Ex-trustee ordered to return R1.6m payoff

2013-05-30 22:18

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Pretoria - A Liberty Medical Scheme former trustee must repay the R1.62m golden handshake he received when he resigned two years ago, the North Gauteng High Court in Pretoria ordered on Thursday.

The Council for Medical Schemes and the Registrar of Medical Schemes had insisted the payment to advocate Boyce Mkhize was unlawful.

They took Liberty and Mkhize to court when the scheme refused to take steps to recover the money.

Liberty's board entered into a "special arrangement" with Mkhize in May 2011, according to which it agreed to pay him R962 000 to resign as trustee and R700 000 not to disclose confidential information to competitors.

On Thursday, Judge Fayeeza Kathree-Setiloane set aside the agreement and ordered Mkhize to repay the money.

Mkhize, a former National Nuclear Regulator CEO and Health Professions Council of SA registrar, was also ordered to pay the legal costs of the application.

Kathree-Setiloane said the payments were illegal because the board had exceeded the scope of its powers under the rules of the scheme.

Liberty contended that the agreement had been necessary to avoid potential costly litigation, and to ensure harmonious relations on the board after the amalgamation of Liberty and Medicover Medical Scheme.

Mkhize said he had found nothing legally or morally wrong with the arrangement because he would not have resigned if the terms of the settlement agreement were unfavourable.

Kathree-Setiloane said it was surprising that the board did not see fit to enter into a similar agreement with the scheme's chairperson Larry Jacques when he resigned.

She said the prudent approached would have been to simply wait a month until Mkhize's term of office expired in June 2011, or to hold a ballot in terms of the scheme's rules to vote him out if he refused to resign.

"By entering into the so-called special agreement with Mkhize, which was clearly at odds with its obligations under the rules, the board had allowed itself to be held at ransom by Mkhize," Kathree-Setiloane said.

Council for Medical Schemes CEO Dr Monwabisi Gantsho described the ruling as "another big victory for the regulator as the custodian of the principles of good governance in the medical schemes industry".

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