- Computers, files seized as anti-graft body probes alleged looting of funds by Netcare,
- fellow shareholders accuse Netcare of looting billions since 2011.
THE Directorate on Corruption and Economic Offences (DCEO) swooped on Queen ‘Mamohato Memorial Hospital (QMMH) and seized computers, hard drives and some documents as part of a probe into the alleged embezzlement of funds at the institution by South Africa’s Netcare Group.
Netcare is a key shareholder in the Tšepong Consortium which has been operating the hospital on behalf of the government since it was opened in 2011. Although there are five shareholders in the Consortium, Netcare is entrusted with the day-to-day running of the hospital.
While the government has not been happy with the Consortium, its shareholders have been enmeshed in their own attrition battles mainly over sharing of the spoils. Other Consortium shareholders accuse Netcare, the South African private hospital behemoth controlled by Stellenbosch billionaire Johan Rupert’s Remgro Group, of short-changing them and essentially stealing money from impoverished Lesotho.
DCEO spokesperson ‘Matlhokomelo Senoko confirmed the raid at the hospital as part of the probe. She, however, refused to say what they were actually investigating because such disclosures would comprise their probe.
“Acting on a report that we received a while ago, we raided the hospital to take all the necessary files that we believe will be useful in our investigations,” Ms Senoko said in a brief interview with the Sunday Express.
However, well-placed authoritative government and hospital sources said the Friday raid came after three of the five companies in the Consortium asked the anti-graft body to probe Netcare for allegedly looting funds over the years. The companies allege that the misappropriated funds run into billions. They allege that Netcare has abused its management contract to line its pockets ever since the hospital opened its doors in 2011.
The raid also came just two days after Health Minister Semano Sekatle announced that the government had resolved to cut ties with the Consortium over several contentious issues including that the Consortium had been fleecing the government and flouting the tenets of the Private Public sector Partnership (PPP) agreement reached by the parties in 2008 for the construction and running of the hospital. The hospital is the country’s premier referral institution. However, its operations have been hamstrung by ubiquitous staff strikes for salary increments since 2012.
Mr Sekatle said although the government and the consortium had differed over many issues, the final straw was the latter’s 12 March 2021 decision to fire 345 striking nurses and nursing assistants at the institution.
The parasitic relationship between the government and the Consortium has been a cause for concern for many years with the Consortium gobbling half of Lesotho’s entire health budget of M582, 1 million, most of which ends up in the pockets of Netcare.
Netcare has a 40 percent stake in the Tšepong Consortium, in addition to its management contract. Four other companies, namely Afri’nnai of South Africa, Excel Health, Women Investment and D10 Investments (all from Lesotho), hold the balance of the shares.
Three of these companies, namely, Afri’nnai Health, Excel Health and D10 Investments are said to have reported Netcare to the DCEO for allegedly looting the hospital funds.
One of the sources said the DCEO probe was long overdue because the companies had reported Netcare late last year.
“The three shareholders discovered that funds running into billions had been looted out from the hospital by Netcare and they reported the matter to the DCEO late last year.
“The looting was discovered last year after Afri’nnai Health Director, Professor Lehlohonolo Mosotho, successfully petitioned the High Court to order all financial institutions to implement the Tšepong board’s directive to remove Netcare general manager Christoffel Smith and others from the list of signatories to the consortium’s bank accounts.
“The shareholders remain frustrated that although it keeps saying it is investigating the matter, the DCEO does not appear to have made any progress at all,” a source told this publication.
Another source said after his successful High Court petition, Prof Mosotho and his allies from D10 Investments and Excel Health accessed the Consortium’s account held with Nedbank Lesotho and sent the bank statements to an audit firm in South Africa.
“Immediately after the court order, the shareholders accessed the Tšepong bank account and handed over all the bank statements dating from 2009 to mid-2020 to a South African auditor.
“It was then discovered that funds running into several millions of rands could not be accounted for,” said the source.
The Sunday Express has seen the preliminary report from the audit firm which was submitted to the DCEO as part of evidence of the alleged looting.
“We have gone through the bank statements and we identified amounts that raise serious concerns. Among others, we found that:
“Transactions that do not clearly show the account which is the receiver of the benefit and on some occasions similar figures were withdrawn about five times.
“There were also some transfers without any clarity or description and mostly amounts reflected are above a million (rands). On average R200 000 000 was withdrawn each year.
“Our final findings will be concluded after tracing all the above to the audited financial statements (and) review the external auditors report if all these matters were raised and reported (sic). If not, the external auditors must be held liable for poor internal control systems,” part of the South African audit firm’s preliminary report states.
In 2019 alone, the audit firm said M331 015 989 was paid to Netcare, its subsidiary Botle Facilities and nine other unknown beneficiaries whose names were not reflected in the transactions.
The payments were made from 21 August to 13 December 2019. Last year, a total of M380 863 923 was paid out to Netcare, Botle Facilities and nine unknown companies or individuals. Again, the nine transfers did not show the beneficiaries’ banking details.
However, sources said given that Netcare allegedly took out an average of M200 million per year, the total looted was likely well over M2 billion since the hospital began operating in 2011.
QMMH Public Relations Manager Mothepane Thahane confirmed the DCEO’s raid of the hospital on Friday.
Without giving details, she said she hoped the raid and probe would help the anti-graft body to get to the bottom of the problems at the hospital and the Consortium.
“They (DCEO) did (raid) and this is the only way to get to the bottom of all this rigamarole,” Ms Thahane said in a brief interview with this publication.
Some of the Tšepong shareholders who spoke to this publication welcomed the government decision to cut ties with the Consortium in the wake of the hospital management’s dismissal of 345 striking nurses and nursing assistants.
The nurses went on strike on 1 February 2021 to press the government and QMMH to award them salary increments to match their counterparts in other government and private institutions.
Mr Sekatle said the government was particularly unhappy with the fact that the QMMH management fired the nurses without first consulting or informing it.
Afri’nnai’s Prof Mosotho welcomed the government’s decision to cut ties with Consortium, saying, “the government had no other option but to terminate this contract because Netcare had been doing as it pleases in this country”.
“We are fully behind the government and we will not support any decision to challenge the government move in court. Whoever decides to challenge it will be on their own,” Prof Mosotho said.
Another shareholder, Thuso Green, hailed Mr Sekatle as a “hero” for taking the bold decision of terminating the contract.
“It must be noted that I am speaking in my personal capacity, not as a Tšepong shareholder. These are my personal views. I congratulated Ntate Sekatle for taking this decision because we have been complaining about the mismanagement of the hospital to every administration through its principal secretaries and ministers.
“We even held a couple of meetings with the prime minister (Moeketsi Majoro), when he was still finance minister and we don’t know what stopped him from terminating the contract. So, to me Ntate Sekatle is a hero.
“The government had no option but to terminate the contract. It is very unfortunate that those who manage Tšepong did everything they wanted without consulting the board and other shareholders. At the end of the day, Netcare orchestrated this termination.
“They did everything to force the government’s hand by suing it for more money. I don’t see any other alternative that the government could have taken except to terminate the contract.
“How do you end up firing more than 300 nurses in the middle of the (Covid-19) pandemic without first seeking approval from the board and other shareholders?
“Lesotho has spent billions on this project, most of which goes to Netcare…. All other shareholders have not received any monies except Netcare because it gobbles much of the hospital’s income through dubious management fees. Something is not right and you cannot treat Basotho like that,” Mr Green said.
He said the Consortium was yet to meet to map the way forward after the government’s decision.