South Africa

Life Healthcare accused of R112 million swindle 

Life Healthcare

Life Healthcare has been accused of irregularly channelling R112 million of government funds meant for drug recovery patients into its bank accounts. 

In response to questions from Daily Investor, Life denied all the allegations in the report and said it contained numerous inaccuracies. 

The Department of Social Development in Gauteng is investigating two of Life’s drug rehabilitation centres in the province. 

Leaked documents seen by the Mail & Guardian and GroundUp show that the investigation found R112 million was irregularly channelled straight into the company’s bank account. 

Life Healthcare owns the Nkanyisa Recovery Centre, a non-profit organisation (NPO) funded by the provincial department since 2016 under its substance abuse prevention and rehabilitation programme.

Nkanyisa was formed as a rebrand of Life Esidimeni, which was shut down due to budgetary constraints that led to the death of 144 patients. 

Nkanyisa has two recovery clinics, one in Randfontein in the West Rand and one in Brakpan in the East Rand.

Before being rebranded, Esidimeni was found to have a bank account that was used to receive grant funding and immediately transfer it to Life’s main bank account.

The investigators said this was highly irregular as money intended for an NPO should not be channelled to a private, for-profit company. 

According to the 2022-23 service level agreement, the Randfontein centre received R62.4  million, while the Brakpan facility was granted nearly R49.9  million – bringing the total to more than R112.2  million.

However, the department grants R16,000 in funding per patient or bed occupied, meaning Randfontein, which has 500 beds, should have received R8 million and Brakpan, which has a capacity of 340, only R5.4 million. This would leave about R98.9 million spare.

The Gauteng Department of Social Development has not paid subsidies since the end of 2022/23, with Life continuing to fund the rehab centres through its own means. 

Life Healthcare responds

Daily Investor contacted Life Healthcare and its Nkanyisa subsidiary regarding the allegations made in the investigation. 

The company said it refutes all the allegations in the report and the information shared in media articles regarding the issue. 

It said the coverage from media outlets contained numerous inaccuracies and that Life Healthcare has not been able to analyse the findings of the investigation itself. 

“A fair and impartial investigation will result in a finding of no wrongdoing or unethical behaviour by either Life Healthcare or the Nkanyisa Recovery Centre NPC,” it said. 

“Life Healthcare has always operated and continues to operate with integrity and transparency, and we stand by our continued commitment to ethical business practices.”

The company said the Gauteng Department of Social Development is actually in debt to Life’s Nkanyisa subsidiary to the value of R172.6 million. 

“Despite the consequent financial challenges, the Nkanyisa Recovery Centres NPC faces, we are advised that it remains committed to providing the highest quality of care to those vulnerable patients who remain in its care.”

“We have requested the Department to share the report with us, and we will comment, if necessary, once we have been able to review it.”