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Netcare responds to ruling in KPMG case

Netcare is disappointed with the ruling by Mr Justice Matojane in Netcare’s case against KPMG

Friday, August 22 2014

Netcare is disappointed with the ruling by Mr Justice Matojane (Gauteng Division of the High Court in Johannesburg) in Netcare’s case against KPMG. On a preliminary consideration of the decision, Netcare respectfully believes that the decision is premised on material errors of fact and law. Netcare is considering its options in light of today’s ruling which has significant implications for corporate South Africa. Netcare is of the opinion that companies will need to give careful consideration to the way in which they engage professional services companies in light of the ruling.
 
KPMG performed professional services for Netcare over a period of three years, including assisting Netcare in preparing for the Competition Commission’s market inquiry into private healthcare.  Unbeknown to Netcare, KPMG tendered for and was awarded the contract to assist the Commission in the market inquiry.  This raised material concerns for Netcare.

KPMG provided Netcare with written assurances that it would assign a “clean team” to work with the Commission and that there would be no sharing of confidential information between the two KPMG teams.  These assurances were also reflected in a court order which was issued in October 2013.  Netcare believed that KPMG had failed to comply with its own assurances and had also violated the court order.  This prompted Netcare to pursue legal action to protect its interests.

Judge Matojane found that the October court order “has become impossible to perform” because “KPMG did not know when the order was taken by consent” that a member of the KPMG Commission team had already “had interactions” with members of the KPMG Netcare team. In other words the Court found that, because KPMG was apparently at the time of the court order unaware that members of its two KPMG teams had already interacted regarding

the work performed for Netcare, it could not be required to comply with the court order. This factual finding effectively confirms the very concern that Netcare raised from the outset, namely that despite the assurances which had been provided to it by KPMG, there had, in fact, been interactions between members of the KPMG Netcare team and the KPMG Commission team.      

Netcare reiterates that its court action was not about delaying the healthcare inquiry or withholding any information.  Netcare is currently participating in the Commission’s inquiry and has already made substantial submissions in response to various requests from the panel which is conducting the inquiry. Netcare will continue to engage with the panel as the inquiry unfolds and is participating fully in the process.

 

Ends

Issued by:                Martina Nicholson Associates (MNA) on behalf of Netcare Limited
Contact:                   Martina Nicholson, Graeme Swinney, Sarah Beswick or Jillian Penaluna
Telephone:            (011) 469 3016
Email:                         martina@mnapr.co.za, graeme@mnapr.co.za, sarah@mnapr.co.za or jillian@mnapr.co.za

 

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