20 May 2014,
Netcare has approached the High Court in order to protect its confidential information from being disclosed by KPMG to the Competition Commission (Commission). The Commission has launched a market inquiry into the private health sector (market inquiry) and has employed KPMG as a consultant for this purpose. Netcare alleges that KPMG has a conflict of interest because it is in possession of Netcare’s confidential information from its former employment with Netcare. It is concerned that the direct or inadvertent disclosure of this information by KPMG will prejudice Netcare’s interests during the course of the market inquiry.
The relevance of the market inquiry
The day opened with the introduction of all twelve advocates in the room: six representing Netcare, and three each for KPMG and the Competition Commission. Just as many attorneys representing for the various parties filled the remaining sections of the front row and spilled onto the sides. The presiding judge for the case is Judge Matojane.
The lead counsel for Netcare, Brian Doctor QC, began by outlining the background to the market inquiry into the private health sector. Netcare emphasised that it had welcomed the market inquiry when it was announced and is not trying to delay it through these proceedings. It argued that it has a genuine interest that it is trying to protect – to keep its confidential information confidential and not to be disclosed to the market inquiry. Netcare stated that it will cooperate with the inquiry but wants to ensure that it is conducted properly and with integrity.
This case is about Netcare’s confidential information
Netcare pointed to the Competition Commission’s broad powers, including summons and subpoena powers – e.g. any person may be called to give information to the inquiry under oath.
The judge noted that the law indeed gave the Commission broad powers to subpoena information, and that the Commission was in any event in a position to subpoena the very information that Netcare appears to be attempting to “supress” through these proceedings. The judge asked whether this did not suggest that Netcare had “something to hide”. Netcare answered that it would assess what information it should legally provide to the Commission when requested in the appropriate, legal manner but that it did not want its confidential information to be provided directly to the Commission by KPMG. Netcare stressed that it did not think that KPMG – the only party who actually knows the content of the confidential information at this stage – should be permitted to be the gatekeeper of confidential information that impacts on its interests.
Netcare’s counsel spent most of the day taking the court through the inquiry and the facts in the case. This included discussion of which of KPMG’s employees had access to Netcare’s confidential information, if it was shared with other KPMG employees later employed by the Commission and why it was necessary to bring this case against KPMG. Netcare stressed that KPMG had initially agreed to a detailed consent order in October 2013, which was made an order of court. This order, which according to Netcare, KPMG is now refusing to abide by requires KPMG not to disclose Netcare’s confidential information. It also requires KPMG to take several steps to ensure that the team assisting the Commission would exclude anyone who had previously had access to KPMG’s information.
The Commission has a public role
Netcare then argued that the Commission, as an independent organ of state, has not complied with its public functions as set out in section 195 of the Constitution – notably the duty to uphold a high standard of professional ethics and to conduct its functions with transparency – in its dealings with KPMG. Netcare went on to argue that the Commission had not met its constitutional duties to ensure that its preferred bidder met the Commission’s own duties to Netcare and that KPMG had the very same duties to act with the highest standard of professional ethics. Finally, Netcare argued that, on its interpretation of the Constitutional Court’s recently decided Allpay judgment, KPMG’s role was significant enough that it is acting as a public functionary when performing in terms of its contract with the Commission. This, in Netcare’s view, means that KPMG is also bound by the values set out for all public administrators in s 195 of the Constitution. Netcare alleges that KPMG has not complied with the court order, and in doing so has breached both the court order and its duty as a public functionary to assist the court by complying with any court order in terms of s 165 of the Constitution.
This case comes before the start of the Competition Commission’s health inquiry. It has already delayed the progress of the inquiry. Netcare began its argument by openly accusing the Commission of acting with bias and bad faith. Netcare also insinuated that the Commission will continue to act without integrity in the future despite its “high flown language” about the need for it to proceed with the Health Inquiry, transparently, independently and as soon as possible in the public interest. Netcare alleges that the Commission will access confidential information from KPMG rather than making a proper information request to Netcare in terms of the law. Netcare also stated that the Commission is not meeting its legal duties because it did not ensure that KPMG complied with the court order.
Though the full case cannot be assessed before we hear the views of KPMG and the Commission, it appears at this early stage already that the attacks made on the Commission by Netcare are supported by flimsy factual allegations. Netcare also appears to overstate the role of KPMG in consulting with the Commission, seemingly assuming that the Commission has and will not apply its mind to advice received from KPMG.
SECTION27 supports a transparent, participatory private health inquiry in which the Commission and its consultants act in the public interest and with the utmost integrity. However, we note concern about the serious but thinly grounded allegations made by Netcare against the Commission in Court today. We emphasise that as a significant participant in the market for private healthcare, which is a market through which 17% of people in South Africa access their constitutional right to healthcare, Netcare itself has constitutional obligations, which it is bound to perform.
The hearing continues tomorrow with arguments from KPMG’s lawyers. SECTION27 continues to monitor this case and the market inquiry and will summarise each day of the hearing for public awareness.
For further information contact:
Umunyana Rugege (SECTION27): email@example.com 0834585677
Tim Fish Hodgson (SECTION27): firstname.lastname@example.org 0828719905