Taxman gets wind of pathology kickbacks

May 15 2000

By Gill Gifford

The expose by The Star of pathology lab kickbacks has spurred the taxman into action. A team of six auditors and investigators has been formed by the SA Revenue Service to investigate payments given to doctors named in the reports.

A Sars spokesperson, Fani Zulu, said on Monday that they had been monitoring The Star's investigation, which revealed that more than 200 doctors were paid to send tests to specific laboratories, and wanted to ensure that the doctors had declared their income accurately and had been taxed correctly.

The Star revealed that three big pathology laboratories - Ampath, Lancet (Pathcare) and Pathnet - are paying out millions to certain doctors. The kickbacks took the form of direct payments as well as other incentives.

On Friday, a list of doctors and the kickbacks they have allegedly been receiving - ranging from monthly "commissions"; payment towards groceries, water and lights and telephones; and the supplying of office equipment such as computers, modems and fax machines - were published in The Star.

"As soon as we saw the article, we set up the team," Zulu said, adding that the team was expected to approach The Star for further information in the next few days with the aim of checking that the money the doctors received had been declared.

He said the revenue service was entitled to request information from taxpayers, and failure to make a full disclosure could be an offence.

"But at this stage we are not accusing anyone of wrong-doing. And we have no intention of approaching the taxpayers (the doctors) themselves, unless there is sufficient reason to warrant this."

Zulu said the investigative team's work would be extended nationally, depending on the seriousness of the matter.

The Star has in its possession documents that list the names of doctors involved and copies of agreements and forms showing the amounts paid out to them. These vary from monthly payments between R500 and R40 000, to six-monthly payouts as large as R120 000.

Mathatha Tsedu, the deputy editor of The Star, said yesterday that the newspaper had not yet been approached by Sars, and would evaluate any request when it was received.

"The key issue will be the information they want and whether handing it over will compromise the undertaking we have given our sources," Tsedu said.

The South African Medical Association, commenting on the kickbacks scandal yesterday, said the vast majority of the medical profession were proud, ethical practitioners committed to uplifting the standards of the healthcare system.

Dr Percy Mahlati, Sama's chief executive, said that while no one could compel another to participate in acts of corruption, it was irresponsible for pathology companies to "hide behind" doctors when they were encouraging kickbacks.

The Health Professions Council is also looking into the kickbacks. It has asked all stakeholders to provide it with information on the issue of perverse incentives (kickbacks) to enable it to institute a detailed probe.

Acknowledgement to