The Public Accounts Committee set up by the Anguilla House of Assembly, as required by the Constitution, published a report on October 31, 2019 on the Government’s financial standing and obligations.
Chapter six of the report deals with the Social Security Board, ASSIDCO, (a subsidiary of the Board) and the Cinnamon Reef project in which the Board invested on behalf of the Government of Anguilla.
The following is an extract from the report of the Public Accounts Committee on that matter which has long been of public interest and comment:
Chapter 6: Social Security Board, ASSIDCO and the Cinnamon Reef project
As noted in chapter four, the Government borrowed $214 million from the Social Security Board in 2016 to help finance the creation of the National Commercial Bank of Anguilla (NCBA) under the Banking Resolution Obligations Act. ASSIDCO, a wholly-owned subsidiary of the Social Security Board, invested in the Cinnamon Reef development on the assumption that the Government would make rental payments to ASSIDCO and contribute to the development of the site as a hospitality training institute for the tourist industry. The Government has started repayments on the interest for the $214 million loan but has not made any payments in relation to the Cinnamon Reef project, for which it owes $31.07 million, despite regular monthly rental invoices from the Social Security Board.
When we asked the Director of Social Security, Mr Timothy Hodge, about the Government’s failure to honour its obligations regarding Cinnamon Reef, he insisted that the debt was not going to go away, however long it took. He thought it was a low-risk loan because it was backed by the Government. Furthermore, he did not consider that the outstanding amounts placed the Social Security Board in a difficult position financially. On the contrary, he maintained that the social security system had performed beyond expectation and has outperformed its model.
The Cinnamon Reef Development project has resulted in losses of $16 million to ASSIDCO. Proposals for joint venture companies have not come to fruition and the Government has advised against this course of action.
The Social Security Board’s lack of curiosity about how and when the Government will begin its payments in relation to Cinnamon Reef seems blasé and gives rise to uncertainty about the viability of the project, ASSIDCO and ultimately the Social Security Board. We invite the Social Security Board by the end of December 2019 to provide a written update to the Committee on its progress in making Cinnamon Reef viable.
