CarePay trial: Webb hid CarePay profits from ex-wife, says Defense

Canover Watson takes the witness stand

CarePay trial: Webb hid CarePay profits from ex-wife, says Defense

Caymanian businessman Jeffrey Webb tried to cover his involvement in the company that won the Health Services Authority’s patient swipe-card contract because he was trying to hide his profits from his former wife during divorce proceedings, defense attorneys in the CarePay trial alleged. 

Trevor Burke, QC, in the defense opening in local businessman Canover Watson’s criminal trial, told jurors, “You’d be surprised by how much Jeff Webb made. His income was well over $1 million per year [as vice president of FIFA], and Webb accumulated quite a substantial fortune as [Advanced Integrated System’s] on-island partner.” 

Watson is accused, along with his friend and business partner Webb, of defrauding the Cayman Islands government and using his position as chairman of the local Health Services Authority board to direct a five-year, US$13 million contract to a Jamaican business associate, Douglas Halsall, in late 2010. 

Prosecutors allege Watson and Webb set up a local company – known as AIS [Advanced Integrated Systems] Cayman Ltd. – to skim profits from that agreement and hid their involvement in the company through the use of “sham” directors. 

Mr. Burke and Watson posited a different theory. They implied Webb tried to hide his involvement in AIS Cayman and had “very much his own reasons” for doing so. 

“There can be little doubt that if Mrs. Webb knew … the money Mr. Webb was making in his partnership with Mr. Halsall, her divorce settlement would have been considerably more,” Mr. Burke said. 

Mr. Burke said jurors would be hearing “a great deal” about Webb during Watson’s defense of the six-count indictment against him. He acknowledged that the two were the “closest of friends,” but that some details of Webb’s involvement – and earnings – from the AIS Cayman contract were not known even to Watson until lawyers received certain bank records ahead of the criminal trial. 

Webb is also charged with offenses in Cayman in connection with the investigation, but he is not facing trial in Cayman at this time. 

The reason Webb is not in Cayman was referred to by Mr. Burke in his defense opening. 

“Things changed significantly in this trial when, right in the middle, Webb ‘fesses up his own guilt in America,” he said, referring to U.S. criminal charges in the ongoing FIFA bribery probe to which Webb pleaded guilty in November. The guilty plea was not announced until after Watson’s trial in Cayman had started. 

“He’s a man obviously steeped in dishonesty,’ Mr. Burke said, referring to Webb. “It’s not important what he pleaded to; all that’s important is that it’s nothing to do with this case.” 

Watson takes stand 

Appearing before the court in his own defense Wednesday morning, Watson was asked by Mr. Burke directly whether he was involved in a criminal enterprise that sought to disguise Webb as the true director of AIS Cayman. 

“Is there any truth to that?” Mr. Burke asked. 

“No,” Watson responded. 

“Why would Webb wish to disguise his association with AIS Cayman?” Mr. Burke asked. 

“It would seem that maybe he was trying to disguise his involvement in AIS from his wife and her attorneys,” Mr. Watson replied. 

Watson notarized the decree of dissolution of marriage between Webb and his former wife on Jan. 20, 2011, jurors in the trial heard. However, Watson testified that he did not know that the terms of that divorce involved the transfer of Webb’s Cayman Islands home and about $100,000 cash to his ex-wife until he was allowed to examine certain financial records in the course of this criminal trial. 

AIS Cayman Ltd. took in approximately US$3 million from a contract it was awarded from the public hospital system in December 2010, prosecutors have alleged. They have further alleged that Watson pocketed about US$348,000 in profits from the contract, which he directed as former chairman of the Health Services Authority board. 

Watson also testified Wednesday that he had never seen registration documents or checks that paid for the registration of AIS Cayman Ltd. – both of which bore his signature – until his arrest in August 2014. He said the reason for this was that his personal assistant, Miriam Rodriguez, was authorized to use Watson’s signature stamp on the records. Watson said Ms. Rodriguez did this at Webb’s request and never told him she had stamped the documents. 

