Top stories of 2015: CarePay contract trial gets under way

A veritable who’s who of Cayman Islands government workers, elected officials and upper-echelon members of society either went before the Grand Court or had their names mentioned in the waning weeks of 2015 during the criminal trial of Canover Watson and Miriam Rodriguez. 

Watson, a former Young Caymanian Leadership Award recipient, is charged in five counts under the common law and the Anti-Corruption Law, alleging that he used his position as Health Services Authority board chairman to direct a multimillion-dollar healthcare contract to a company he and business associate Jeffrey Webb clandestinely controlled. 

Watson and Rodriguez are also charged with transferring criminal property, namely proceeds from the CarePay swipe-card contract, to Webb. Both defendants pleaded not guilty. Webb, facing sentencing in the U.S. on a separate criminal matter, is not on trial in Cayman, although he is charged in the case. 

The trial is slated to continue into 2016. Here we recap the first four weeks of the proceedings. 

Week 1 

After a seven-person jury and two alternates were selected to hear the case, the first week of testimony got under way on Nov. 23 with a four-and-a-half day opening speech by Deputy Director of Public Prosecutions Patrick Moran. 

Mr. Moran alleged that Watson, Webb and Watson’s former personal assistant Rodriguez used a company Watson and Webb set up to “defraud public bodies of large amounts of money” following the 2010 award of a public hospital contract. 

The alleged fraudulent activities took place between December 2010 and late 2013 and involved the transfer of large sums paid by the Health Services Authority and the Cayman Islands National Insurance Company to AIS Cayman Ltd., a company prosecutors alleged Watson controlled while serving as chairman of the HSA board of directors. 

It was further alleged that Watson and Webb worked together to create AIS Cayman Ltd. as the Caymanian-owned subsidiary that would receive profits from what became known as the hospital’s CarePay swipe-card system. AIS Cayman was created just a few months before the CarePay contract was awarded in December 2010, jurors were told. 

Sums said to be profits from the contract were paid in both large checks and in cash envelopes that prosecutors allege were handled by Rodriguez. Prosecutors said the cash envelopes “appeared were to be handed out to Jeff Webb.” 

In his two-hour opening speech, Watson’s attorney, Trevor Burke, QC, painted quite a different picture. He stated that a number of government officials involved in the award and implementation of the CarePay swipe-card contract, fearing they would be caught up in the corruption investigation, sought to blame Watson for what occurred. 

Mr. Burke said that even Crown prosecutors could not identify who “the others” in the CarePay investigation might be at this stage, although he said they appeared content to “get a lot of free kicks” at Webb, who wasn’t there to defend himself. 

Nonetheless, Mr. Burke stated that “every prosecution witness” jurors would hear from during what is expected to be a two-month trial “absolutely endorsed” Advanced Integrated Systems (AIS) of Jamaica and its owner, Douglas Halsall, for the implementation of the CarePay project. Former Health Minister Mark Scotland – who is not on the witness list – secured an additional $2 million in funding for the expansion of the swipe-card project to private sector insurers, attorneys said. “There was no more enthusiastic supporter of AIS than … the minister responsible,” Mr. Burke said. 

Week 2 

Trial testimony opened with Cayman Islands Health Services Authority chief executive Lizzette Yearwood stating she was “shocked” by email communications from Watson that showed what she called a “direct conflict of interest” in the CarePay contract and another contract for a computerized hospital pharmaceutical tracking system. 

Ms. Yearwood, who agreed to the payment of the first US$686,000 for the swipe-card contract in December 2010, told jurors she could not remember if she had read the agreement before authorizing payment. However, upon reading it in court, she said she recalled having some concern about the manner of payment used for the contract. She said Watson sought to allay her worries about the CarePay contract payments at that time. 

Later in the week, presiding trial Judge Michael Mettyear asked Ms. Yearwood whether a contract existed within government for a US$2.4 million expansion of the CarePay swipe-card system to private sector insurers and healthcare providers. 

“I believed there was a contract, but I never had sight of it,” Ms. Yearwood replied. 

