Watson: $100K was ‘investment’ in fuel distribution
About US$100,000 from a bank account held by the local company that was a partner in the CarePay swipe-card project was transferred in December 2010 to a business in which Canover Watson was a part owner, Crown prosecutors said Thursday.
Watson, 45, the former chairman of the Cayman Islands Health Services Authority board of directors, has been accused by prosecutors of using that position to influence the award of a public hospital patient swipe-card contract in favor of a local company called AIS Cayman Ltd.
Cash from the CarePay contract went to AIS and was then sent on to other bank accounts and businesses owned by Watson and his business partner Jeffrey Webb, the Crown alleges. It is further alleged by the Crown that Watson and Webb directed AIS from behind the scenes through the use of “sham” company directors.
In the particular instance discussed Thursday, the US$100,000 originated from the first US$686,000 payment on the CarePay contract shortly after it was signed in December 2010.
A transcript of a Royal Cayman Islands Police interview read out in court Thursday indicated that officers had obtained records from Fidelity Bank in Cayman showing that the amount was disbursed from the AIS Cayman Ltd. account to another account held by a company named P&W Distributors Ltd.
Watson told police at the time that one of the named directors of AIS Cayman, Joscelyn Morgan, had contacted him in December 2010 and indicated he wished to invest in P&W, a company that had obtained local fuel distribution rights from Chevron-Texaco in Cayman. Watson was a 50 percent owner in P&W at the time, the court heard.
Watson told police that Mr. Morgan made a “personal investment” of US$100,000 which had initially been deposited in the AIS Fidelity account. So, while it appeared to come from the AIS bank account funds, it was actually Mr. Morgan’s personal cash, according to the police interview transcript.
The other part-owner of P&W Distributors, Ernest Powell, testified Thursday that he had never heard of a man named Jocelyn Morgan and knew nothing of a US$100,000 “personal investment” in the company at any time.
Mr. Powell testified that he worked in the “sweat equity” end of the business, loading up his fuel delivery truck and distributing petrol to a number of local entities, including Cayman Airways and the Cayman Islands Fire Service. He said Mr. Watson took care of the financial side of things.
Mr. Powell also testified that although he knew the other named Caymanian director of AIS Cayman, Eldon Rankin, he was unaware of Mr. Rankin having any involvement in P&W Distributors, either.
During cross examination Thursday, Watson’s attorney, Trevor Burke, QC, said Mr. Powell had lost tens of thousands of dollars in running the fuel distribution business between 2010 and 2011, cash that the attorney suggested Watson eventually bailed Mr. Powell out when their partnership dissolved in 2012. Mr. Burke also pointed out that Watson was under no legal obligation to reveal who the shareholders of P&W Distributors were to either Mr. Powell or bank officials who provided the company with loan overdraft facilities in 2011.
The participation by Mr. Morgan or Mr. Rankin in the business of AIS Cayman Ltd. came under scrutiny during testimony by Finance Minister Marco Archer on Wednesday. Mr. Archer testified that he was unsure how either Mr. Rankin, who knew next to nothing about computers, and Mr. Morgan who worked as a bookkeeper at a local auto parts store, could even know how to become involved in what was a multimillion-dollar software development company.
Minister Archer surmised during testimony that the only connection between the two men was Webb, who had known Mr. Morgan through their association with Cayman Islands football activities. Mr. Rankin is Webb’s stepfather, Mr. Archer confirmed.
Webb pleaded guilty to separate criminal charges in the U.S. and is also charged in the CarePay investigation, but he is not on trial in the current case before the Grand Court.