Council for Medical Schemes removes trustees

The Council for Medical Schemes has removed three members of the Board of Trustees of Medshield Medical Scheme from office in terms of Section 46(1) of the Medical Schemes Act 131 of 1998 (MSA), with effect from 13 June 2008.

The Council believes that Mr P. S. Moyanga (also the chairperson of the scheme), Mr J. T. de Almeida and Mr H. du Plessis are not fit and proper persons to hold their offices.

As trustees, they failed to ensure that the scheme complied with Board Notice 73 of 2004 when they appointed a new administrator. The scheme misled the Council regarding its compliance with the notice; they failed to ensure that Council received the correct information. Mr De Almeida and Mr Du Plessis also failed to avoid conflicts ofinterests.

Not complying with Board Notice 73 of 2004

Schemes must evaluate a range of potential administrators fairly and reasonably before awarding a contract to one of them. They are obliged to select an administrator best suited to their needs, taking into account cost, capacity, experience in administration, and financial soundness.

But in 2006-07, Medshield appointed a new administrator without considering the notice. Instead, the three trustees tried to establish a new company to take over the administration of the scheme.

Misleading the Council

Medshield mislead the Council by creating the impression that a tender process compliant with Board Notice 73 of 2004 had been followed for the appointment of the new administrator.

Not avoiding conflict of interests

During 2005 and 2006 Mr De Almeida and Mr Du Plessis failed to avoid conflict of interests in their capacity as trustees – this is contravention of the MSA.

Both were directors of Westwing (Pty) Limited, which was warehousing prospective employees for the new company they were trying to form to take over the administration of the scheme. Both consulted with stakeholders and implemented a strategy to create the new administrator.

The fact that they may or may not have received financial benefits from their involvement does not detract from the conflict of interests. Trustees are obliged to act in the best interests of the beneficiaries of their scheme.

During 2005 and 2006 Mr De Almeida and Mr Du Plessis were also directors and shareholders of Protecta Funeral Services (Pty) Limited, where they failed to avoid conflict of interests  between the company and their duties as trustees.