Conversation with…Duncan Taylor

Read our article in the Cayman Financial Review Magazine, eversion 

Functions of the governor 

Just two years ago, intelligent, self-assured and personable Duncan Taylor became the 11th governor of the Cayman Islands, a tiny trio of islands with a big international reputation in the world of offshore finance.

In applying for the job, Taylor admits he was looking for a professional challenge. Based on his research and a previous visit, he felt he would enjoy the opportunity to live and work in the Cayman Islands.  

It would seem the Cayman Islands has more than fulfilled the promise of a challenging assignment – a large, expensive public service which comprises 60 per cent of the total of recurrent budget, a narrow revenue base which leaves the local economy particularly vulnerable in the languishing global recession and a minister back in London who, although actively promoting a more positive approach to the UK’s relationship with the Overseas territories, has introduced an aggressive three year timeline to get the Cayman Islands’ finances into a more sensible, well managed state of affairs.

The role of governor

Interestingly, the constitution makes clear the governor must act in the best interests of the Cayman Islands so long as those interests are aligned with those of the United Kingdom. His three primary areas of responsibility are:

  •    Internal Security, including policing
  •    Civil service – appointments and operations
  •    Good governance – “the governor shall endeavour to promote good governance.”

In addition, the governor is responsible for defence and foreign policy but these are not such big subjects.

The governor presides over Cabinet, essentially chairing Cabinet meetings and taking advice from Cabinet, although the ministers make the decisions. However, he can choose not to act in accordance with Cabinet decisions, if in his judgement, the Cabinet recommended action would go against his stated responsibilities of acting in the best interest of the Cayman Islands in the areas of security, civil service and good governance.

One recent example of Taylor exercising his ability to act against the advice of Cabinet was in the matter of Jamaican visas. Cabinet recommended relaxing the current visa requirements for Jamaican nationals who held a UK, US or Canadian visa, but the governor chose not to accept that advice, citing concern for national security and opting instead to maintain the current requirements (he was happy to agree to Cabinet’s decision to remove the visa requirement for Jamaicans below 16 and over 70). Another scenario under which he might act against the advice of Cabinet is if he is specifically instructed by the Foreign Secretary.

Security

Security is a sensitive issue in Cayman. Recent incidents of gang related violence on the islands have raised doubts over the ability of the local law enforcement to tackle the issue effectively.

The governor rates security his top priority at present.  A safe environment is essential if Cayman’s two key industries, Financial Services and Tourism, are to thrive. Recent incidents of gang related violence and an increase in robberies have raised concerns amongst the public and have stretched the resources and the capabilities of the Royal Cayman Islands Police Service.

But Governor Taylor insists:

“We have a good understanding of the types of security issues facing the Cayman Islands. We are certainly attempting to systematically address the issues and some of them are long-term issues.”

One such issue is local crime, especially crime involving youth and young adults. Taylor seems au fait with the causes, catalysts and effects of this type of crime, and the complex solutions required to reverse the recent patterns.

He deftly described the root conditions in the communities and households that create the fertile conditions for gangs to thrive, and acknowledged that more effective policing, while important, is in itself insufficient to address the problem. Social structures, early identification and intervention coupled with family support, rehabilitation and education are critical components to the solution.

Another important security issue, raised by Taylor, is that of data protection. Legislation exists to define data protection in the private sector, particularly in the financial services sector but there was no such legislation for the public sector.

“We are looking at implementing a Data Protection Act that would complement the Freedom of Information Act to protect the privacy of data held by government, data such as personal information of private citizens,” Taylor said, adding he expects this draft legislation will be considered by the Legislative Assembly in 2012. Governor Taylor recognises that security is a serious challenge to the Cayman Islands government. 

But he is confident that the additional resources made available by the Legislative Assembly in the autumn (despite real pressure on budgets), a more settled and strategic leadership of RCIPS and operational innovations will begin to show real dividends over the next couple of years.

An agenda for change in the civil service

A second core area of the governor’s responsibility is the management of the civil service. The civil service was identified by the Miller Shaw report, which two years ago assessed government finances in the Cayman Islands, as one of the main cost drivers and blamed for exploding expenditures in the public sector.

