Minister of Health Dr Aaron Motsoaledi File picture: Jacques Naude

Johannesburg - Health Minister Dr Aaron Motsoaledi on Wednesday made a U-turn on the termination of the controversial multi-million rand Mediosa contract. 

More than a month ago Motsoaledi instructed the North West health department to terminate the contract with Mediosa for a mobile clinic. Now the Heath Minister's office says he has no powers to cancel the contract. 

In March, Motsoaledi said the contract with the Gupta-linked company would be terminated as it served no health service purpose for residents “except siphoning money from the health department to the Guptas”. Instead, he said the project was used as an "ATM card" by the controversial family.

Mediosa came under fire after it emerged that the North West Health Department paid R30 million upfront and made a further R180 million payment for the purchase of a single mobile clinic, while other service providers - who had done work for the provincial department - were told they would only be paid after the new financial year.

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Free State Health, meanwhile, has reportedly paid the company R25 million for healthcare services since 2016. 

North West Premier Supra Mahumapelo then instituted a forensic investigation into the provincial department and has since suspended Health head Dr Thabo Lekalakala.

Motsoaledi's office said on Wednesday that the minister has no powers to cancel the contract. His spokesperson Popo Maja said only the provincial departments had the power to terminate it.

“The minister does not have the power to do so, he can only make recommendations to the provincial departments,” Maja clarified.

Mediosa has confirmed their contracts with the North West and Free State health departments remained in place.

“Asif Latib, the independent Business Rescue Practitioner appointed by Mediosa, has reached out to both the Departments of Health and we currently await written confirmation that the contracts are still in force," the company said.

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“To date we have not received any formal communication from either department, advising on cancellation of  the contracts."

The company in a statement denied claims it didn’t pay its employees or that it failed to meet all its "contractual obligations" with both departments.

“All allegations that have been levelled at Mediosa are patently untrue.  As a company we have followed all necessary procedures that were stipulated by both the Free State and North West Departments of Health. We have fulfilled, and in many cases exceeded, all our contractual obligations with both Departments of Health.” states Mediosa director Inish Merchant.

Instead, the company said, they are still owed a substantial amount of money by both departments and that is why they are now in business rescue. 

“We have received a verbal agreement from the Free State Department of Health confirming the debt that is owed to Mediosa. Based on this, we are certain the company will soon be a in a far more steady financial position. We remain positive that Mediosa will weather this storm, and continue to do what they do best:” Latib said.

Addressing reports over non-payment of workers' salaries, Mediosa said that it took its responsibility towards employees "very seriously".

Last month it was reported that the company was unable to pay employees as its finances had dried up due to a “financial crunch”.

Mediosa employees in both the Free State and North West have confirmed that contracted workers have not received salaries.

“All staff received their February salaries, and management have been in constant discussions with staff centred on the state of the company and its future plans.  At this stage, there are no retrenchments on the cards, and this has been clearly conveyed to all staff members.” Latib said.

The company further denied links with the Gupta family, saying that the only assistance it got from the family related to Mediosa (then Cureva) management’s visa application in 2015.  

The company directors also denied having directed any monies to the Guptas via Dubai, nor having "derived any commercial benefit arising from this acquaintanceship". 

“As part of our preliminary investigations into Mediosa’s business dealings, we have reviewed the company’s financial statements and bank accounts, and have found no evidence of wrongdoing,” Latib said.

Attempts to reach the North West Health Department were unsuccessful while the Free State Health Department had not responded to questions at the time of publication.