Released: Damning SIU report finds at least R72m fruitless and wasted, implicates Mkhize, DoH officials in Digital Vibes contract

Dr Anban Pillay. (Photo by Gallo Images / Financial Mail / Russell Roberts)

By Pieter-Louis Myburgh for Scorpio

29 Sep 2021

Former health minister Zweli Mkhize directly influenced the Department of Health’s decision to award a R150-million contract to Digital Vibes. He and his family financially benefited from the deal, the Special Investigating Unit’s long-awaited report into the matter has found.

The Special Investigating Unit (SIU) has made damning findings against former health minister Zweli Mkhize and top Department of Health (DoH) officials in relation to the department’s R150-million Digital Vibes deal.

President Cyril Ramaphosa authorised the release of the long-awaited report on Tuesday. It comes on the back of a series of exposés by Daily Maverick’s Scorpio investigative unit, directly implicating Mkhize and his family, Digital Vibes “masterminds” Tahera Mather and Naadhira Mitha and several DoH officials in a string of misconduct and alleged criminal offences.

Read how the story unfolded from Scorpio’s first report on 23 February 2021.

WhatsApp messages

According to the report, WhatsApp messages from Mkhize to the department’s former director-general, Malebona Matsoso, support allegations that Mkhize had from the outset been involved in Digital Vibes’ appointment by the department.

Presidential Report.30 June 2021 Digital Vibes (1) by janet on Scribd

These messages were exchanged in 2019, before Digital Vibes landed a contract for communications services related to the country’s roll-out of a National Health Insurance (NHI) scheme.

“It is apparent from the contents of the WhatsApp message that the Minister was giving instructions to the DG. At best, this conduct on the part of the Minister was improper and at worst, the conduct of the Minister was unlawful,” the SIU has found.

What’s more, Mkhize also “approved the first budget allocation for the NHI media campaign, which approval specifically mentioned that the services would be rendered by Digital Vibes”.

On paper, the company’s managing director was listed as Radha Hariram, but the SIU has found that Mather and Mitha – who had both worked for or alongside Mkhize before his appointment as health minister – were the company’s true masterminds.

“... Ms Mather and Ms Mitha used Digital Vibes as a front in order to hide the fact that they were tendering for the contract and ‘disguised’ this, due to the fact that they were close associates of the Minister of Health (Dr Z Mkhize),” reads the report.

In late 2019, the department’s tender evaluation committee (TEC) “irregularly and irrationally” appointed Digital Vibes ahead of a rival bidder which could have performed the envisioned NHI communications work for less than half of the R141-million price tag submitted by Digital Vibes.

It was a closed bid process that saw the DoH deviate from standard procurement laws and regulations.

The TEC consisted of Dr Anban Pillay, DoH spokesperson Popo Maja and other top officials.

Disciplinary action

Pillay and Maja, along with suspended director-general Dr Sandile Buthelezi and former CFO Ian van der Merwe, have also been earmarked by the SIU for “disciplinary action” in relation their respective roles in the saga, including the approval and processing of payments to Digital Vibes.

Pillay has been identified as “one of, if not the main actor(s)” in the saga and should be criminally prosecuted for alleged financial misconduct and fraud, the SIU has recommended.

This relates to alleged “intentional misrepresentations” by Pillay to National Treasury, through which the DoH sought approval to appoint Digital Vibes without a normal open tender process.

“The obtained evidence indicates that he committed fraud in this regard,” according to the SIU.

It is not clear why Pillay has been singled out for possible criminal action.

Dr Anban Pillay took over as the Department of Health’s acting director-general in late 2019 and formed part of the Tender Evaluation Committee for the Digital Vibes contract. (Photo: Gallo Images / Financial Mail / Russell Roberts)

The SIU has found that Mkhize had played a material role in approving the budget for the payments made to Digital Vibes, and that he and his family subsequently derived financial gain from the deal.

Of the R150-million Digital Vibes ended up pocketing, about R132-million came from budget allocations that Mkhize himself had signed or approved.

The SIU has found that Mkhize’s son, Dedani, had received at least R3.8-million from the Digital Vibes contract by way of cash paid through a third-party account, a vehicle that had been bought for him and payments deposited into one of his company’s accounts.

The minister himself also directly benefited from the contract, as Scorpio has previously revealed.

“During the relevant period, Digital Vibes paid an amount of R6,720 for repairs at a property belonging to the Minister,” the SIU confirmed.

Scorpio first tied Mkhize to this expenditure after we obtained invoices for the repairs bearing the former minister’s cellphone number.

Mkhize may have lied

It appears Mkhize may have lied to the SIU when it queried him about the maintenance work.

“The Minister indicated to the SIU that he had not requested these services, nor did the indicated cellular number belong to him or to an account registered in his name,” reads the report.

“However, the indicated cellular number, in eNatis records, is linked to vehicles registered in the name of the [former] Minister,” the SIU found.

The unit also found that Mkhize had misled the public during a press briefing in May 2021 in which he denied that he or his family had benefited from the contract.

“This denial was 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 benefited from the NDOH contracts,” reads the report.

“In this regard, the Minister indicated that he was at that stage not aware that he himself (via his property) or his son had benefited in this regard and had been telling the truth as he knew it to be.

“However, the fact remains that the Minister’s denial was misleading to the public at large and the President.”

Mkhize and his family, along with Mather and Mitha, could face money laundering and related charges.

According to the SIU: “Digital Vibes (represented by Ms Hariram), Ms Hariram (in her personal capacity), Ms Mather and Ms Mitha (at the instance of the Minister), contravened the provisions of section 2 of the Prevention of Organised Crime Act (money laundering).”

The unit also found that Mather, Mitha and Mkhize’s family contravened sections of the Prevention and Combating of Corrupt Activities Act “in that they paid and received gratifications resulting from the fact that the NDOH had irregularly and unlawfully awarded contract(s) to Digital Vibes in respect of the NHI – and the Covid-19 media campaigns.”

Irregular process

Considering the allegedly flawed tender process, the SIU has labelled the entire R150-million paid to Digital Vibes as irregular.

What’s more, at least R72-million has been found to have been fruitless and wasted.

This was determined based on the difference between Digital Vibes’ original bid price and the one offered by the rival bidder.

However, the quantum for expenditure on legitimate goods and services linked to actual communications work for the NHI and Covid-19 may end up being alarmingly small.

A provisional Scorpio analysis of the flow of funds found that only about R40-million had been spent on such items and that by far the largest slice of the contract had been funnelled to accounts belonging to Mather, Mitha and other role players involved in the affair. DM

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