Netcare comes out with guns blazing

By Thoboloko Ntšonyane

MASERU – The Netcare Hospital Group (Pty) Ltd issued a statement on March 24 which takes aim at the Tšepong shareholders over strained relations and the government of Lesotho over the delayed payments.

This follows the government’s decision to cut ties with the Tšepong following its move to fire its 265 nursing staff who had engaged in a 40 day industrial action on account of the “low” salaries which they argued were last restructured in 2012 and some shareholders who decried impropriety.

It has refuted the previously recorded 345 of the nursing staff which were given the marching orders.

“Tšepong is a thinly capitalised entity without access to working capital, and therefore unable to meet financial obligations when monthly payments by GoL [Government of Lesotho] are delayed. During these prolonged periods of non-payment – sometimes up to five consecutive months – Netcare provided the interest-free bridge funding to sustain the financial position of Tšepong.

“When Netcare recovered amounts due to it, once Tšepong’s had the funds to settle its obligations to Netcare, the company was accused of financial impropriety which naturally is not conducive to maintaining relations, especially when Netcare’s financial assistance ensured the viability of the project. Netcare’s financial support of Tšepong in effect means that Netcare is a 100% contributor on the downside and only a 40% beneficiary on the upside.”

“Shareholder relations became further strained when unsubstantiated allegations were made by some of the shareholders that they have not benefited financially from the PPP project. These utterances do not recognise that M65 million advanced by the Development Bank of South Africa (DBSA) to ensure their participation, has been settled in full. It also does not recognise the substantial management fees paid for procurement of equipment and Netcare’s concession to share 50% of its monthly management fees which to date, yielded the shareholders aggregated earnings in excess of M11.5 million.

“While Tšepong has been trading solvently, Tšepong’s ability to declare dividends and maintain liquidity has been severely constrained by the poor payment history by GoL and poor support, by some members of the Tšepong board, to act in the interest of the company and take action to collect fees owing by GoL,” says Dr Chris Smith, the Finance General Manager at Netcare.

The statement further attributes the souring of relations of Netcare and its shareholders and nursing staff to the government’s delayed payments.

The statement goes on to say the remedies which were explored to bring solution proved futile over citing the dismissed court application at the Commercial Court in 2020 wherein they sought “to place Tšepong under judicial management” but the Netcare said it had appealed the matter.

Meanwhile the Directorate on Corruption and Economic Offences (DCEO) investigators has seized some computers at the hospital last week to investigate on alleged misconduct at that hospital. This the statement says it had complied with the Directorate request last year where it sought the computers and the documentation on the PPP agreement for their investigations.

The group has expressed dismay over the raid saying “Netcare was surprised by the unannounced raid by the DCEO at the QMMH on 19 March 2021 to remove documents and computers, without any basis of contraventions of any legislation being put to Tšepong.”

On March 17, the task team of cabinet Ministers formed of the Ministers of Health, Finance, Development Planning, Labour and Employment, Education and Training, Tourism, Environment and Culture and Law and Justice announced the government’s decision to part ways with the company citing the long strained relationships from the onset of the public private partnership (PPP) agreement between the Tšepong and the government.

Tšepong gobbles M550 million annually from the Ministry of Health to run the Queen ‘Mamohato Memorial Hospital (QMMH).

The group further said concerning the proposed termination of the PPP contract, Netcare said it learnt through the media reports of the government’s intention to end the 18 year PPP contract which is in the 13th year saying it will “keep engaging GoL on these issues in an effort to avoid any disruption to service delivery”.

The statement goes on to say that Netcare plans to challenge the ‘default notice’ received on March 18 from the GoL which is reported to have defaulted.

“Netcare’s role in the PPP is to provide and deliver all management, clinical and related services, equipment and information technology (IT), laundry, cleaning, security and gardening services, amongst others. In addition, Netcare is responsible for the nurses’ and emergency services training and for the establishment of relations with external training institutions to facilitate peer review and support of medical practitioners. Tšepong as principal contractor of the PPP mainly has the obligation for the employment of staff members.”

“Netcare has led the establishment of this pioneering PPP and is privileged to be serving the Basotho people through the provision of quality healthcare. The PPP project has brought a range of specialised services to the Basotho people, unprecedented in the country’s history, and significantly elevated the range and quality of healthcare services accessible by the citizens of the Kingdom of Lesotho,” charges Dr. Smith

The Netcare Hospital Group (Pty) Ltd, commands the majority shareholding within the public private partnership (PPP) between the Government of Lesotho and Tšepong (Pty) Ltd, a company that runs the QMMH and the four filter clinics in Maseru.

Tšepong’s shareholders comprise of Netcare, which holds a 40% stake within the consortium while the remaining 60% shareholding is held by Afrinnai Health (Pty) Ltd 20% – South African based company, and the local companies comprising of; Excel Health Services (Pty) Ltd with 20% shareholding, D10 Investments (Pty) Ltd (D10) which has 10% shareholding, and the Lesotho based Women Investment Company (Pty) Ltd (WIC) with 10% stake.