The Legislative Assembly approve the budget for the civil service – only they can vote funds and provide the governor with the budget. He is then tasked with delivering the services through the civil service.

Much of the responsibility for the day to day management and operation of the civil service is delegated to the deputy governor; and in January with the retirement of Donovan Ebanks, a veteran civil servant and former Chief Immigration Officer Franz Manderson will take over that role.

As part of his remit the governor is responsible for recruiting, performance management, training and development, and discipline.

Given the seemingly high cost of the civil service, one crucial question is whether Cayman gets value for money? When asked how he would characterise the quality and efficiency of the services offered to the country by the civil service, Taylor replied: “There are some very talented people in the civil service and there is some very good work going on, but I think there’s room for improvement, there’s always room for improvement.”

And the governor has an agenda for increasing the quality of public service delivery with a focus on performance management, accountability and customer service.

“We need better tools for line managers to encourage good performance but also to discourage poor performance. Right now there is not a very effective system of accountability for civil servants, so you’re relying on people who are self-motivated to do a good job.

Unfortunately, there are few consequences for those who do not do a good job, or for those people who don’t do very much at all,” he said.

Another area on the governor’s radar is the culture of service. “I think the quality of our customer service is very important; as civil servants we need to understand that we are there to serve people and good quality service matters.”

Inspired by his own experience with the Foreign and Commonwealth Office in the UK, the governor is also motivated to introduce a more formal assessment and development programme for civil servants on a management track.

This will include a process where short listed candidates undertake some written exams and tests in addition to an interview. The idea is that the assessment will demonstrate capabilities and competencies, such as technical knowledge, communication, judgment and decision making, and only those candidates who demonstrate a strong performance in the selected areas would be shortlisted for interview. Performance would be assessed over time in past positions and capabilities and competencies could be measured through a series of exams and simulations.

Good governance: Framework for Fiscal Responsibility

In November 2011, Premier McKeeva Bush signed a Framework for Fiscal Responsibility with the UK government, setting out the principles, objectives and processes for managing government finances in the Cayman Islands. Despite the existence of a Public Finance Management Law, the UK was keen to see Cayman adopt a new framework. 

“The motivation for the UK Minister to have the Framework for Fiscal Responsibility (FFR) signed was in seeking reassurance that local government was committed  to clear and sensible management of our financial affairs and would bring public finances back onto a sustainable track within a specified timeline,” Governor Taylor explained.

“It is coming on the heels of some very difficult times in terms of the management of public finances of some of the overseas territories, including Cayman,” he added.

The initiative was driven by the fact that in 2009, immediately upon being elected, the current premier had to go to the UK Minister responsible (at the time Chris Bryant) to seek permission to borrow a large amount of money to meet the Cayman Islands’ obligations.

Then, in 2010 the premier had to go back again and request permission for further borrowing of large sums at a time when the other Overseas Territories were struggling. Both the former Minister Chris Bryant and the current Minister for the Overseas Territories Henry Bellingham wanted some reassurance, some agreement, to ensure we don’t get in a position where we go over the borrowing guidelines again, Taylor said.

The agreement is a reflection of the degree to which the UK government has a say in the budget of the Cayman Islands. Governor Taylor stressed that the FFR is not meant to be a tool the UK can use to coerce the Cayman Islands into doing things in a particular way.

Rather the FFR is designed to help government in Cayman Islands make better decisions in terms of public finances. If the CI government fails to be compliant it will find itself in an even more difficult financial situation – likely needing permission to continue borrowing and finding that request declined by the UK.

“If in three years, we have not complied with the terms of the FFR, then the Cayman Islands’ public finances will be in a serious mess and at that time, the Cayman Islands will then be forced to, at short-notice, make much more difficult decisions to try and bring the public finances back into balance.  [But] I believe the premier is committed to getting public finances back on track,” he said.

Should the Cayman Islands fail to comply, the question remains whether the local government will take the necessary tough decisions or whether these decisions will have to be taken by the United Kingdom?

Although the governor delicately avoided commenting on what actions the UK might take in three years, should the Cayman Islands government fail to comply with the three year, it is a logical question – what, other than refusing permission for further borrowing, might the UK do in the face of non-compliance?

