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‘R7m’ spent on probe into ex-medical schemes registrar

Personal Finance

The Council for Medical Schemes postponed the release of its annual report this week for “procedural reasons”, saying Health Minister Dr Aaron Motsoaledi wanted the council to present the report to Parliament first.

The report is expected to provoke some debate, which is now likely to occur in Parliament first, instead of within the industry and the media.

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It is expected that the report will disclose how much was spent to investigate allegations of corruption against the former Registrar of Medical Schemes, Dr Monwabisi Gantsho. The investigation has not resulted in any prosecutions.

On Wednesday, ahead of the release of the report, Gantsho sent various media organisations a letter stating that the investigation had cost the council R7 million but did not find any evidence of corruption, or irregularities in his affairs.

Gantsho was suspended in 2014 after allegations of corruption were levelled against him in a High Court application to remove the curator of Medshield medical scheme, lawyer Themba Langa.

Langa alleged that Gantsho asked for R3 million of the R10 million that Medshield paid to buy its trademark name from the former owners of Medshield’s administration business.

The chairman of the Council for Medical Schemes, Professor Yosuf Veriava, commissioned law firm ENSafrica to investigate the allegations. ENSafrica recommended that Gantsho be subject to a disciplinary hearing. The council appointed an advocate to chair the hearing, which had not been concluded when Gantsho’s contract expired. The health minister did not renew his contract.

In his letter, Gantsho said Motsoaledi and the Auditor-General “have since questioned the appointment of ENSafrica as irregular in terms of supply chain management policies and Public Finance Management Act requirements, thus raising suspicious internal corruption tendencies by certain council members and officials who were involved at the time”.

He said the council, by its own admission, “regretted its witch hunt” against him and was demanding a refund from ENSafrica “for the fruitless expenditure they incurred”. Veriava informed Motsoaledi of this decision in a letter in mid-July, he said.

Gantsho said his contract with the council expired in 2015, and he signed a mutual separation agreement with the health minister and the council in September last year.

The Council for Medical Schemes said in a statement last year that ENSafrica was of the view that the allegations against Gantsho were sufficient to give rise to suspicions of corruption, and it was required in terms of the Prevention and Combating of Corrupt Activities Act to report these to the National Prosecuting Authority (NPA).

But Gantsho said the NPA was no longer interested in prosecuting him. Allegations that his tax affairs were not in order and that the South African Revenue Service had obtained a default judgment against him for R817 000 were unfounded, he said.

However, he said Medshield was pursuing Langa for the R10 million he paid the scheme’s former administrator for its trademark.

The council did not respond to a request for comment on whether the investigation cost R7 million, whether it had asked ENSafrica for the money back, and whether Motsoaledi and the Auditor-General had questioned the amounts spent.

In his letter, Gantsho said he doubted the annual report could be released this week “in the wake of so many challenges facing a poorly monitored industry”.

It was reported last week that, under the council’s watch, the solvency ratio (or reserves as a percentage of members’ contributions) of the Government Employees Medical Scheme (Gems) had fallen sharply from 9.46 percent to a projected five percent.

The scheme, which covers 1.7 million lives, however, denied claims that it could go insolvent by the end of the year, because it had R2.6 billion in reserve at the end of last year.

Both Gems and the country’s largest medical scheme, Discovery Health Medical Scheme, have reported an increase in hospital claims as result of new hospitals, anti-selection (members joining schemes only when they are already sick), fraud, wastage and abuse.

The council said the release of the annual report was not postponed because of Gantsho’s remarks.

It also denied that the postponement was because Commed had obtained an interdict against the council, because the report contained adverse information about the medical scheme. The interdict followed the decision to postpone.

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