Medical schemes are supposed to exist as not-for-profits, for the sole benefit of their members, regulated under the Medical Schemes Act to ensure fairness, transparency and the safeguarding of members’ contributions.
However, revelations regarding SA’s second-largest medical scheme, Bonitas Medical Fund, suggest some trustees may be putting their own interests ahead of the 400,000 principal members they are entrusted to serve.
The scandal, as pieced together from separate disclosures from my expanding rookery of wandering albatrosses, centres on Bonitas’ board of trustees and their alleged involvement with Willem Britz, a former executive at AfroCentric, and a string of questionable decisions that have cast a shadow over the scheme’s governance.
Cracks in the relationship between Bonitas and Sanlam, AfroCentric’s majority shareholder, have begun to emerge on rumours that Sanlam is considering going with Fedhealth Medical Scheme as its sole strategic partner from 2025.
If true, the move raises eyebrows considering that Bonitas has historically been the anchor client for AfroCentric’s distribution services, providing about three-quarters of the group’s profit, and given that Sanlam has taken a bath since acquiring the majority stake in AfroCentric at about 600c a share in May 2023 — the share closed at 290c on Friday. To put this in perspective, Bonitas was birthed by Medscheme — then part of AfroCentric — and they enjoyed a symbiotic relationship for decades.
What seems like a sudden divorce has in fact been brewing beneath the surface for some time. Behind closed doors, Sanlam seems to have lost trust completely in Bonitas’ trustees, who by all accounts have in effect “sold out” to external interests. A series of inexplicable decisions by the trustees has raised serious governance concern.
At the heart of the controversy is the trustees’ decision to terminate the contract of Afrocentric Distribution Services (ADS), the entity responsible for bringing in young, healthy members to Bonitas, which is crucial for the sustainability of any medical scheme. For reasons that remain unclear, the board of trustees fired ADS, despite its established infrastructure and long-standing relationship with Bonitas, and appointed a virtually unknown service provider linked to none other than the former ADS CEO.
This new player had no discernible capacity to deliver the critical services required at the time the decision was taken. In fact, it was no more than a one-man operation at the time of the appointment. What were the trustees thinking when they approved this move? More importantly, what was their motivation?
The story takes an even more sinister turn when we follow the money trail. Britz, a former AfroCentric executive, appears to be at the centre of this web. He resigned from AfroCentric earlier in 2024, but sources indicate that Britz resurfaced after allegedly acquiring PHA, another entity involved in Bonitas’ recent decisions.
PHA was awarded the administration of Bonitas’ low-cost Boncap option, a contract that had been under Medscheme’s purview for nearly three decades. So, a company that had been mothballed somehow managed to secure one of the most lucrative contracts in SA’s medical scheme industry. Once again, the question arises: Did PHA possess the capacity to handle such an enormous responsibility? And if not, what prompted the trustees to make such a reckless decision?
There’s a disturbing pattern here: contracts once held by well-established entities with proven track records are being handed over to companies with questionable capacity, and all roads seem to lead back to Britz and his close associates.
Where is the regulator? The Council for Medical Schemes (CMS) is supposed to act as a watchdog for the industry, ensuring that trustees fulfil their fiduciary duties and members’ interests are protected. Yet despite mounting evidence of conflicts of interest and potential mismanagement at Bonitas, the regulator has remained conspicuously silent.
Given the scale of these decisions one would expect the council to launch a preliminary investigation into the Bonitas board of trustees and their recent actions. Terminating well-established service providers, awarding contracts to one-man shows, and granting administration of key options to mothballed companies, all raise serious red flags. At the very least, these actions suggest gross incompetence; at worst they hint at outright corruption.
Sanlam’s apparent decision to cut ties with Bonitas is a wake-up call for the entire industry. Sanlam is SA’s largest insurer and a majority shareholder in AfroCentric, so is no stranger to the healthcare sector. If the talk in the industry is true that it is considering kicking Bonitas out of its employee benefits options, it speaks volumes about its lack of faith in the scheme’s trustees.
Pivoting to Fedhealth — a far smaller scheme — would also underline the severity of the Bonitas crisis. If Sanlam moves to consolidate its healthcare offerings under a single open scheme, this would flag Bonitas as a sinking ship, riddled with governance issues that are too big to ignore.
Bonitas members, representing more than 1-million beneficiaries, deserve better. They deserve trustees who act in their best interests, who maintain transparency, and who ensure their contributions are being used to provide the best possible healthcare services — not to line the pockets of a select few.
At the time of writing, questions sent to Sanlam, AfroCentric and Bonitas remained unanswered. If the trustees have been compromised, they must be held accountable, and the CMS must launch an investigation. The future of Bonitas, and indeed the integrity of SA’s medical schemes, depends on it.
• Avery, a financial journalist and broadcaster, produces BDTV's ‘Business Watch’. Contact him at Badger@businesslive.co.za.
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