Canover Watson released on bail

Ex-HSA chairman faces allegations of corruption, money laundering

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Canover Watson, former chairman of the Cayman Islands Health Services Authority board and prominent Caymanian businessman, was released on bail Thursday evening following his arrest in connection with a criminal investigation into the public hospital’s contract for a swipe card payment system. He wasn’t charged prior to his release.

The 2007 recipient of the Young Caymanian Leadership Award is also managing director of the local financial services company Admiral Administration.

According to a statement from Cayman Islands Anti-Corruption Commissioner David Baines, the arrest was for suspicion of breach of trust contrary to section 13 of the Cayman Islands Anti-Corruption Law, as well as abuse of public office under section 17 and conflict of interest contrary to section 19 of the Anti-Corruption Law.  

In addition, officers with the Anti-Corruption Unit and Royal Cayman Islands Police Financial Crime Unit arrested Mr. Watson on suspicion of money laundering contrary to section 133 of the Proceeds of Crime Law [2008].  

It was unknown precisely what the money laundering allegation referred to, but the three allegations under the Anti-Corruption Law were in regard to the alleged actions of Mr. Watson while he was at the helm of the Health Services Authority. 

Section 19 of the Anti-Corruption Law [2008] refers to decisions taken by public officers in which they have a “personal interest” where those decisions are not disclosed and/or where the public officer “votes or otherwise takes part in proceedings of the government entity related to such [personal] interest.” To do so is an offense under the Anti-Corruption Law, carrying a prison term of up to five years.  

For some months, the Anti-Corruption Commission has been looking into certain aspects of the award and implementation of a 2010 contract the public hospital system signed with the local arm of a Caribbean company for a patient swipe card system known as CarePay.  

The probe began following an audit of the contract process, the Cayman Compass learned from separate sources familiar with the matter. The newspaper has confirmed that the Cayman Islands Auditor General’s Office started looking into the CarePay contract about two years ago and that the office has since completed a review of the agreement. That review was passed on to the Anti-Corruption Commission. It has not been made public.  

The contract for the swipe card system was awarded on Dec. 21, 2010, to AIS Cayman Ltd., an agent of St. Lucia-based Health Adjudication Systems, for a five-year period. According to the contract, AIS Cayman Ltd. was to receive US$1.37 million for initiating and implementing the computerized card swipe system. In addition, it would receive from the Cayman Islands National Insurance Company and the government Health Services Authority 4 percent of the value of every swipe card transaction approved for payment. 

The 4 percent charge on the value of each claim was split between CINICO, which was responsible for paying 1.5 percent of it, and the Health Services Authority, which would pay 2.5 percent, according to the contract. 

Bid documents for the project obtained by the Compass indicate that the total costs over the five-year period were estimated at US$13.6 million (CI$11.15 million), including the US$1.37 million for the set-up costs. That means the company would earn approximately US$2.4 million per year from the percentages of each approved “swipe” of a patient’s card.  

The size of the financial sums associated with the contract caused Cayman Islands Finance Minister Marco Archer, during a June meeting of the Legislative Assembly’s Finance Committee, to publicly demand the names of the beneficial owners of AIS Cayman Ltd.  

Mr. Archer later identified the shareholders of AIS Cayman Ltd. as local resident Joscelyn Morgan, who holds 60 percent of the local company’s shares, and Douglas Halsall, who holds 40 percent of the shares.  

Mr. Halsall is the chief executive officer of Advanced Information Systems Ltd., which is located in Kingston, Jamaica, according to a company website. Attempts to contact him at the company’s Jamaica offices have been unsuccessful. Mr. Morgan also could not be reached for comment.  

The local offices for AIS Cayman Ltd. have an address of 37 Fairbanks Road, which is a condominium complex in George Town. 

Two companies bid on the initial contract, one a California-based firm and the other the eventually successful St. Lucia-based bidder. There were representations made at the time that the U.S.-based company’s proposal for the swipe-card system was cheaper, but the bid records reviewed by the Compass show that costs for the various systems were about the same.  

However, there has been evidence since the award of the contract that the CarePay system did not achieve all of its intended results.  

According to tender records issued on Dec. 6, 2010, to then-Health Services Authority board chairman Mr. Watson: “The Health Services Authority is expected to save in excess of $2 million from reduction in bad debts plus savings in administrative cost.” 

Questions were raised in the Legislative Assembly’s Finance Committee as to whether the swipe-card system had met its goals, including whether it was helping to reduce the Health Services Authority’s bad debts. As of June 30, 2014, the authority’s past-due debts of more than a year stood at $55 million. By the end of June 2015, the amount is expected to increase to $70 million. 

Mr. Archer, whose ministry is responsible for the Cayman Islands National Insurance Company, has said that the contract is now being reviewed by CINICO, the Health Services Authority and the Ministries of Health and Finance.  

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