Lawmakers skeptical of CarePay ‘fixes’

Efforts to prevent a reoccurrence of bureaucratic bungles that led Cayman Islands taxpayers to spend US$1.8 million for nothing during the CarePay contract debacle drew skepticism from lawmakers who noted there had been little accountability in the wake of the disastrous deal’s end.

Revelations of government paying large sums of money without a contract in hand, board members or senior government staff not reading multimillion-dollar contracts before signing them, and public fiduciaries being conned by the CarePay contract’s proponents came thick and fast last year during the criminal trial of former Health Services Authority Board Chairman Canover Watson.

Watson was imprisoned for seven years after being convicted in February 2016 on fraud and corruption charges. However, lawmakers on the government’s Public Accounts Committee noted last week that little else seems to have happened since then.

“I am really disappointed that one person is sitting in Northward and everyone else who signed the [CarePay] contract is able to keep their job,” said committee member. Bodden Town MLA Chris Saunders.

According to a civil service internal audit completed last year, the Cayman Islands government spent US$1.8 million (CI$1.5 million) on a fraudulent plan to “rollout” a healthcare patient swipe-card system to private sector doctors and insurers.

Not only was there no existing contract for the expenditure, the entire basis for the payment – made in two tranches between late 2011 and mid-2012 – was a “letter from the former Health Services Authority Board chairman [Canover Watson] to the Minister of Health.”

The audit review, completed by government’s Internal Audit Unit at the request of Deputy Governor Franz Manderson, attributed the payments for the nonexistent “national rollout” of the CarePay system to a “lack of an expected standard of care and professional skepticism in the payment of invoices totaling CI$1.5 million by the Health Services Authority.”

“The Ministry of Health funded the Health Services Authority for an equity injection on the basis of a request from the former board chairman [Watson],” the audit states. “However, the HSA finance officers advised that they had no knowledge of this equity funding. The HSA officials, at the instructions of the former board chairman, paid out the funds to Advanced Integrated Systems Cayman without an approved contract of service and despite the fact that the invoices were addressed to the Ministry of Health and not for the HSA.”

“This was not our finest hour,” the deputy governor said after the completion of the audit review.

One solution presented in the wake of the CarePay failures was a change in the makeup of board membership in all statutory authorities and government-owned companies, Accountant General Matthew Tibbetts said last week. Those requirements include board members having expertise in their respective areas, as well as adding some civil service staff to public boards – including on the Health Services Authority Board.

The civil servant position is an “advisory role” and does not get a vote, but Mr. Tibbetts said it would give government “a presence” in the debate.

Public Accounts Committee Chairman Ezzard Miller objected to this step.

“This idea that government has adopted that putting civil servants as ex-officio [non-voting] members of the board simply because their presence will intimidate people is wrong,” Mr. Miller said. “I’m concerned that the government seems to be extracting a lot of comfort by putting what seems to be a stool pigeon on the board. Why set up the board in the first place? Why not just make it a government department?”

Mr. Saunders said simply putting a civil servant on a board would not prevent what happened during the CarePay contract. He indicated that people signed the contract who had not read it, while having the expertise of the government financial services ministry on hand to review those documents.

“But [that expertise] was not used,” he said, “and the person who signed the contract is still sitting there earning a big salary.”

Mr. Saunders suggested that government finance officials be required to review separately all contracts above a certain amount, before their approval.

Prospect MLA Austin Harris asked what “accountability mechanisms” were in place – outside of the Cayman Islands Auditor General’s Office – for the public authorities.

“We seem to be repeating auditor general’s reports time and time again, as opposed to addressing them comprehensively and meaningfully,” Mr. Harris said.

Mr. Saunders said, “[There are] stupid decisions and then the civil servants need to come up with policies and procedures to prevent these stupid decisions.”

Mr. Tibbetts said he thought having the finance ministry sign off on big-money contracts before they are approved was “a great idea” that he would suggest to the ministry. He also noted that the recently approved Public Authorities Law would give central government more direct control over the statutory authorities and government companies’ operations.

The accountant general said government recently issued an anti-fraud policy complete with an anonymous fraud reporting hotline to help head off situations where unethical or illegal behavior may occur.

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