THE government may soon be slapped with a M686 million lawsuit for its alleged failure to meet its financial obligations towards the running of the Queen ‘Mamohato Memorial Hospital in Maseru.
This after South African-based health services provider, Netcare Hospital Group (Pty) Ltd’s lawyers, Werksmans Attorneys, this week wrote to the board of the Tšepong Consortium which runs the hospital giving them until Tuesday to issue a summons against the government for the payment of M686 million.
Netcare says the money to be recovered from the government includes a M312 million bill for services and transport fees. It also alleges that the government owes millions more for value added tax (VAT) and default interest repayments.
Netcare, the South African based private hospital conglomerate controlled by Stellenbosch billionaire Johan Rupert, is the majority shareholder in the Tšepong Consortium with 40 percent shares followed by Excel Health and Afri’nnai Health with 20 percent each while Women’s Investment Company and D10 Investments each hold a 10 percent stake.
It accuses the other Tśepong directors of failing in their duty to recover the money allegedly owed by the government.
Its lawyers’ letter warned of action against the “intractable directors who are and remain in breach of their duties, and which breaches have caused and continued to cause our client to suffer loss”.
It warned that a failure to issue summons by Tuesday would result in Netcare’s appointed directors proceeding with a “derivative” claim against the government.
It is understood that the other Tśepong directors – mainly representing local companies – are extremely reluctant to take legal action against the government.
“Please find attached hereto a draft summons, claiming payment of the overdue amount of M686 073 373 (inclusive of VAT and default Interest), from the Government of Lesotho,” part of the 24 February 2020 letter from Netcare’s lawyers to the Tšepong Consortium states.
Netcare said the consortium was well within its right to demand payments from the government. It said the public-private partnership (PPP) agreement clearly stipulated that the Lesotho government would pay the consortium for any services provided.
But Afri’nnai Health Director, Professor Lehlohonolo Mosotho, said Netcare and its General Manager (Finance), Christoffel Smith, were advised that the Lesotho government was the “anchor debtor” of the project and there was no way the state would let the project collapse given its political commitment.
“He (Mr Smith) was advised that the litigation was not an option in relation to the claims they had against the government but he would always adopt a hardline approach which in the process marginalised the government officials responsible for paying the invoices of the respondent company,” Professor Mosotho said.
He wants Mr Smith to shoulder the blame for the government’s delays in processing payments, saying that there were never delays before the latter became part of the project.
But Netcare said it had done everything it could to get the government to pay for services and they were well within their rights to sue for non-payment.
Netcare said the consortium had submitted VAT invoices to the government on a monthly basis in accordance with the agreement and that payment of such invoices was due.
“The defendant did not dispute the invoices. The defendant failed to pay the invoices. In the circumstances, the defendant is indebted to the plaintiff in the sum of M 686 073 373 including default interest,” the Netcare letter states.
Netcare’s letter comes barely a month after one of the Tśepong shareholders, Afri’nnai Health, accused the company of being responsible for causing operational havoc and uncertainty by pursuing an “unnecessary aggressive stance against the government of Lesotho”.
The Queen ‘Mamohato Memorial Hospital, popularly known as Tšepong, takes up almost 30 percent of Lesotho’s health budget.
The hospital was built under a PPP that committed a host of private healthcare companies operating as the Tśepong Consortium to not only building and running the hospital for 18 years but also to establishing an additional clinic and refurbishing three other similar facilities in the area.