Watson: Minister Scotland agreed on CarePay expansion

Hours before government officials signed what became known as the CarePay contract, behind-the-scenes negotiations on the five-year, US$13 million deal were still occurring, Canover Watson testified in his criminal trial last week.

The talks, which Watson brokered, were between CarePay system contractor, Jamaican businessman Douglas Halsall, and former Health Minister Mark Scotland over whether the government could “guarantee” the eventual expansion of the hospital patient swipe-card system to private sector insurers in the Cayman Islands.

The initial contract for the system covered only the operations of the Health Services Authority, affecting about 13,000 government-insured employees, their relatives and individuals who otherwise could not obtain healthcare. However, Watson – the chairman of the Health Services Authority at the time the CarePay contract was signed – testified that Mr. Halsall and his company, Advanced Integrated Systems of Jamaica, were keen to ensure their system would also be used by Cayman’s private sector healthcare providers.

The day before the CarePay contract was due to be signed, Dec. 20, 2010, Mr. Halsall flew to Cayman and met with Watson, jurors in the trial heard. Early the next day, Watson said he and Mr. Halsall discussed the possibility of reworking the CarePay contract so that Mr. Halsall could have “some assurances” the contract would expand beyond government-insured clients.

Watson testified that then-Minister Scotland refused to agree to such terms because he did not want government seen to be forcing the private sector into accepting the deal. Watson said he put Mr. Halsall directly on the phone with Mr. Scotland and the two discussed it.

Following the phone conversation, which Watson said he was not privy to, Mr. Halsall told Watson that Minister Scotland gave a commitment that the then-United Democratic Party Cabinet backed the CarePay system expansion, even if it did not currently have the funds in the government budget to support it.

“Based on the minister’s commitment, [Mr. Halsall] was prepared to go forward,” Watson testified.

The CarePay contract was signed by a number of government officials and by Mr. Halsall later the same day. Provisions for the expansion of the CarePay system to the private sector were not included in the contract signed on Dec. 21, 2010.

On Friday, Watson’s lawyer, Trevor Burke, QC, asked him if there ever was a formal contract for the CarePay system to private sector insurers.

“No,” Watson replied.

The second count of the Crown’s indictment against Watson alleges that he and business associate Jeffrey Webb defrauded the government by misrepresenting that funds had been set aside for the CarePay system expansion when they actually had not. Mr. Burke has argued that such a claim is “nonsense” and that former Minister Scotland and many others were well aware of plans for the expanded system.

During Watson’s testimony Friday, Mr. Burke recounted a number of communications between Watson, Ministry of Health senior staff, Mr. Scotland and Mr. Halsall regarding the CarePay system expansion.

Watson testified that Minister Scotland became concerned in mid-2011, after delays in implementing the CarePay patient card system for the public hospital, that expansion to the private sector might not occur as quickly as he had promised.

Acting on instructions from Mr. Scotland, Watson testified that he drafted a letter updating all involved on the progress of the CarePay system and the proposed expansion of the system to the private sector. That letter included payment terms for the system expansion costing US$2.4 million, half of which was to be paid “up front” and the remaining two 25 percent payments on separate dates depending on when various stages of the expansion were completed.

Watson said Mr. Scotland was aware of those terms and that they had been agreed. Watson said Advanced Integrated Systems, Mr. Halsall’s company, had given him the terms in the first place.

“The minister agreed them with AIS?” the judge asked.

Watson testified that he had personally agreed the terms with AIS and passed those terms to Mr. Scotland, who had also green-lighted the expansion with the understanding that AIS would enter into contracts on its own with the private sector healthcare providers.

Previously, the court heard that US$1.2 million was paid in August 2011, representing the first half of the CarePay system expansion.

Another payment of US$600,000 was made in May 2012. The third installment of US$600,000 was never paid. The expansion of the CarePay patient card system never occurred.

Watson stated the project “stalled” after the May 2013 election of the Progressives-led government and that he was not reappointed to the HSA board in 2013 when his term ended.

‘No personal interest’

Asked directly Friday whether he had any personal interest, or had benefited personally from the CarePay contract, Watson stated he had not. Watson agreed he took a “hands on” role in the project at the prompting of then-Minister Scotland, who recommended him as “point person” on the contract. The court heard that Mr. Halsall relied on Watson to the point where he refused to speak with anyone else – even Webb, his original local business partner – about the contract.

In March or April 2011, Watson testified that Mr. Halsall offered him a high-ranking position in AIS Jamaica’s corporate structure because he was so impressed with Watson’s performance.

Watson said he was interested and did explore the opportunity, but agreed he could not take any such position without first resigning from the HSA board. He said he did not have a financial interest in the local arm of Mr. Halsall’s company, AIS Cayman Ltd., at any time.

Watson considered this opportunity, the court heard, to the point where he set up a private consulting firm named AIS Consulting Ltd. in the British Virgin Islands in anticipation that he would take on a consulting role in Mr. Halsall’s firm when his appointment to the HSA board expired in July 2011.

Watson testified that he attempted to resign from the HSA board, but that then-Minister Scotland “was very upset” and insisted that he stay to finish up the CarePay contract implementation and sort out a “revolt” that was occurring among HSA doctors at that time.

Watson said he informed Mr. Halsall that he could not take the AIS position and that he had agreed to stay on the HSA board for another year at Mr. Scotland’s insistence. He testified that the BVI consulting company he established was never used and never opened a bank account.

In previous submissions before the court, Crown prosecutors have argued that the BVI company was established to accept expected payments from the CarePay contract expansion Watson intended to receive. Those payments, at one point, were expected to reach as much as US$5.8 million, prosecutors alleged – although there was no evidence that the Cayman Islands government ever agreed to spend such a sum.

The Crown had not previously mentioned Watson receiving any offers of employment from AIS Jamaica.