Govt, Tšepong set for a bruising legal fight
. . . as Minister Sekatle vows not to pay any termination fees to Consortium,
. . . says money will instead be spent on refurbishing hospital, replacing equipment “looted” by the Consortium.
HEALTH Minister Semano Sekatle has vowed not to “pay a cent” of the M3 billion demanded by the Tšepong Consortium for the premature termination of its contract to operate Queen ‘Mamohato Memorial Hospital (QMMH) on behalf of the government.
Instead, the state will spend the money on refurbishing the run-down hospital and replacing malfunctioning equipment as well as machines the minister says were “looted” by the Consortium before its departure from the hospital in August this year.
The government’s stance could lead to a bruising legal battle with the Consortium, particularly its largest shareholder, Netcare. The latter is on record saying it will demand full payment of the termination fee. Netcare has also said it will press for the payment of other undisclosed amounts it is allegedly owed by the government for services rendered during the subsistence of the contract.
What was meant to be an 18-year Public-Private-Partnership (PPP) for the Consortium to manage QMMH prematurely ended in August 2021. This after the government terminated the contract citing several alleged infractions over the years by South Africa’s Netcare hospital group, the biggest company in the Consortium.
Announcing the termination in March this year, Mr Sekatle said the government felt it could no longer continue with the 2008 PPP with the Consortium for the construction, running and transfer of the hospital due to serious differences which had plagued the agreement from the very beginning.
However, the final straw was the Consortium’s 12 March 2021 decision to fire nurses who had been on strike since 1 February 2021 to press for salary increments to match their counterparts in other government and private sector institutions, the minister said.
The Consortium had run QMMH since October 2011 when it replaced Queen Elizabeth II Hospital as the country’s major referral healthcare facility.
Netcare had formed the Consortium with a fellow South African company and three local companies. In October 2008 an 18-year PPP agreement was then signed between the government of Lesotho and the Tšepong Consortium, for the construction and operation of the hospital. Netcare held a 40 percent stake in the Tšepong Consortium. Four other companies, namely, Afri’nnai of South Africa (20 percent) and Lesotho companies; Excel Health (20 percent), Women Investments (10 percent) and D10 Investments (10 percent) held the balance of the shares.
Prior to its departure in August this year, the Consortium said it had no problems handing over the facility to the government. However, the state would have to fork out termination fees said to be in the region of M3 billion by Finance Minister, Thabo Sophonea. It also demanded other disclosed amounts it said were owed by the state for services rendered throughout the years.
Mr Sekatle has vowed the government would not pay all these amounts.
The normally soft-spoken minister cut an animated figure as he spoke about the QMMH saga in an exclusive weekend interview with the Sunday Express.
He said a month before its departure, the Consortium “sabotaged” the government by looting everything from stationery, office furniture, computers and medical equipment. Therefore, the state would not pay anything to the Consortium. Rather, it would spend money in rehabilitating the hospital and replacing the “looted” equipment, Mr Sekatle said.
“We don’t owe Tšepong anything in termination fees or anything else,” the minister said.
“The Consortium was not performing and we kicked them out. We are not going to pay them anything because we don’t owe them. Tšepong was in disarray, it’s a non-existent company. It was dysfunctional and that is why we terminated our contract with them.
“Even though they were supposed to eventually go, they left abruptly in contravention of what we had agreed. The Consortium wreaked havoc. They ransacked the hospital and looted equipment that belonged to the government.
“Given the state they left the hospital in, one should say we are doing very well to even offer services right now. Most facilities at the hospital weren’t functional. These include labs, the refectory, dry cleaning and maintenance rooms. When we took over, we had to start rehabilitating the facilities,” Mr Sekatle said.
He begged the public for patience, saying they had a huge task of rehabilitating the hospital and procuring equipment which he said had either been left in a state of disrepair or “looted” by the Consortium.
“We need time to regroup and recover from the emergency termination of the contract. The hospital should have been on its knees and unable to take in patients due to the state that they left it in. However, we worked hard to prevent this from happening.
“We kicked out Tšepong because they were not fixing the machines. On top of that, they looted equipment before their departure. We are in the process of sourcing MRI (Magnetic Resonance Imaging) equipment which was in a state of disrepair…… (MRI equipment is used in the diagnosis of diseases. It uses the magnetic field and computer-generated radio waves to create detailed images of the organs and tissues in the human body).
“We are also trying to source radiography and other equipment looted by the Consortium. We don’t owe them any money and we are not going to pay them anything. However, we will spend money procuring equipment and rehabilitating the hospital,” Mr Sekatle said.
This hardline stance is likely to lead to a costly legal fight between the two parties. Although Netcare was not reachable for comment yesterday, the healthcare provider is on record saying they expect the government to pay them the termination fee in the region of about M3 billion. The Consortium also wants other undisclosed amounts it says are owed for various services it rendered while it ran the hospital.
Mr Sekatle called on the Consortium to settle its outstanding debts to its former employees.
The staffers, who are now employed by the government after it terminated the Consortium’s contract to operate the hospital, say Tšepong has not paid them despite promising to have done so by 30 September 2021.
They have written to both the Consortium and the government reminding them of their dues but to no avail.
Commenting on the issue, Mr Sekatle said, “Tšepong should pay its former employees. The government will not pay the gratuities owed to doctors by the Consortium”.