PROMINENT South African health services provider, Netcare’s High Court application to have the Tšepong Consortium placed under judicial management has been thrown out by Justice Lisebo Chaka-Makhooane.
The Tšepong Consortium runs the country’s major referral hospital, the Queen ‘Mamohato Memorial Hospital (QMMH), on behalf of the government with whom it entered into a public-private partnership to build the hospital
Netcare is the major shareholder with its 40 percent stake in Tšepong Consortium. Four other companies, namely, Afri’nnai Health of South Africa, Excel Health, Women Investment and D10 Investments (all from Lesotho), hold the remaining shares.
QMMH is facing serious financial challenges which the minority shareholders have blamed on Netcare’s alleged financial impropriety which has allegedly seen it make making unauthorised payments to itself, Botle Facilities Management and some unknown persons.
Netcare General Manager (Finance) Christoffel Smith has denied any wrong-doing on his company’s part and last December, he applied to the High Court to place the Tšepong Consortium under judicial management, arguing that a failure to do so would land Lesotho in a “sovereign debt crisis”.
“This is an application to place the respondent under judicial management in terms of section 156 (1) of the Companies Act 18 of 2011 (“the Act) and to appoint Mr Siviwe Dongwana and Mrs Majoel Makhakhe as the respondent’s joint judicial managers in terms of section 157 (1) of the Act,” Mr Smith stated in his December 2019 for the Tšepong Consortium to be placed under judicial management .
He said that Ms Makhakhe and Mr Dongwana would ensure that Tšepong’s “present inaction and dysfunctionality” were addressed and that the Tšepong Consortium would recover M832 million in overdue debts allegedly owed to it by the government.
However, Netcare’s application was recently dismissed by Justice Chaka-Makhooane.
“The application to place the respondent (Tšepong) under judicial management in terms of Section 156 (1) of the Companies Act of 2011 is dismissed with costs,” Justice Chaka-Makhooane briefly stated in his 24 February 2020 judgement. The reasons for Justice Chaka-Makhooane’s decision will only be known when he issues a written judgement.
Netcare’s bid to have the Tšepong Consortium placed under judicial management was opposed by fellow shareholders, chief among them, Afri’nnai Health shareholder, Professor Lehlohonolo Mosotho, who last month told the High Court that Netcare was only filing the application to dodge a forensic audit into the finances of the consortium.
Prof Mosotho accused Netcare and Mr Smith of diverting substantial payments from the consortium and making unauthorised payments to Netcare, Botle Facilities Management and other unknown persons.
“We (Tšepong Board) decided to mount a forensic audit, which is opposed by the applicant (Mr Smith) and Netcare because they are aware that they siphoned funds that were not due to them to the prejudice of the respondent (Tšepong Consortium) and its financial obligations,” Prof Mosotho said.
Mr Smith had told the high court that the consortium was in serious financial distress and owes its creditors, who include the Development Bank of Southern Africa, more than M320 million. He warned that the debt could balloon by a further M90 million.
In his answering affidavit to Mr Smith’s application for judicial management, seen by the Lesotho Times, Prof Mosotho accused Netcare of siphoning money out of the consortium and paying out a total of M312 million without the approval of the board.
He alleged that Netcare paid itself M201 million in just nine months.
He said the amount was way more than the M161 million that Netcare had submitted to the Tšepong board as its management fees in the 2017/18 financial year.
Prof Mosotho also alleged that Netcare paid Botle Facilities Management M47 million between January 2018 and May 2019 without the approval of the board.
Netcare owns shares in Botle which is responsible repairs and maintenance services at QMMH.
Prof Mosotho accused Mr Smith and Netcare of vehemently opposing a forensic audit into the affairs of the consortium because they were fully aware that the net was closing in on them.
“On 4 February 2019, the applicant (Smith) and Netcare transferred M34 054 231, 75 to an unnamed person who we suspect is Netcare.
“In particular the applicant spearheaded a disastrous plan and scheme of siphoning the funds of the respondent company to the two companies, in which he stood to gain financially.
“We (Tšepong Board) decided to mount a forensic audit, which is opposed by the applicant and Netcare because they are aware that they siphoned funds that were not due to them to the prejudice of the respondent (Tšepong Consortium) and its financial obligations.
“On 14 March 2019, the date when the applicant (Smith) suggests the respondents was unable to pay its financiers particularly the Development Bank of Southern Africa (DBSA), it actually made two payments amounting to M56 972 378, 55. On the same date the applicant paid Botle M9 064 788, 57,” he said.
He said that the Botle payment was followed by a transfer of M4, 3 million to an undisclosed person and another payment of M237 978 was made to another unknown person on 19 March 2019.
Prof Mosotho said there were three more transactions that same month totalling M24 million, another transfer of M20 million to unknown person in April 2019 and another transfer of M24 million to undisclosed persons in May 2019.
He said Mr Smith stood to gain employment income and other benefits from Netcare and directorship fees as well as allowances and other benefits from Botle.