EFF and GEMS clash over corruption claims

The Government Employees Medical Scheme (GEMS) has this week rejected the Economic Freedom Fighters’ (EFF) allegations of corruption, maladministration and corporate capture, saying the claims are misleading and not based on verified facts.

This follows an EFF statement last Thursday in which the party accused GEMS of abandoning its founding principles and operating as a “parasitic system” that enriches private corporations and certain board members at the expense of public servants. The EFF also demanded a forensic audit of the scheme’s contracts and the suspension of trustees who are also public servants.

GEMS said its appearance before Parliament’s Portfolio Committee on Public Service and Administration on 5 November was part of normal oversight processes, where members of the committee sought clarity on affordability for low-income public servants.

In response to the EFF statement, GEMS said it found it concerning that the EFF, a member of the same committee, chose to issue a public statement before the scheme had been given the opportunity to respond formally to Parliament.

“GEMS continues to operate under its founding mandate of providing affordable and equitable healthcare coverage to public service employees,” said Dr Stan Moloabi, Principal Officer of GEMS. “The scheme takes all allegations of wrongdoing seriously and will investigate any matter if credible evidence is presented.”

Moloabi said GEMS has maintained clean audit outcomes for the past 18 years and that its governance structures are compliant with the Medical Schemes Act and all relevant regulations. “Our operations are conducted with transparency and in full compliance with the law. We remain committed to protecting the interests of our more than two million members and their families,” he said.

The scheme said all board members are vetted before appointment and that no violations of the law have been established against the trustees mentioned by the EFF. It added that its procurement and contracting processes are open and competitive, and all service providers are subject to B-BBEE and preferential procurement regulations.

According to GEMS, the contracts with Medscheme Holdings and Metropolitan Health were awarded through transparent bidding processes. Both companies are Level 1 B-BBEE contributors, and all payments to them comply with the Preferential Procurement Policy Framework Act.

However, the EFF maintains that GEMS has become an example of state capture within the public healthcare sector. Party national spokesperson Sinawo Thambo said the scheme has turned into “a machine of enrichment” for private firms and connected individuals.

“The EFF has reviewed the 2024 GEMS Annual Integrated Report and found worrying evidence of corporate monopolies benefiting from public servants’ contributions,” Thambo said. “Over R2.9 billion was paid to two private firms in 2024 alone while members continue to face unaffordable contributions and poor healthcare access.”

Thambo said the party is alarmed by what it calls “double-dipping” by certain GEMS board members who are also full-time public servants, alleging they received R3.1 million in trustee fees without authorisation from their employer. “This violates the Public Service Act. These individuals must be suspended, and every cent they received must be recovered,” Thambo said.

The EFF has demanded that GEMS stop what it calls “anti-poor” contribution increases and expand its hospital network to rural and township areas. The party said it would push for a forensic audit of all GEMS contracts and raise questions in Parliament to hold the board accountable.

In its response, GEMS said its administration costs in 2024 amounted to 5.59 percent of gross contribution income, well below the industry average. It said this demonstrates its efficiency in managing resources.

“GEMS remains fully committed to ethical governance and financial integrity. All our processes are subject to independent oversight, regular audits and regulatory reviews,” the scheme said.

Both parties have stood firm on their positions. While the EFF insists that GEMS must be overhauled and held accountable for what it describes as financial mismanagement, GEMS maintains that its operations are lawful, transparent and focused on the well-being of its members.

The scheme said it would submit written responses to Parliament as part of due process and will continue engaging oversight bodies to verify the integrity of its operations.

GEMS has also reserved the right to respond to each of the EFF’s allegations through formal channels if necessary.

Meanwhile, the EFF said it would not back down from its demand for transparency and accountability. “We will not be silent while public funds meant for healthcare are diverted to private hands. GEMS must return to serving its members, not the elite,” Thambo said.