Saturday, December 12, 2015

Cayman Islands Corruption Trial, Day 2

Last week, I testified in court about a corruption trial in the Cayman Islands. Below is a summary of my testimony that originally appeared in the Cayman Compass newspaper.

CarePay trial: Contract was 'highway robbery,' witness says

Fees that were expected to generate more than US$2 million a year for a Jamaican company providing services to the Cayman Islands public hospital system under the CarePay contract were called “highway robbery” by a Crown witness who testified Thursday in an ongoing criminal trial. 

Former Health Services Authority chief information officer Dale Sanders also told the jury in the trial of Canover Watson and Miriam Rodriguez that he “suspected” there was a corrupt relationship between the Jamaican contractor, AIS [Advanced Integrated Systems] and Watson, a suspicion that Mr. Sanders said eventually forced his exit from the authority. 

“I felt very strongly and actually quite sadly [in June 2011] that there was some form of corruption that existed between AIS and Mr. Watson and that it was time for me to leave,” Mr. Sanders said Thursday. 

Those allegations of “corruption” were made by Mr. Sanders in July or August 2011 to Cayman Brac and Little Cayman MLA Moses Kirkconnell and his sister Nancy Kirkconnell-Ewing on a trip to Cayman Brac. It was stated that Mr. Kirkconnell and now-government Minister Osbourne Bodden met with Mr. Sanders in mid-2013 regarding his allegations during a trip to Washington D.C.  

Defense attorney Trevor Burke, QC, suggested that Mr. Sanders appeared to have been given a lucrative consulting contract with government following that 2013 meeting. 

Mr. Sanders’s commitment to the implementation of the CarePay swipe-card contract for the local hospital system was also questioned by Mr. Burke during cross examination Thursday.  

Mr. Burke said Mr. Sanders had failed to attend a key meeting regarding the hospital contract bid recommendations in November 2010 because he was picking up his girlfriend at the airport, and later suggested that Mr. Sanders had attempted to sabotage the whole project. 

“That’s not true. I would never do such a thing,” Mr. Sanders said. 

It was after the non-attendance that Watson removed Mr. Sanders from a technical committee’s decision in evaluating bids for the hospital contract, a move Mr. Sanders said he thought was “inappropriate.” Mr. Sanders had earlier testified he missed only 15 minutes of the meeting due to an IT emergency at the Cayman Islands Hospital. 

Watson is accused by prosecutors of using his position as Health Services Authority board chairman to direct the hospital contract to AIS Jamaica and its sister company, AIS Cayman Ltd. 

Prosecutors allege that Watson and his business partner Jeffrey Webb controlled the local arm of AIS from behind the scenes using “sham” directors. The two men then funneled profits made by the local company to other accounts they owned or controlled, the Crown alleges. 

In addition, both Watson and Rodriguez are accused of transferring criminal property, namely earnings from the CarePay contract, to Webb. Both Watson and Rodriguez have pleaded not guilty to all charges. 

4 percent ‘robbery’ 

The initial contract between the local public healthcare system and AIS called for the Jamaican-St. Lucian company to set up an electronic system that would first verify a patient’s health insurance coverage and then “adjudicate” their claims – to determine how much the patient’s insurance would pay and how much the patient owed. 

The plan was for both of these functions to be performed through a single “swipe” of a hospital patient’s “CarePay card” – which worked much like a credit card. 

For these services, AIS would receive a 4 percent “transaction fee” for every patient card swipe. So if a patient’s insurance was charged $100 for a doctor’s visit, $4 would go to the contractor providing the service. 

“This amounts to highway robbery,” Mr. Sanders said of the 4 percent per transaction fee. “This is an atrocious, excessive amount for claims processing. Normally you would expect to pay pennies on a per-claim basis.” 

In the U.S. healthcare system, for example, Mr. Sanders said, a provider would charge 20-25 cents per transaction, regardless of the services billed. 

Mr. Sanders testified that he had never seen the original CarePay contract between AIS, the Health Services Authority and the Cayman Islands National Insurance Company before it was signed and only discovered the details months afterward. He said he repeatedly had to demand a copy of the contract before it was given to him. 

Mr. Sanders further testified that no one else on the technical committee that evaluated the AIS bid would have known about standard norms for such charges in the healthcare industry and that his input on the contract for such a technical operating system should have been sought prior to approval of the contract. 

As time went on and the initially scheduled implementation date for the CarePay swipe-card system looked less and less likely, Mr. Sanders testified, hospital staff and managers were under significant pressure from Watson to make “something” happen with the project by July 1, 2011. 

