The former principal director of the collapsed Medilife medical aid scheme, his wife and the group's former auditor were arrested in East London and Johannesburg on Thursday and held on multiple charges of fraud and theft involving R30-million.

Judy van Vuuren was the first of the trio to be arrested, at her mother's East London home where she and her husband live.

Subsequent attempts on her behalf to quash the arrest warrant, on the grounds that "one of her names" did not appear on the warrant, were dismissed by a magistrate who found that when confronted by the police, Van Vuuren had acknowledged she was the person in respect of whom the warrant was made out.

The police, led by the investigating officer, Captain Philip Kotze, swooped on the East London home armed with a search warrant. They searched for documents relating to the failed medical aid scheme.

Bob van Vuuren, formerly the principal director of Medilife, was not at home when his wife was arrested. He surrendered himself in East London later through his attorney.

He is employed selling medical products in the area.

Also taken into custody was the former auditor and financial director of the Medilife Group, Guy Pansegrouw, who handed himself over to the authorities in Johannesburg.

He was a former managing partner of auditors Ernst & Young, which had handled the affairs of Medilife.

In 1996, he was appointed financial director of the Medilife Holdings Group.

The arrests bring to an end an intensive 18-month police investigation and a massive forensic audit performed by PriceWaterhouseCoopers, during the course of which 900 boxes of documents were studied.

After the arrests, the Van Vuurens appeared briefly in court in East London and Pansegrouw in Johannesburg.

They were advised to lodge applications for bail in Pietermaritzburg, where the matter was transferred at the request of the KwaZulu-Natal director of public prosecutions.

State advocate Glen Webber, who worked closely with the police investigators and who is leading the prosecution, confirmed that the three were expected to appear in the Pietermaritzburg regional court on Monday. He expected to oppose bail.

Webber said apart from the fraud and theft charges totalling about R30-million, the trio would face other "fairly technical" charges under the Medical Aid Schemes Act, the Companies Act and the Insolvency Act.

One charge is that the registrar of medical aid schemes was misled so that he did not intervene timeously in the scheme's affairs, which would have enabled him to limit losses to members.

It is alleged that about R18-million was unlawfully removed from the medical aid scheme funds and transferred to numerous subsidiary companies within the Medilife Holdings Group.

Webber confirmed that the majority of the scheme's debt had never been recovered despite civil action.

Members lost millions in unpaid claims which by February 1998 had mounted to more than R37-million. Some witnesses at a 1998 insolvency inquiry into the reasons for the scheme's collapse likened the affairs of the scheme to the television soap opera Dallas.

The scheme reached great heights and achieved a record-breaking membership of around 18 000 people within 30 months of its inception in 1994.

It was liquidated in September 1997, in debt to the tune of at least R18-million.

The insolvency hearing was characterised by raw emotion, slanging matches, accusations of reckless trading and nepotism.

Senior staff members were accused of enriching themselves at the expense of scheme members and drawing huge salaries and fringe benefits which were out of touch with the marketplace.

In some cases salary packages allegedly topped R50 000 a month.

The insolvency inquiry also heard an allegation that one director may have maintained a mistress and child with funds from the scheme.