President Cyril Ramaphosa on Wednesday authorised the publication of the final report into the R150 million contract awarded by the national Department of Health to Digital Vibes – a little-known communications company purportedly owned by former health minister Zweli Mkhize’s close associates.
The Special Investigating Unit (SIU) carried out the probe into the irregular tender earlier this year after shocking claims that Mkhize and his family personally benefited from the contract, which was for the department’s National Health Insurance (NHI) communication work and later, Covid-19 media campaigns.
The 114-page report was submitted to Ramaphosa in late June and there had been repeated calls from opposition parties and civil society for it to be released, in the interests of transparency and accountability.
Below is a summary of the seven key findings from the SIU report:
1. R150 million irregular expenditure
Procurement processes followed in awarding the contract to Digital Vibes for NHI work and Covid-19 media campaigns were irregular, and the subsequent contract(s) and service-level agreement(s) were therefore found to be void.
“In this regard, irregular expenditure amounting to approximately R150 million and fruitless and wasteful expenditure amounting to approximately between R72 million and R80 million was incurred by the NDOH [national Department of Health].”
2. Former acting DG must be criminally prosecuted
The department’s former acting director-general (DG) Dr Anban Pillay must be criminally prosecuted for “financial misconduct” regarding the Covid-19 media campaign after he was found to have committed fraud.
This is in line with the Public Finance Management Act (PFMA), which states that DGs – as accounting authorities – can be found guilty of an offence and liable on conviction to a fine or to imprisonment for a period not exceeding five years if that accounting officer wilfully or in a grossly negligent way fails to comply with provisions of the Act.
“Furthermore, Dr Pillay, in a letter to the National Treasury dated 11 May 2020 where he requested approval to deviate from normal procurement procedures, made numerous material intentional misrepresentations to the National Treasury in an attempt to obtain belated approval to deviate from normal procurement procedures. The obtained evidence indicates that he committed fraud in this regard.”
3. Mkhize’s associates committed fraud
The SIU found that Mkhize’s associates – Tahera Mather and Naadhira Mitha – committed fraud by using Digital Vibes as a front in order to hide the fact that they were tendering for the NHI media campaign contract and “disguised” this because they are close associates of Mkhize. Digital Vibes is owned by Radha Hariram.
4. Mkhize family directly benefited from tender
The SIU found that at the instance of Mkhize, his associates and direct family members contravened the provisions of the Prevention and Combating of Corrupt Activities Act (Precca) in that they “paid and received gratifications” resulting from the fact that the department had irregularly and unlawfully awarded contract(s) to and paid Digital Vibes in respect of the NHI and the Covid-19 media campaigns.
Furthermore, Digital Vibes contravened the provisions of section 2 of the Prevention of Organised Crime Act (Poca) related to money laundering.
How Mkhize and family personally benefited:
- Digital Vibes paid an amount of R 6,720 for repairs at a property belonging to the Mkhize.
- On 2 May 2020, Digital Vibes transferred R300,000 (via a company belonging to Mather) to a company belonging to the former minister’s son, Dedani Mkhize.
- On 4 May 2020, Digital Vibes paid an amount of R160,000 to a Pietermaritzburg car dealership in respect of the purchase of a second-hand motor vehicle (i.e. a 2003 Toyota Land Cruiser) for Dedani. This motor vehicle was registered in the name of the minister’s son.
- At the time of the above-mentioned transactions, the NDOH had transferred approximately R50 million to Digital Vibes for services related to the Covid-19 media campaign.
- Digital Vibes also, by way of having electronic fund transfers converted to cash, caused significant amounts of cash to be paid to Mkhize’s son.
5. Mkhize lied to South Africans
The SIU also found that Mkhize lied to the media during a briefing that was held on 26 May 2021 regarding the Digital Vibes contract when he denied that he or his family had benefited from the deal.
“This denial was, objectively speaking, untrue, as the minister’s son and the minister himself (via property belonging to him) had directly benefited from Digital Vibes, who in turn had benefitted from the NDOH contracts.”
6. Digital Vibes failed to declare and pay company tax
Taking into account the amounts of money that were received by Digital Vibes and an analysis of the bank account(s) of the company, “it appears that Digital Vibes failed to declare and pay company tax and failed to pay the required VAT to the South African Revenue Service”.
7. Mkhize gave instructions for tenders
The SIU found that Mkhize gave instructions via WhatsApp messages to the department’s former DG, Precious Malebona Matsoso, for the NHI and the Covid-19 media campaigns to be awarded to Digital Vibes.
“At best, this conduct on the part of the minister was improper and at worst, the conduct of the minister was unlawful… as it constituted an interference by the executive authority in the affairs of the administrative authority of the NDOH.”