CarePay project costs 'increased massively'

Prosecutors allege Watson, Webb tried to cover up ‘sham’ 

The proposed costs of a public hospital patient swipe-card project increased by as much as US$3.5 million after bid documents for the deal were submitted to former Cayman Islands Health Services Authority Board chairman Canover Watson, Crown prosecutors alleged Tuesday. 

Meanwhile, prosecutorial statements presented in the corruption trial of Watson and his former personal assistant Miriam Rodriguez also alleged that the local company Watson and close friend Jeffrey Webb formed to receive some business from the swipe-card system had “sham” frontmen installed as directors to cover up their personal involvement. 

During the continuation of his opening speech Tuesday, Deputy Director of Public Prosecutions Patrick Moran said “a most remarkable change in the documentation” submitted by Advanced Integrated Systems (AIS) Jamaica to win the bid for the Cayman Islands Health Services Authority’s patient billing system contract had occurred. 

The change, Mr. Moran said, occurred after AIS Jamaica’s bid documents were sent to Watson on Nov. 4. 

At most, the senior prosecutor noted, initial bids from AIS Jamaica for the health services’ proposed “real time” customer billing system contained US$872,000 in what were referred to as “start-up” costs. Those documents were sent to both Webb and Watson in various drafts days before they went to the government’s Central Tenders Committee. 

By the time bids were officially opened at central tenders for evaluation on Nov. 5, 2010, the maximum “start-up” costs for the AIS bid had gone up to US$1.37 million, prosecutors said. 

Moreover, by the time the AIS Jamaica proposal for the customer billing system was recommended as the bid winner in late November, the ongoing costs over the course of the five-year contract had increased by an estimated additional US$3 million, prosecutors stated. 

“The costs … to the public for doing business with AIS dramatically changed,” Mr. Moran said. “The inflation of these fees was an entirely dishonest act which served no purpose other than to line the pockets of those who stood to benefit from doing business with AIS Jamaica.” 

Watson chaired the technical bid review committee that recommended AIS Jamaica win the bid on Nov. 29. That contract was approved by the Health Services Authority Board of Directors, chaired by Watson, in December 2010. 

Precisely who was responsible for the changes to the bid amounts was not stated in court, but earlier testimony from Monday indicated that both Watson and Webb had personal interests in a local company, AIS Cayman Ltd., that was being formed as a subsidiary of AIS Jamaica to operate as a local partner in the hospital patient claims system contract, once it was awarded. 

Various email communications sent between Watson, Webb and AIS Jamaica representatives were read out during court testimony Tuesday and showed Webb “pre-approving” certain communications that Watson intended to send to AIS representatives. Mr. Moran alleged that Watson also supplied Webb with details of other interested project bidders for the hospital patient payment system. 

Further statements indicated Webb, acting on behalf of AIS Jamaica representatives, sent questions for Watson to ask during bid evaluation committee meetings. 

In 2011, when the CarePay swipe-card project had “hit the buffers,” according to Mr. Moran, prosecutors alleged Webb and Watson appeared to be focusing on buying themselves houses in the Atlanta, Georgia metro area. 

‘Sham’ directors 

During court testimony Monday afternoon, Mr. Moran said the registered directors of AIS Cayman Ltd. were listed in October 2010 as Caymanians Joscelyn Morgan and Eldon Rankin and Jamaican businessman Douglas Halsall, who owned AIS Cayman’s parent company, AIS Jamaica. 

Mr. Moran argued Monday that it was actually local businessmen Watson and Webb who ran AIS’s local operations from behind the scenes, disguising their involvement and “defrauding” both the Health Services Authority and the Cayman Islands National Insurance Company of significant sums in the award of a contract for the public hospital swipe-card system. 

Mr. Moran said the appearance of Messrs. Morgan and Rankin on the registration documents for AIS Cayman Ltd. was “a complete sham.” 

“Although these individuals do exist, neither of them appears to have played any visible role [in the company],” Mr. Moran said. 

Mr. Rankin was identified in court as the owner of a local construction company, while Mr. Morgan once worked as a bookkeeper for an auto shop. Mr. Moran said Mr. Morgan, the listed 60 percent “local” owner of AIS Cayman Ltd. left the islands and had not returned for some time. He eventually began receiving some payments “at a very late stage,” the prosecutor said. 

Criminal investigations into the CarePay contract award also revealed that fees to register the local company in the Cayman Islands were paid from a Butterfield Bank account held by TCB construction, a firm owned by Watson’s family. 

Mr. Moran alleged that Rodriguez, acting on behalf of Watson, asked Butterfield representatives not to list the name of the construction firm on the check issued for the registration of AIS Cayman Ltd. The bank did not comply and the check ended up in the prosecution’s records. 

The Crown further alleged that Watson, when asked about the registration by police officers investigating the case, indicated that he did not register the company. Watson, Mr. Moran said, explained that AIS Cayman Ltd. must have been registered by the directors after they saw a request for proposals regarding the computerized swipe-card system issued by the Health Services Authority. 

“It’s simply not true,” Mr. Moran said, indicating the Crown evidence in the case included details that Webb and Watson had made efforts as early as September 2010 to register AIS Cayman Ltd. in order to profit from the hospital swipe card contracts. 

A significant amount of the profits earned from the CarePay contract by the local arm of AIS were received, prosecutors said, by another company – The W Group – which was entirely controlled by Watson and Webb. 

“The answer in relation to who was behind AIS Cayman is pretty obvious,” Mr. Moran said. “It was their company [referring to Watson and Webb].” 

The Crown has a list of more than 30 witnesses to call in its case which seeks to prove six counts against Watson, including two counts of conspiracy to defraud, contrary to common law, one count of conflict of interest contrary to Cayman’s Anti-Corruption Law, one count of fraud against the government, one count of transferring criminal property and one count of breach of trust under the Anti-Corruption Law. Rodriguez is charged with one count, along with Watson, of transferring criminal property. 

The defendants have pleaded not guilty to all charges. Webb, who is also charged in the case, will not be present for the trial. Prosecutors indicated he could face trial in Cayman at a later date.