Last week the North Gauteng High Court in Pretoria ordered a former trustee of Liberty Medical Scheme (Liberty) to pay back the R1.7 million he had received from the scheme in terms of an illegal settlement agreement.
The settlement saw him prematurely resigning from the scheme’s Board and agreeing not to assist any regulatory or other authority with any possible investigation into the scheme.
According to the Council for Medical Schemes (CMS) Advocate Boyce Mkhize and Liberty agreed to this arrangement in May 2011 in terms of which he received R962 500 for resigning from the Board of the scheme one month before his term of office would have automatically come to an end, and a further R700 000 as a restraint of trade agreement for agreeing not to assist anyone with any possible action against the scheme.
The court set the settlement agreement aside yesterday, calling it illegal, the Board “supine”, and Adv. Mkhize “blissfully unaware” of his fiduciary responsibilities as a trustee.
According to Dr Elsabé Conradie, head of stakeholder relations for the Council for Medical Schemes (CMS), the council became aware of the possible payments to Mkhize after the withdrawal of the complaint by the scheme against him around May/June 2011. This was followed by requests for the agreement and other information regarding the payment.
“The CMS then requested the scheme to recover the payment towards the end of 2011. When they failed the CMS requested Mkhize to refund the payment to the scheme. After he declined at the beginning of 2012 the CMS instructed its lawyers on the matter and the application was launched in June 2012,” said Dr Conradie.
A ‘liability’ to the scheme
Andre’ Edwards, Executive Principal Officer at Liberty Scheme, said that prior to the settlement Liberty had complained about the trustee to the CMS when he had proven to be a liability to the scheme.
“We did not get any assistance from the CMS and consulted with our top senior council to get advice on how to go ahead with this matter,” said Edwards.
Edwards added it was not as simple as voting him off because not everyone would have voted against him and with the prospect of having him serve another three years, Liberty took the advised decision to settle the matter with Mkhize.
According to Edwards, this decision was taken in the best interest of Liberty’s members.
“We have always put the interest of our 150 000 members first and until now there have been no governance issues. We recently had a full audit done by KPMG, which we passed with flying colours. When it came to Mkhize, there were bigger issues at play, which we did submit in a complaint to the CMS,” said Edwards.