Watson’s troubled fuel firm received $100k from AIS

Canover Watson

(CNS): A cheque for $100,000 from AIS Cayman was transferred to a company in which Canover Watson was a 50% shareholder when it was losing significant amounts of money, the court heard Thursday. In a police interview, the former HSA board chair, who has denied corruption allegations in relation to the CarePay contract awarded to AIS, said the money had come from Joscelyn Morgan, one of the AIS directors, because he had become a shareholder in the troubled fuel distribution business in which Watson was already a partner.

Ernest Powell, who partnered with Watson in P&W distributors, was a crown witness Thursday, He told the court that he and Watson were 50/50 partners in the local company, which was established in 2011 when they secured the rights to deliver fuel to businesses other than gas stations. Powell said that he knew nothing at all about any another shareholders at any time in the business, which was a straight forward partnership between himself and Watson. He said he did not know Morgan and knew nothing about him ever becoming or wanting to be an investor in the business.

Powell said that the company closed after significant losses as a result of what he said was a faulty fuel gauge on the truck. Powell said he had nothing to do with the paperwork or the financial side of the business, which was handled by Watson, who was the only signature on the P&W bank account.

During cross examination, Trevor Burke QC, representing Watson, implied that Powell may have been behind the problems faced by the business, but the witness denied taking anything from the firm other than the $1,000 per week salary he was paid to drive the truck and make the deliveries. Burke claimed that with 13,000 gallons of fuel unaccounted for over a six month period, Watson, who was the financial backer, swallowed a loss of some $125,000. Powell said he did not know how much the business lost as he said Watson did all of the paperwork and it was not possible for him to know what was happening until they found out the gauge was broken.

Andrew Hulse, the firm’s account manager at Butterfield bank at the time, also confirmed that as far as he was concerned, during the life of the business it was a straight partnership between Watson and Powell. Appearing as a crown witness, he said he had never been informed that there was another shareholder in the business. During cross-examination he acknowledged, however, that Watson was under no legal obligation to tell the bank about another investor but he told the judge that he would expect a local business to keep the bank informed of who was involved.

As the attorney questioned Hulse, it was revealed that the overdraft for the business was supported by Watson’s own wealth and the court heard that, according to the paperwork held by the bank, Watson’s own personal assets outweighed his liabilities by almost $2.5 million. Hulse confirmed that the fuel business did get into serious trouble and it was Watson who settled the debt to the bank.

Ahead of the evidence the jury heard that when asked by the police about the $100,000 transaction from AIS Cayman Ltd’s account at Fidelity bank to his P&W account at Butterfield, Watson said it was from Joscelyn Morgan for 25% of Watson’s shares in the fuel distribution business. He said although it looked as though the money was coming from AIS, it was in fact coming from Morgan personally as an investment in P&W.

It became clear during the evidence from Powell and Hulse that the claimed investment was made at a time when Watson was aware that P&W was running at a significant loss and was a far cry from the profitable business he had hoped for when he partnered with Powell.