Funds paid for Webb’s house, Watson’s home entertainment system
Cayman Islands businessman Canover Watson deceived local government officials into paying an additional US$1.2 million for the expansion of a public hospital patient swipe-card system by “doctoring” copies of the initial CarePay card contract and sending it to Ministry of Health officials in August 2011, Crown prosecutors said Thursday.
That proposed expansion of the CarePay patient card system to private sector health insurers in the Cayman Islands never happened and was not agreed to in the initial contract government signed for the service in December 2010.
It was included, prosecutors alleged, in the doctored copy of the CarePay contract Watson sent to former Health Minister Mark Scotland and other Health Ministry officials on Aug. 15, 2011.
“[The] alteration suggested that the contract signed in December 2010 had made specific provision for the national rollout [expansion of CarePay] to be undertaken by AIS Cayman,” Deputy Director of Public Prosecutions Patrick Moran told jurors Thursday.
This “devious” approach, as Mr. Moran termed it, worked, and US$1.2 million was transferred by government into the account of AIS Cayman Ltd., the local partner company of the Jamaican-St. Lucian firm that was contracted to provide and implement the swipe-card system. Prosecutors said it appeared ministry officials did not have copies of the original CarePay contract that was approved in December 2010 by the Cayman Islands Health Services Authority and the Cayman Islands National Insurance Company.
Portions of the cash that went into the AIS Cayman account, which prosecutors said was actually controlled by Watson and his close friend and business associate Jeffrey Webb, were used for a number of purposes that prosecutors said had nothing to do with the CarePay swipe-card contract.
Those purposes included settling a $220,000 loan Webb had taken out to pay an amount due on a home he had purchased in the Atlanta, Georgia area. Some of the money went to the Cayman Islands Football Association. Another amount went to Evolution Home Theater to pay for a home entertainment center at Watson’s house in Georgia.
By late 2011, less than US$200,000 remained in the AIS Cayman Ltd. bank account out of the original US$1.2 million.
During the prosecutor’s opening speech Thursday, Grand Court Judge Michael Mettyear asked Mr. Moran: “Either someone in the ministry overlooked [the change in the CarePay contract] or somebody was complicit?”
Mr. Moran, while not commenting directly on the judge’s assessment, said there was significant confusion over the August 2011 payment. He noted in later testimony Thursday that Health Services Authority CEO Lizzette Yearwood indicated in emails dating from October-November 2011 she was unaware that the expansion of the CarePay card system to private sector insurers had ever been approved.
Prosecutors said Watson made two previous attempts to expand the CarePay patient swipe-card system’s use beyond public sector health services. Watson wrote to then-Cayman Islands Health Minister Mark Scotland on May 3, 2011 and again in July 2011 with proposals outlining a public-private partnership to roll out the computerized payment system to private sector health insurers.
The proposal sought, among other things: The construction of a data center at the Citrus Grove building in downtown George Town to assist in processing patient transactions, funding for ‘consultants’ to guide the project and additional cash that would be paid into the AIS (Advanced Integrated Systems) Ltd. account set up at Fidelity Bank.
Watson “strongly encouraged” the then-minister to make the investment in the expanded project, for which he later proposed a bill of US$6.8 million. Roughly US$4.7 million of that was to be paid for consultant fees. Prosecutors said there was no evidence showing these amounts were ever paid or that the May or July proposals were agreed to by government. Government did agree to the “doctored” version of the plan Watson allegedly sent in August, prosecutors said.
Around the same time as the CarePay expansion proposal was being discussed, prosecutors said Watson was seeking to set up a company in the British Virgin Islands that was eventually named AIS Consulting Ltd. It was this company, prosecutors surmised, that was created to receive the expected profits from the expanded CarePay project. Watson expected that account, at one point, to receive about US$500,000 per year.
“It’s obvious,” Mr. Moran said. “Mr. Watson intended personally to benefit from monies arising from these affairs. The fact, and the value, of that benefit was to be kept well away from the Cayman Islands.”
Seeking an additional US$220,000 to meet payments due on a house he had purchased in Loganville, Georgia, Webb sought to obtain a loan in mid-2011 that prosecutors described as ‘intriguing.’
The three-month loan was sought from Fidelity Bank by a Cayman Islands registered company known as J & D International. Webb was listed as a director of that company. Other directors of the company included former Cayman Islands resident Costas Takkas and former Trinidadian politician Jack Warner, both of whom are facing charges – along with Webb – in connection with U.S. criminal investigation into FIFA, world football’s governing body.
The J & D loan sought US$240,000 and raised some questions among Fidelity Bank managers, prosecutors said. Those managers wanted to know what kind of business J & D International conducted and what it had to do with AIS Cayman Ltd. and the CarePay contract.
Prosecutors said Webb forwarded those questions from the bank to Watson to answer for him. The Crown said Watson answered by stating J & D International sought to “invest” in AIS Cayman Ltd. which was expanding its operations to the U.S.
The loan was granted, the funds given to J & D, transferred to the AIS Cayman Ltd. account and then sent off to a Wells Fargo account in the U.S. to help pay off the money prosecutors said Webb owed on the Loganville home.
In September 2011, the loan repayment was due, but by that time, Mr. Moran said the US$1.2 million had “landed” in the AIS Cayman Ltd. bank account as a result of the “doctored” contract Watson had agreed with the Ministry of Health.
“Where did the $1.2 million come from? It was money that came from the Cayman Islands Health Services Authority. It was public money,” Mr. Moran said.
In late June 2011, Watson would also transfer about US$500,000 obtained via a separate loan to an account in Georgia to purchase a home as well, Mr. Moran said. The home Watson bought was located on the same street in Loganville, Ga. – Adel Dr. – as Webb’s home.
Things fall apart
After the US$1.2 million for the CarePay project expansion was paid in August 2011, a number of individuals began “asking questions,” about the project, according to Mr. Moran.
Those questions came from a number of sources: The Cayman Islands National Insurance Company financial officers, the Cayman Islands Auditor General’s office, an open records request for information about AIS Cayman Ltd. and even Watson and Webb’s Jamaican business partner Douglas Halsall, who prosecutors said had become concerned regarding the lack of an audit trail regarding funds from the AIS Cayman bank account.
Fidelity Bank, which held the account for AIS Cayman Ltd., also sought to obtain more information about the actual beneficial owners of the company, threatening to close the account unless it received specific details.
Despite the difficulties, the government proceeded with the partial implementation of the CarePay patient swip
e-card system after prosecutors alleged Webb and Watson “manipulated” CINICO chief Lonny Tibbetts into accepting the “go live” date for the project.
The CarePay swipe-card system went live for the entire public hospital system in May 2012, but problems persisted for months afterward and the Health Services Authority refused to pay for the remainder of the contract until those issues were resolved.