Review of CarePay debacle complete

The internal review of the Cayman Islands government’s catastrophic five-year, US$13 million dollar contract for hospital patient insurance adjudication services has been completed, Deputy Governor Franz Manderson said Friday.

Mr. Manderson said he expected to receive details of the CarePay contract audit by the end of this month, once government entities involved in the review had an opportunity to review the report. The review was ordered shortly after the end of a criminal trial that focused on former Health Services Authority Board Chairman Canover Watson’s role in an alleged scheme to defraud the government. Watson was sentenced to seven years in prison after a jury found him guilty of five out of six criminal charges against him.

Neither Mr. Manderson nor Internal Audit Unit Director Deloris Gordon commented on the audit’s findings when asked Friday, but the deputy governor has pledged to release the report to the public.

The audit is not a criminal investigation, but an administrative review of the actions taken by Cayman Islands government workers during the procurement and implementation of the hospital patient swipe-card contract. The contract was awarded to a local company named Advanced Integrated Systems Cayman Ltd., in which Watson had an interest that he did not disclose.

Mr. Manderson said the review would consider “comprehensively” all activities surrounding the bid process and award of the contract.

Watson, 45, was accused at trial of orchestrating, with business partner and friend Jeffrey Webb, a scheme that prosecutors said sought 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 appointed Ms. 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.