Police query large payment in CarePay case

The payment of an unknown “mobilization fee” from the Cayman Islands government that went toward the operation of a public hospital patient swipe-card system has led to questions from police Anti-Corruption Unit investigators looking into the CarePay card contract, the Cayman Compass has learned.

The fee payment was discussed in June during a meeting of the Legislative Assembly’s Finance Committee in which Cayman Islands National Insurance Company chief executive Lonny Tibbetts was asked by North Side MLA Ezzard Miller about the operating costs of the CarePay card system.

Mr. Tibbetts told the committee that after the CarePay contract was signed, a $2.4 million “mobilization fee” was paid by the company, partly by CINICO and partly by the Cayman Islands Health Services Authority.

Mr. Miller asked if there was a local company or a local business license to which these charges were paid.

Mr. Tibbetts said the contract was registered to “AIS Cayman,” which is a commercial vehicle of Advanced Integrated Systems Ltd., based in Jamaica and sister company Health Adjudication Systems in St. Lucia..

Although Mr. Tibbetts made reference to a $2.4 million “mobilization fee” during the committee hearing, Cayman Islands National Insurance Company financial reports for the 2010/11 budget year indicated that AIS Cayman Ltd. costs for implementing the system were US$1.372 million, not including travel and any additional consulting fees. Mr. Tibbetts later confirmed the actual setup costs for the CarePay card system were US$1.372 million, as stated in the 2010/11 annual report. He said he was “not sure exactly what [the $2.4 million] was for.”

The $2.4 million fee does not appear anywhere in the contract between AIS Cayman Ltd., CINICO and the Health Services Authority. It was also unclear whether the entire amount had actually been paid out.

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 the CarePay patient swipe card system.

The Cayman Islands businessman arrested in connection with the police investigation, Canover Watson, reported back to police on Sept. 29, as per his bail conditions.

According to a statement released on behalf of Anti-Corruption Commissioner David Baines, Mr. Watson had “a further interview” with police on Thursday, Oct. 2 and was then released again on police bail to report back on Nov. 6.

Mr. Watson, 43, denied allegations of corruption made against him in a short statement issued a day after his Aug. 28 arrest. No charges have been filed against Mr. Watson in connection with the investigation.

Mr. Baines said in August that Mr. Watson’s 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].

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.

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  1. Mobilization fee is a standard part of most contracts, pay-out value requested is usually qualified by the contracting officer using a formula of contract value, transportation and worksite set-up costs. If a mobilization fee has been paid, then the contract has already been awarded.

    An important point is that any delay to the contractor at this point by the owner could result in additional costs, based on the contractors formula of daily work production..

  2. Ignoring this case and speaking generally, government ministers need to have some formal training with regard to negotiation techniques. It seems like whenever they sit down at the table opposite a big company they capitulate to all the conditions without imposing any safeguards, service level guarantees or performance requirements. (You can guarantee their counterparts have had that training, making it very one sided)

    I used to work in the software industry and it was not unusual to use an Escrow service – the monies being paid to a mutually trusted third party with conditions attached – so the vendor knows the funds are there in full, and the purchaser knows the vendor will deliver on the implementation as it is only once a working system is in place that the final payment is released. This was particularly important when there are multiple parties involved – e.g hardware and software from different sources.