“Mr. Watson continued to invoke the interest of the premier and [health] minister in this project,” he said. “We had to have something by July 1 … so that they could declare a political victory.” 

It was at this point that Mr. Sanders sent an email to an undisclosed individual or individuals that stated his concerns about corruption in the AIS-CarePay project. 

Despite these concerns, Mr. Sanders agreed at Watson’s request to stay on and finish the implementation of the CarePay project, prosecutors said. 

“I had no proof of [the corruption], so I was still trying to be a positive member of the community and finish a project that HSA and CINICO had committed to,” he said. 

Meeting in Washington 

Mr. Sanders testified that, shortly before he left the Cayman Islands in September 2011, he traveled to Cayman Brac to tour Faith Hospital and to meet with Nancy Kirkconnell-Ewing, who was involved in Brac Informatics – another company that had wanted to bid on the hospital contract. 

During this visit, Mr. Sanders said he made what he regarded as confidential allegations to Mr. Kirkconnell, Mrs. Kirkconnell’s brother, about the corrupt actions of several figures he believed were involved in the CarePay deal. Those individuals involved included Watson, former Health Minister Mark Scotland and former Premier McKeeva Bush, Mr. Sanders said. Following Cayman’s general election in May 2013, Mr. Kirkconnell’s political party, the Progressives, was elected as Cayman’s government. 

In the summer of that year, the court heard, Mr. Sanders was in Washington on other business and, during the trip, met with Mr. Kirkconnell – now the deputy premier – and Minister Bodden – then the minister of health. 

“What did they want to talk about?” Mr. Burke questioned. 

“They wanted to talk about this situation [referring to the CarePay contract issues] and Minister Bodden wanted to talk about the development of this strategic health plan,” Mr. Sanders said. 

Mr. Burke asked, “Did the deputy premier promise you a … consultancy agreement if you helped them?” 

Mr. Sanders replied, “No, and I was not interested in that. Now, advising Minister Bodden on his strategic plan [for healthcare]. I would be interested in that.” 

Mr. Burke pressed Mr. Sanders on whether he was actually given another contract with the current government, but Mr. Sanders said he could not recall or could not provide the details of any payments. 

Asked whether he had provided reports of corruption to the Royal Cayman Islands Police prior to leaving the islands, Mr. Sanders replied that he did not “know who to trust” and that he was worried about his family’s safety while they remained here. 

He alleged that he feared certain individuals might try to “plant drugs” in his Cayman residence or “put pornography” on his computer in order to discredit him.  


It was Mr. Sanders’s stated commitment that drew rapid-fire questions from Mr. Burke during cross examination Thursday. 

“Did you buy into this enthusiasm [for the CarePay project] really?” Mr. Burke asked. 

Mr. Sanders said the concept was revolutionary and that he was “excited” by it. 

Why then, Mr. Burke asked, had Mr. Sanders – as a member of the technical evaluation committee for the project – been absent from the entire presentation about it from AIS Jamaica? 

Mr. Sanders said he recalled that Nov. 17, 2010 committee meeting and said he was only absent for about 15 minutes to deal with an IT emergency in the hospital’s radiology department. 

“Nonsense,” Mr. Burke said. He indicated records obtained by the defense noted that Mr. Sanders had gone to Owen Roberts International Airport that afternoon to pick up his girlfriend. 

“You missed the entire AIS presentation [at the meeting],” Mr. Burke said. “You weren’t at any emergency at the hospital.” 

Mr. Sanders said he could not remember the exact dates and if what Mr. Burke said was correct, he apologized. However, he noted that he felt it was still unfair for Watson to exclude him from the bid committee’s recommendations. 

That exclusion, he said, had cost the HSA and CINICO in terms of determining what was best for health services in the Cayman Islands. 

Cayman Islands Corruption Trial, Day 1

Last week, I testified in court about a corruption trial in the Cayman Islands. Below is a summary of my testimony that originally appeared in the Cayman Compass newspaper.

CarePay trial: Witness says 'half dozen' companies wanted CarePay deal

About “half a dozen” companies, both local and international, had expressed interest on bidding for a Cayman Islands public hospital patient swipe-card contract prior to the contract being awarded to a Jamaican-St.Lucian firm, according to the former chief information officer for the local Health Services Authority.

Dale Sanders testified via video link Wednesday that he was “reprimanded” by former Cayman Islands Health Services Authority board chairman Canover Watson in late 2010 when Watson learned Mr. Sanders had put government bid request documents on his healthcare blog.

Mr. Sanders said he wanted to expand the bid process as much as possible so that the HSA and the Cayman Islands National Insurance Company could “benefit from that competition.”

