Medical schemes regulator suspends five officials
The regulator of the R160bn medical schemes industry has suspended five senior officials pending the outcome of an investigation into alleged corruption and unethical conduct, and will subject all its executives to a lifestyle audit, it announced on Wednesday.
The latest developments come hard on the heels of a series of events that have rocked the Council for Medical Schemes (CMS), the watchdog agency charged with safeguarding the interests of about 9-million consumers and ensuring medical schemes, brokers and administrators comply with the Medical Schemes Act.
The medical schemes industry generated R160bn in annual contribution income, according to the most recent CMS annual report. At that stage, the industry covered 15.6% of the population.
The suspensions follow the resignation earlier this week of head of compliance and investigations Stephen Mmatli, who was suspended in February pending the outcome of an investigation into alleged corruption, and against the backdrop of a probe into the CMS by the Special Investigating Unit for maladministration and corruption.
ALLEGATIONS DENIED
The suspensions raise fresh questions about the legitimacy of inspections currently under way; recent decisions to place schemes under curatorship; and whether the regulator may have turned a blind eye to issues that warranted scrutiny.
The CMS issued a statement saying two executives and three senior managers have been suspended but did not name them.
Business Day can confirm that the two executives are CMS CFO Daniel Lehutjo and head of
legal services Craig BurtonDurham. Burton-Durham said he denies the allegations in the strongest terms and reserves his right to comment at a later stage. Lehutjo declined to comment.
The allegations against the five include the irregular placement of schemes under curatorship, irregular appointment of service providers, irregular spending on service providers and having personal lifestyles that are not matched by salaries.
Other allegations include having a close and corrupt relationship with entities regulated by the council, breaching the Public Finance Management Act, and colluding in the appointment of service providers.
The CMS did not specify which allegations applied to each of the individuals who have been suspended.
Many of the allegations were made by anonymous whistleblowers using the CMS’s anonymous tip-off line.
“The CMS views these allegations in [a] serious light. Therefore, these suspensions and investigations are in line with our zero tolerance to unethical conduct.
“We will not rest until information received has been investigated and, based on the findings, appropriate steps will be taken,” CMS registrar Sipho Kabane said in the statement on Wednesday afternoon.
All CMS executives “will be immediately subjected to a lifestyle audit”, Kabane said.
Kabane subsequently told Business Day the suspensions would not affect the CMS’s daily operations, as the regulator had sufficient staff.
He said Mmatli had resigned on September 15, shortly before his disciplinary hearing was due to get under way.
In Mmatli’s resignation letter, a copy of which he provided to Business Day, he said the investigators appointed by the CMS had finalised their investigation report into his conduct without his input, which he said was unfair and indicated it had not been conducted in good faith.
THE ALLEGATIONS INCLUDE THE IRREGULAR PLACEMENT OF SCHEMES UNDER CURATORSHIP
ALL CMS EXECUTIVES WOULD BE IMMEDIATELY SUBJECTED TO A LIFESTYLE AUDIT, KABANE SAID