Cayman Islands Deputy Governor Franz Manderson has ordered government’s internal auditors to look into events surrounding the award and implementation of the CarePay hospital swipe-card contract, in the wake of what were described as “shocking” revelations during former Health Services Authority Board Chairman Canover Watson’s criminal trial.
“Based on the details that were revealed during the recent court case … there are concerns with regard to how well risks are being managed and whether the right processes are in place to prevent reoccurrence,” Mr. Manderson wrote in an email Thursday.
The review, to be conducted by government’s Internal Audit Unit, will look at the “entire procurement process for the CarePay system,” including the award of the contract to Advanced Integrated Systems Cayman Ltd., the local contractor.
Mr. Manderson said the review would consider “comprehensively” all activities surrounding the bid process and award of the contract.
A final report and recommendations are to be submitted to the deputy governor’s office.
Watson, 45, was convicted and sentenced to seven years’ imprisonment for the fraud scheme he orchestrated with business partner and friend Jeffrey Webb that prosecutors said aimed to siphon $3 million from government coffers.
A number of current and former civil servants took the witness stand during the proceedings to give the Grand Court their accounts of what occurred during the scheme between mid-2010 and mid-2013.
The testimony at trial included statements indicating there was “little scrutiny” given to the five-year, US$13 million contract for the CarePay swipe-card system for public hospital patients. The heads of the Health Services Authority and Cayman Islands National Insurance Company admitted they had not read the agreement before it was signed.
A US$2.4 million expense for the proposed expansion of the CarePay card system to private sector insurers and healthcare providers was inserted into government’s 2011/12 budget, but no contract for the purported agreement ever existed. The system expansion never happened, even though a total of US$1.8 million was paid for it.
It was also revealed that Watson, as HSA chairman, was put “in charge” of the CarePay project implementation, involving complex computer programming tasks for which he had no specific knowledge or training to assess. This was allowed to occur over the protests of then-hospital information technology chief Dale Sanders.
Mr. Manderson said he had appointed Internal Audit Unit director Deloris Gordon to lead the review, and indicated auditors would be given a “wide mandate” to look into all areas, from the overarching civil service decision-making process down to the bid process specifics.
During the trial, Crown prosecutors alleged that Watson rushed through the original CarePay contract process and later bamboozled civil servants – and possibly a government minister – into approving funds for the system expansion, even though no contract existed for it.
Mr. Manderson said he did not wish to prejudge the Internal Audit Unit’s review, but did indicate that such reviews generally, depending on what they find, can lead to disciplinary action taken against government workers if that is warranted.
A somewhat similar review was conducted by Internal Audit Unit personnel into various administrative allegations made in 2014 against suspended Chief Immigration Officer Linda Evans. Ms. Evans is on paid leave pending the government’s decision regarding her future employment.
Mr. Manderson stressed that the internal audit was not a criminal probe and, in this case, the investigation into Watson and Webb’s dealings had already progressed. The audit, he said, amounted to an administrative review of the actions taken by civil servants in relation to the CarePay contract.