‘[Ms. Rodriguez] had full control of my life,” Watson said during testimony. 

Mr. Burke asked why Webb did not pay for the AIS Cayman registration documents. 

“You have to understand with Mr. Webb, he’s a big personality, not great attention to detail,” Watson said. “It’s likely he set this up and then ‘I need to get on a plane.’ Then Miriam is left with [it].” 

Watson’s ‘life’s work’ 

Mr. Burke agreed that Watson was “intimately involved” in every detail of the Health Services Authority’s patient swipe-card contract – which became known as the CarePay system – and was keen to resolve a situation with accumulated debts that left the public hospital system bankrupt for “at least five years” by the time Watson became HSA board chairman in 2010. 

He said Watson knew a system that could verify an insured patient’s claims for healthcare services in real time and that could decide what was owed by insurance companies almost immediately could help the HSA resolve many of the financial problems it was experiencing. 

“For a period, it became his life’s work,” Mr. Burke said. “Nothing was more important. 

“Rest assured, he knows more about this contract and what went on behind the scenes in relation to it than any witness that has given evidence [in the trial],” Mr. Burke said. 

Mr. Burke suggested that Mr. Halsall’s company, AIS Jamaica, was the only company “in the world” that could provide the services the HSA was seeking in relation to real-time patient claims verification and adjudication. He suggested that Watson knew AIS Jamaica offered the only solution “and so did everyone else.” 

“Everyone else,” according to the defense, included then-government Health Minister Mark Scotland and former Cayman Islands Premier McKeeva Bush. 

Despite these circumstances, Mr. Burke said, Watson was instructed by then-Premier Bush to issue a request for proposals for the hospital patient claims system. Mr. Burke suggested this was because another company, Brac Informatics, wanted to bid on the contract and “nobody wants the politics of them not being allowed to bid.” 

The “politics” came into the equation, Mr. Burke suggested, because Cayman Brac and Little Cayman MLA Moses Kirkconnell – then an opposition party member – had a controlling interest in Brac Informatics. 

As it turned out, Brac Informatics did not bid on the hospital patient verification system contract, but another company – an American firm named Cerner – did. 

Mr. Burke said AIS Jamaica, its sister company Health Adjudication Systems of St. Lucia and local partner AIS Cayman ended up winning the contract because they were the best and lowest bidder. “There is no question that AIS offered the best value for money,” he said. 

Halsall’s ‘problem’ 

According to Cayman Islands law, no foreign company can own more than 40 percent of a locally operating firm unless there are special circumstances involved. 

This is what led AIS Jamaica’s owner, Mr. Halsall, to form a locally operating arm for his interests in the HSA swipe-card contract. The company that ended up being formed was AIS Cayman Ltd. 

Mr. Burke said Mr. Halsall, whom he described as “a smart man, a wealthy man,” incorporated AIS Cayman so that his on-island expenses related to the CarePay contract could be paid here. 

AIS Jamaica’s interests in the CarePay contract were registered with another company, Health Adjudication Systems of St. Lucia, so that some of the profits from the CarePay deal could be “sheltered” in that jurisdiction from a 27 percent corporate tax typically charged in Jamaica, Mr. Burke said. The senior defense counsel did not suggest Mr. Halsall had done anything wrong and said he was merely structuring the relevant firms involved to his best financial advantage. 

However, Mr. Burke did suggest that Webb may not have informed Mr. Halsall about everything that was going on in Cayman with the registration and operation of AIS Cayman Ltd. Both local directors, Joscelyn Morgan and Eldon Rankin, had close ties to Webb, attorneys said. Mr. Rankin was Webb’s stepfather and Mr. Morgan knew Webb for many years through the Cayman Islands Football Association. 

Watson testified Wednesday that while he knew both Mr. Morgan and Mr. Rankin, he did not have as close a relationship with either man as Webb. In fact, Watson said, he did not currently have contact details for either man. 

Jeffrey Webb
Jeffrey Webb