The Special Investigating Unit has found that the awarding of the infamous National Health Insurance (NHI) and COVID-19 communications contracts to Digital Vibes was “fraudulent, irregular” and “made a mockery of purported approved supply chain management” deviations that are allowed for government departments.
This was revealed in a report drawn up by the SIU following an investigation into the R150 million worth of contracts and service level agreements (SLAs) entered into between the National Department of Health (NDOH) and Digital Vibes.
The report was released by President Cyril Ramaphosa on Wednesday morning.
“[T]he procurement processes … were irregular and the subsequent contracts and/or SLAs … was/were 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,” the SIU said.
In the report, the unit said it had found wrongdoing on the part of, amongst others:
Then Acting Health Director General, Dr Anban Pillay, in the irregular appointment of Digital Vibes, expanding the mandate of its contract and requesting late approval from National Treasury for a deviation from regular supply chain channels.
Former Health Minister, Dr Zwelini Mkhize, for allegedly benefitting from repairs done at his home by Digital Vibes. His son is also alleged to have received R300 000 from Digital Vibes plus R160 000 paid towards the purchase of a car for him.
Digital Vibes and its owners for alleged fraud, paying of gratifications and failing to declare and pay company tax and VAT to the South African Revenue Service (SARS) and contraventions of several acts in the combatting of corruption.
A host of other National Health Department officials and other private individuals for their role in the scandal.
Findings against Mkhize
The report said evidence suggested that former health Minister Mkhize “mislead” the President and the nation when he denied that he or his family benefitted from the Digital Vibes deal.
“This denial was, objectively speaking, untrue, as the Minister’s son and the Minister himself had directly benefitted from Digital Vibes. The Minister indicated that he was at that stage not aware that he himself (via his property) or his son had benefitted 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,” the SIU said.
The unit further stated that it had found that he had gone against a cabinet memorandum instructing the GCIS (Government Communication and Information System) to drive the NHI media campaign and chided Dr Mkhize for approving the appointment of Digital Vibes to drive COVID-19 awareness campaigns despite a National Joint Operational and Intelligence Structure (NatJoints) decision to task GCIS to drive those campaigns.
“A Cabinet Memorandum… indicated that the GCIS would be responsible for the rollout of the NHI communication strategy. In the circumstances, it is astonishing that the Minister thereafter, contrary to the Cabinet Memorandum, allowed Digital Vibes to be appointed … in respect of the NHI media campaign. In fact, it can be argued that the Minister deliberately ignored a Cabinet decision.
“[T]he GCIS was again tasked… to do the COVID-19 awareness campaign for Government. Once again, it is inexplicable as to why the Minister would have allowed the ‘extension’ of the Digital Vibes SLA… to include the COVID-19 media campaign. It would have been far more cost-effective if the GCIS had rendered the required services,” the report said.
Former acting Health DG faces possible criminal prosecution
In the report, the SIU recommended that former Acting Director General of the NDOH during the COVID-19 media campaign and the NHI communications campaign, Dr Anban Pillay, be “criminally prosecuted for financial misconduct”.
“Dr Pillay was also one of, if not the main actor(s) within the NDOH who, by way of a SCM deviation… attempted to irregularly appoint Digital Vibes… for the provision of goods and/or services relating to allegedly urgent strategic communication solutions in respect of the NHI media campaign,” the unit said.
According to the unit, Dr Pillay was allegedly “one of the main actors” in a decision to make a closed tender process with only ten bidders chosen for the original NHI communications contract awarded in 2019.
Most of those chosen companies offered services that were either inappropriate or were not registered on government’s Central Supplier Database.
The only company who vied for the tender against Digital Vibes was communications company Brandswell which offered their services at more than half of the R141 million quoted by Digital Vibes.
“The TEC [Technical Evaluation Committee] of the NDOH disqualified Brandswell’s tender as it purportedly only had achieved a score of 59.2%, and not the minimum score of 60% functionality assessment. Digital Vibes received a 100% score from all the TEC members with regard to the functionality assessment. Brandswell was again in this manner irregularly and incorrectly disqualified from the NHI tender evaluation process,” the report said.
Dr Pillay was a member of the TEC at the time.
The unit also recommended disciplinary processes be instituted against him for gross misconduct, gross dereliction of duty and/or gross negligence.
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Digital Vibes and its owners
The SIU also picked out the directors of Digital Vibes, Tahera Mather and Naadhira Mitha and its owner Radha Hariram for wrongdoing.
“Mather and … Mitha committed fraud in that they held out to the NDOH that Digital Vibes was tendering for the NHI media campaign contract, whereas in fact, [they] 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 … [Mkhize], who was the Executive Authority of the NDOH,” the report said.
The unit said the three had also contravened at least two corruption busting laws.
“Digital Vibes… (at the instance of the Minister), direct family members of the Minister, former associates of the Minister and family members of former associates of the Minister contravened the provisions of section 3 read with sections 24 and 26 of the [Prevention and Combating of Corrupt Activities Act] in that they paid and received gratifications received gratifications resulting from the fact that the NDOH had irregularly and unlawfully awarded contract(s) to Digital Vibes.
“Furthermore, Digital Vibes… (at the instance of the Minister), contravened the provisions of section 2 of the Prevention of Organised Crime Act [related to money laundering],” the report found.