Despite Premier McKeeva Bush’s talk of austerity in government finances, following the signing of the FFR, his government subsequently announced a 3.2 per cent pay increase for civil servants, to remove a pay cut that was instituted less than two years ago.

While the salary increase is a classic example of how government and the private sector make decisions differently, Taylor said he believed there was a case for this increase and that he did not disagree with the decision because the premier had been able to identify savings elsewhere in the budget specifically to fund the 3.2 per cent increase.

Cayman Islands image and reputation

Internationally one of the biggest challenges for Cayman in recent times has been the image and reputation of the Islands. Taylor stressed that the quality of regulation is one of Cayman’s most important attributes which helps make the Cayman Islands a good place to do business with.

It is precisely because of the legislative and regulatory framework that Cayman was able to pioneer and then become a world leader in certain sectors. Taylor said that this quality and integrity of the regulatory framework is increasingly being recognised where it needs to be – the OECD, IMF and others, but he acknowledged that on TV and in novels the portrayed image is typically the opposite of that of a well regulated jurisdiction.

Taylor noted that the fiction writers and movie producers have had a significant negative influence on the Cayman Islands’ reputation globally and that perhaps not enough has been done to reshape and more accurately define Cayman’s image, especially in the financial services industry.

It is thus that he considers it part of his role to promote the positive attributes of Cayman.

“Internationally, I can help people to understand that the regulation here is good, it works and this plays back to good governance,” he said.

Governor Taylor sees himself as having two distinct opportunities to contribute in promoting the image of the destination – the first is by ensuring good governance to underscore and protect the stability and reliability of the Cayman Islands as a good place to do business. The second is through his travels and speaking engagements, when he has an opportunity to share the facts and dispel some of the myths about the Cayman Islands.

His legacy

Governor Taylor hopes to have his term characterised by visible, tangible enhancements to good governance and evidence that the government operates in line with the laws and regulations.

“As a major financial centre, it is critical that we do things properly and I think we largely do things properly as far as regulation; we may need to promote that more overseas,” he stated. Soberly, yet confidently he said, “I think the good governance aspect of my job is very important”. 

Conclusion

Set against the backdrop of life on Grand Cayman, Duncan Taylor has taken on the role of governor during times of unprecedented challenges and with the need for urgent change in the public sector.

Ultimately, he is somewhat insulated from the tough decisions on the economy, social conditions and the environment – those are the remit of the elected members of Cabinet.

However, spending time with Duncan Taylor leaves one with the distinct sense that this governor carries out his duties with a clear sense of purpose; with discipline and restraint intended to allow the fullest level of responsible internal self-government by the elected leaders; with the calm determination to do what he believes is in the best interest of the country even when unpopular.

His leadership style appears to favour communication, collaboration and persuasion rather than abstract exercise of his power or position. During the remaining time he has as governor, we expect to see evidence of increased security, a more efficient public service and tangible results of increased good governance in the Cayman Islands.

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Pilar Bush

Pilar Bush is the managing director of AtWater Ltd., a consulting firm which provides strategic advisory services.  She has more than 15 years’ professional experience in tourism, aviation, government and has a BA in Economics and an MBA. She was Director of Tourism for the Cayman Islands (2005-2008) and while based in New York, the Deputy Director responsible for Marketing (2001-2004).   She is also EVP of Marketing and Communications at Dart Realty and Dart Enterprises.

Other career highlights include  VPMarketing & Corporate Planning for Cayman Airways and an Asst.Permanent Secretary in the CI Government with responsibility for planning (land planning and development). She has served on the Board of Directors of the Caribbean Tourism Organisation (CTO), Chair of the CTO’s Sustainable Tourism Technical Committee, Cayman Airways Board of Directors, the Hotels Licensing Board and on various tourism, change management and marketing committees.

T. +1 (345) 623 7100 
E. pbush@atwaterltd.com 

AtWater

Founded by Pilar Bush, AtWater Consulting Ltd. provides advisory and operations services to industries, organisations and individuals in the areas of strategy formulation, business development, project management and marketing communications. 

 

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