Judge Mettyear responded that the capital project, while not enormous in terms of government’s budget, was still substantial. “I just wanted you to have a chance,” Justice Mettyear said to Ms. Yearwood. “Why is it you dismissed the notion that [the money] could be given by the minister [of health] alone?” 

Ms. Yearwood replied that even in a ministerial-driven initiative, a written contract of “some sort” would be required, setting out the obligations of either party. “I’m not aware of the minister being able to enter into any sort of business arrangement without any sort of physical contract,” she said. 

Week 3 

Greg Hoeksema, former medical director of the Cayman Islands Health Services Authority, testified on Dec. 8 that he was “not comfortable” with either the CarePay patient swipe-card contract or a subsequent contract for a pharmaceutical tracking system being awarded to the local operator of a Jamaican-St. Lucian company, but acknowledged he did not formally object to either deal. 

With regard to both contracts going to AIS Cayman Ltd., Dr. Hoeksema told jurors on Dec. 7 that he felt it was already a done deal. 

“I knew this was a battle that I could not win,” he said via a video-link teleconference from Washington state. “I could choose to die on this battlefield or I could choose to let it go and press on with the other issues of the day. This was not going to be stopped.” 

The jury also heard during the week that government minister Marco Archer raised questions about the CarePay contract and that the former IT director of the public hospital system noted his view that the initial five-year US$13 million CarePay contract amounted to “highway robbery.” Hospital IT chief Dale Sanders also alleged that there appeared to be corruption in the granting of the CarePay agreement. 

“I felt very strongly and actually quite sadly [in June 2011] that there was some form of corruption that existed between AIS and Mr. Watson and that it was time for me to leave,” Mr. Sanders said. 

Mr. Sanders made his allegations of “corruption” in July or August 2011 to Sister Islands MLA Moses Kirkconnell and his sister Nancy Kirkconnell-Ewing on a trip to Cayman Brac. It was stated that Mr. Kirkconnell and now-government minister Osbourne Bodden met with Mr. Sanders in mid-2013 regarding his allegations during a trip to Washington, D.C. 

Defense attorney Mr. Burke suggested that Mr. Sanders appeared to have been given a lucrative consulting contract with government following that 2013 meeting. Mr. Burke also questioned Mr. Sanders’s commitment to the implementation of the CarePay contract. 

Mr. Burke said Mr. Sanders had failed to attend a key meeting regarding the hospital contract bid recommendations in November 2010 because he was picking up his girlfriend at the airport, and later suggested that Mr. Sanders had attempted to sabotage the project. “That’s not true. I would never do such a thing,” Mr. Sanders said. 

Week 4 

Testimony revealed that as late as September 2013 – two years after the HSA had spent the majority of the funds – the hospital authority was still trying to find a copy of the contract that purported to authorize government to spend up to US$2.4 million on the proposed expansion of the CarePay system. 

The jury heard that the Ministry of Health had “no contractual relationship” that would have allowed it to spend such sums to effect the “rollout” of the CarePay system to private sector healthcare providers in the Cayman Islands, even though an initial contract had been agreed with the government hospital to use the system. 

Despite those statements, installments of US$1.2 million and US$600,000 were paid to AIS Cayman Ltd. and its partner company, Health Adjudication Systems of St. Lucia, in the latter half of 2011 and in 2012, the jury was told. Those sums ostensibly went for the “rollout” of the system to private sector insurers. The third and final payment of US$600,000 was never made due to government financial difficulties at the time. 

Former ministry chief financial officer Carrol Cooper testified that there was “no way” the ministry could have legally made those payments. 

Later in the week, it was revealed that both Caymanian men who ostensibly ran the local branch of the company that was awarded a five-year, US$13 million contract to implement the CarePay system in December 2010 had close personal ties to Webb. 

The two people named as directors of AIS (Advanced Integrated Systems) Cayman Ltd., Joscelyn Morgan and Eldon Rankin, have been described by prosecutors as “sham” frontmen directors. Prosecutor Mr. Moran alleged that the two were placed in their positions by Webb and Watson so that Webb and Watson could “cover up” their personal involvement in the company. It was also revealed that Minister Archer, who also testified in the case, had a close personal relationship with Mr. Rankin. 

The trial is due to continue on Jan. 4.