Warning of conflict of interest in AHealth deal
Siseko Njobeni
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Trade and Industry Correspondent
THE Council for Medical Schemes has called for the removal of a doctors’ group from the black economic empowerment consortium that wants to acquire Afrox Healthcare, saying its membership could amount to a possible conflict of interest.
Business Venture Investments, majority shareholder in the consortium that wants to buy Afrox Healthcare, consists of Mvelaphanda Strategic Investments (40%), Brimstone (40%) and an unnamed doctors’ empowerment group (20%).
Alex van der Heever, adviser to the council, said on Friday during a sitting of the Competition Tribunal, which is to rule on the empowerment transaction, it was concerned about doctors being shareholders in a group with intentions to own private hospitals.
He said competition in the private hospital sector was not based on price but on relationships with doctors. Doctors often referred patients to private hospitals. Van der Heever said allowing doctors to own shares in a group with interests in private hospitals would create “a fundamental conflict of interest”.
The council has also questioned the role of Rand Merchant Bank and Old Mutual Life Assurance in the deal. Rand Merchant Bank is the financier of the deal, and holds a 10,1% stake in the consortium. Old Mutual Life Assurance also has a 10,1% shareholding in the consortium.
Rand Merchant Bank’s parent company, FirstRand, is a majority shareholder of Discovery Health, “and we have a problem with that”. Old Mutual Life Assurance owns Old Mutual Healthcare.
Van der Heever said the council would like to get an undertaking from the groups they would not increase their stakes in future.
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