Mr. Sanders said Watson called him into a meeting later and reprimanded him “quite harshly” for putting out the contract bids for a real-time healthcare claims verification system in such a way. Mr. Sanders said he was told the bids were intended only to be advertised locally.

However, one of the interested companies, Brac Informatics, was a local firm on Cayman Brac. That firm, along with several other companies that had contacted him, were unable to bid because of what Mr. Sanders referred to as an “unprecedented” short turnaround time on request for proposal documents.

Watson has been accused by Crown prosecutors of personally benefiting from the eventual award of the CarePay swipe-card contract to St. Lucia’s Health Adjudication Systems and its local partner, AIS (Advanced Integrated Systems) Cayman Ltd. – an award he is alleged to have directed as chairman of the HSA board.

Watson and his business partner Jeffrey Webb are alleged to have set up AIS Cayman Ltd. as a front company to cover up their involvement in the scheme.

In addition, Watson and his former personal assistant Miriam Rodriguez are accused of transferring criminal property, namely funds from the CarePay contract, to Webb. Both Watson and Rodriguez have pleaded not guilty to all charges.

During court testimony Wednesday, Deputy Director of Public Prosecutions Patrick Moran revealed that another company, Caribbean Network Solutions, had expressed interest in the hospital contract. Mr. Sanders said he was unaware of this particular company, although he did list the names of several others.

Questions posed by that company in relation to the government’s request for proposals on the hospital contract were sent to Watson, Mr. Moran said. These were technical questions which, Mr. Moran said, an IT expert like Dale Sanders would have been able to assist Watson in answering.

Reviewing the list of questions from the Caribbean firm, Mr. Sanders said: “These are good questions. I’ve never seen this before.”


Referring to AIS Jamaica’s (the sister company of St. Lucia’s Health Adjudication Systems) eventual bid on the hospital contract, Mr. Sanders described it as “terrible.” He said responses given by the company were vague, non-specific and incomplete.

“It was by far the worst response, on paper, of any of the proposals,” Mr. Sanders said.

During a November 2010 evaluation of the two competing bids that were received for the hospital contract, Mr. Sanders said he was dismissed from a technical committee meeting by Watson after he stepped out of the proceedings for “no more than 15 minutes” to deal with an IT emergency at the public hospital’s radiology department.

Mr. Sanders said he thought this was “inappropriate,” and that he attempted to stay in the room following a break in the meeting.

“We went back into the committee and Mr. Watson announced that I would be dismissed,” Mr. Sanders said. “I felt it was completely inappropriate and would not benefit [the process of making] a good decision for HSA or CINICO.”

Watson’s attorneys had not cross-examined Mr. Sanders as of press time Wednesday. However, his defense team has suggested during other witness testimony that the CarePay claims adjudication system offered by AIS Jamaica was a “unique” system that offered precisely what the local healthcare industry required.

Lawyer’s advice

The final contract for the CarePay patient swipe-card system between the HSA, CINICO, the Jamaican-St. Lucian company and its local partner AIS Cayman Ltd. was never reviewed by government lawyers in the solicitor general’s office, jurors heard late Tuesday.

Instead, the contract was perused by then-HSA board member and Maples law firm partner Wanda Ebanks, who testified Tuesday that she was asked by Watson to look at the agreement “as a member of the board” to assist her fellow board members.

Ms. Ebanks, under prompting by Mr. Moran, testified that she was surprised to get the contract “at the last minute,” but denied suggestions by defense attorney Trevor Burke, QC, that she received the contract because she was Watson’s “go-to lawyer.”

Mr. Moran said the proposed contract between AIS Cayman Ltd. and the health services agencies appeared to “bind the hands” of the public hospital system, requiring it to spend more than US$13 million over five years and requiring another five-year renewal unless either party issued a termination notice a year prior to the contract’s end.

Ms. Ebanks testified that she had written a note during her examination of the AIS contract that indicated “it’s even worse than Cerner” – the U.S.-based firm that previously handled HSA’s patient information services.

Mr. Burke objected, stating that Cerner’s previous contract could not be compared to AIS because the AIS deal provided a “get out” clause for both parties where Cerner’s did not. He also alleged that Mr. Moran was “leading” Ms. Ebanks to her answers. “This is just not an appropriate examination of the witness,” he said.

At this point, Judge Michael Mettyear intervened in the proceedings, seeking to clarify what would have been expected to occur if AIS Cayman did not agree to contract changes Ms. Ebanks suggested.

“I would expect it would have been sent back to the board,” Ms. Ebanks said, stating she did not review it in detail again. A version finalized on Dec. 5, 2010 was approved by the HSA board on Dec. 7 and signed by government on Dec. 21.

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