Bonitas, the country’s second-largest open medical scheme, has been placed under curatorship, ending a two year battle between the scheme and the Council for Medical Schemes (CMS), the regulator said on Wednesday.
The High Court in Johannesburg appointed Joseph Maluleke as the curator on 27 May, and ordered that the scheme have a new board of trustees in place within three months to restore proper governance structures at the scheme, the regulator said in a statement.
Maluleke, who was Bonitas’ compliance officer for the past nine months, was described as someone who had a proven track record of stabilising organisations experiencing governance problems.
“This is a victory for the regulator but more importantly, for the hundreds of thousands of Bonitas beneficiaries and their families,” said CMS Registrar and Chief Executive Monwabisi Gantsho.
“We can all rest assured that the problems which had been plaguing the medical scheme are being addressed in a concrete way. After many months of interaction and litigation we are delighted that this protracted case has finally made satisfactory progress and we look forward to the outcome of the curatorship,” he said.
Bonitas has more than 650 000 members.
The regulator first raised concerns over the fitness and propriety of Bonitas’ board of trustees at the beginning of last year. This followed a probe that began in 2009.
Allegations of corporate transgressions were levelled against the former principal officer, Bafana Nkosi, who resigned before facing a disciplinary hearing.
The same accusations were also borne by members of the board of trustees.
These ranged from investments in property development, for which the scheme paid about R20-million more than planned, to exclusive contracts with suppliers that were governed only by verbal agreements.
The regulator emphasised that placing the scheme under curatorship was not an indication of financial instability or a reflection on its ability to honour claims.
“Bonitas remains one of the biggest and healthiest medical schemes in South Africa.”
The court ruling did not only effectively remove the trustees but also restricted them from ever again taking office as trustees or principal officers.
At the end of 2009, Bonitas’ solvency stood at 35.7 percent, which had remained stable at above the 25 percent required by law.
CMS said the audited figures for the year ending in December 2010 would be published later in the year.