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Medical scheme trustees ‘busted’

South Africa’s fourth-largest open medical scheme, Medshield, has been placed under provisional curatorship because trustees have been accused of misappropriating money and "acting as a law unto themselves".

But the Council for Medical Schemes, the regulator of medical aids, has assured the medical aid’s members that their claims would still be paid.

Medical schemes registrar Dr Monwabisi Gantsho said: "The provisional curatorship has nothing to do with the financial soundness of the scheme."

The council told the Pretoria High Court on Tuesday that if the scheme was not placed under curatorship, there was "a danger of the scheme’s trust funds being misappropriated in future".

In court papers, Gantsho said trustees had initiated contracts worth millions without following proper processes.

He argued that the trustees had paid themselves "excessive remuneration", some times paid themselves twice for each responsibility.

Gantsho alleged that the trustees illegally paid themselves retainers and then remunerated themselves for annual launches and meetings attended even though these were never approved.

For example, a part-time trustee earned an average R280000 a year.

The scheme’s CEO, Thabo Mabeta, also acted as a trustee. This is illegal as CEOs are meant to independently approve trustees’ decisions.

Mabeta allegedly paid himself R150000 a month as a trustee. He also received a salary of about R100 000 a month as CEO.

Some of the money was "illegally" paid into a family trust linked to Mabeta.

These payments were allegedly not taxed correctly, something Gantsho labelled "highly irregular". The scheme appointed Inkwazi Debt Solution to collect money from the Road Accident Fund while Mabeta was a part owner of the former.

He later sold his rights, but the registrar alleges that the trustees and Mabeta should not have appointed a company linked to one of its members.

The registrar wants Medshield to recover more than R600000 from Mabeta.

They also want R27-million they claim was paid illegally to brokers to create business for the medical aid.

The papers detail how Medshield refused to allow auditors Ernst & Young access to minutes of meetings or provide them with full accounting records.

The scheme also refused to cooperate with a compliance inspection appointed by the registrar. Medshield had not responded at the time of going to print.

http://www.timeslive.co.za/thetimes/2012/10/04/medical-scheme-trustees-busted