Pay fraud case hit hospital’s bottom line

| 24/09/2020
Cayman News Service
Cayman Islands Hospital, George Town

(CNS): Two men accused of defrauding the hospital by getting paid for work they never actually did even claimed overtime when they were not in the country in a scheme that prosecutors said could have cost the Health Services Authority tens of thousands of dollars in losses. Nick Smith (58) and Dominic Dacres (42), who have denied the allegations, appeared in the dock Thursday as their trial opened before a jury.

The crown’s case is that the men, who worked as security staff at the George Town hospital, were involved in a corrupt scheme throughout 2017 in which Smith, who was the supervisor of the HSA’s security teams, signed off on false overtime claims and allowed Dacres and at least one other officer to take unscheduled and unauthorised leave but ensured they were still paid.

In a trial that is expected to last three weeks, crown prosecutor Candia James told the jury that they would hear evidence from hospital staff and investigators, but the case would also be based on documents and diaries that recorded the shifts of all of the security officers working at the hospital at the time.

She said that the allegations were much more than mere incompetence and that the crown would demonstrate that this was a dishonest scheme in which the two public officers were well aware that they were defrauding their employers.

Dacres, who is said to have received more than CI$7,300 in overtime that he did not work for, faces one count of obtaining property by deception. The crown says that he made 33 false overtime claims throughout 2017.

Smith faces two charges of false accounting, which relate to the 33 claims by Dacres and 14 claims, amounting to over $3,000, made by another officer, Bruce Barnes, who has not been charged in the conspiracy. Smith also faces one count of breach of trust under the Anti-Corruption Law, which relates to both the false overtime claims and annual leave summaries regarding officers under his supervision who were taking far more time off than was actually documented while being paid for it.

The crown says that Dacres and Barnes directly received over CI$10,000 between them for overtime they did not work for but were paid for anyway. But Smith may have caused the hospital to lose another $90,000 because of the wages paid to several officers for unscheduled leave, which in Dacres case was for many months.

As James laid out the case, the jury heard that Smith came under suspicion in 2014, when senior hospital accountants began raising queries about the significant amount of overtime the hospital was paying to security staff. However, inquiries were unable to demonstrate any dishonesty on Smith’s part and the excessive claims were put down to incompetence. There were no proper schemes in place and nor proper records documenting when staff were at work.

Smith was not demoted from his supervisor role as a result, but he was retrained and given the tools to manage a new system to ensure that the paperwork relating to staff hours and pay was properly managed.

But a few years later the finance staff once again began raising the alarm. In 2018 a report was made to the Anti-Corruption Commission and an investigation was launched. In June 2018 Barnes, Dacres and Smith were all arrested and Dacres and Smith were later charged.

The investigation threw up some serious red flags, including overtime payments to officers who were overseas when they were said to be patrolling the grounds of the hospital. In Dacres case, he was reportedly at home with a bad back for months during 2017 but was being paid, not just for his regular hours, but for overtime as well.

The crown did not outline the motive for Smith’s part in the fraud and gave no direct indication how he benefited from the corrupt scheme, but said he had made certain admissions.

In conversations with the prosecutor’s main witness, the hospital’s operations manager, Caswell Walford, the security supervisor told him he needed an additional $1,000 in month in overtime to pay off a massive loan of some $350,000 he had taken to renovate his home. He also said that the rest of the staff were struggling to cope financially and they also needed the overtime money.

Walford said in his statements to police that Smith had effectively confessed to signing off on all the extra payments and cleared people for paid leave to which they were not entitled. The witness claimed that Smith told him, “You know and I know… I messed up.”

However, following his arrest Smith gave three no-comment interviews, referring only to a written statement he submitted in the immediate wake of his arrest. In that he said he was not dishonest and had not defrauded anyone but stated that he had no training or experience with payroll and accounts.

When Dacres was arrested, he said that he was entitled to everything he had been paid but he had been in dispute with Smith over the dates he was putting on the paperwork.


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