that of the PLPs because we expect the transgressions to stop. We were promised something different, something better, that is what we expect or we’re just being fooled again.