After a three month delay, President Cyril Ramaphosa has released the Special Investigating Unit report into the multimillion Digital Vibes tender fraud, reports MedicalBrief. Aside from already claiming the scalps of former Health Minister Dr Zweli Mkhize and Department of Health’s current Director-General Sandile Buthelezi, the SIU recommends criminal prosecution of former acting D-G Dr Anban Pillay, as well as flagging contraventions of the Public Finance Management Act by another five senior officials, including Chief Financial Officer Ian van der Merwe.
The SIU estimates that irregular expenditure amounting to approximately R150m and fruitless and wasteful expenditure amounting to R72m-R80m was incurred by the national DOH.
Mkhize resigned over the saga in August, just hours before Ramaphosa reshuffled his cabinet.
Buthelezi was this week suspended for his alleged role in the saga, after initially taking a leave of absence. While the contract with Digital Vibes was already in place when Buthelezi was appointed in 2019, it was what he potentially failed to do afterwards that resulted in his suspension, the DoH has stated.
Dr Nicholas Crisp, the deputy D-G responsible for the NHI, will continue to act until Buthelezi's hearing process has been concluded.
The SIU identified Pillay as a “main actor” who allegedly committed fraud, gross misconduct, negligence and dereliction of duty, for his role in the awarding of a R150m communications contract to Digital Vibes for work related to the proposed National Health Insurance plan. The contract was later extended to projects on COVID-19.
Pillay, who is currently deputy Director-General for Health Regulation and Compliance, in a letter to the Treasury “made numerous material intentional misrepresentations … in an attempt to obtain belated approval to deviate from normal procurement procedures. The evidence indicates that he committed fraud in this regard”. It said he should be “criminally prosecuted for financial misconduct” and for disciplinary action to be instituted against him for contravening sections of the PFMA, the Constitution, and gross dereliction of duty, among other charges.
The SIU report details email correspondence between Pillay from his private email address to Mkhize’s former personal assistant, Tahera Mather, for services “not currently part of your scope”. “It is noteworthy that Dr Pillay had decided to [send] the email from his private email address instead of his official [departmental] email address, which indicates that Dr Pillay may have been trying to hide his conduct from the [department] or public scrutiny,” the SIU report stated.
“On the same day [March 6 2020], Mather responded with an outline of the services and a quotation from Digital Vibes in the amount of R35,906,450.” Pillay had responded to Mather’s email with: “Your proposal is approved. Please advise on the expected payment schedule for this plan and the timelines for implementation.”
The SIU said that from its analysis of the company's accounts,“it appears that Digital Vibes failed to declare and pay company tax and failed to pay the required VAT to the SA Revenue Service … Evidence was obtained justifying the blacklisting of Digital Vibes from conducting business with the public sector,” the report said.
The SIU also found that health department CFO Ian van der Merwe and Buthelezi both contravened the PFMA, with the latter criticised for “allowing payments to Digital Vibes amounting to approximately R60m, in circumstances where such payments constituted irregular expenditure, as envisaged in the PFMA, and parts thereof also constituted fruitless and wasteful expenditure, as envisaged in the PFMA”. Buthelezi should have conducted a comprehensive due-diligence exercise before allowing such any payments, the SIU said.
The SIU found that Mkhize had “directly influenced” the DoH’s decision to award the R150m contract to Digital Vibes and that he and his family financially benefited from the deal.
It said there was evidence that Mkhize, who has denied wrongdoing, had directly and indirectly received gratifications from Digital Vibes, citing R3.8m that flowed to Mkhize’s son, Dedani, while another R6,720 was used for repairs at Mkhize’s Bryanston property. Digital Vibes paid R160,000 to purchase a Toyota Land Cruiser for Dedani from a Pietermaritzburg car dealership on May 4.
The SIU report said that it was apparent from the contents of a WhatsApp message that the Mkhize gave instructions to the D-G that “at best, this conduct on the part of the Minister was improper and at worst, the conduct of the Minister was unlawful".
“At a press briefing that was held on 26 May 2021 regarding the Digital Vibes contract, the Minister 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 benefitted from Digital Vibes, who in turn had benefitted from the DOH contracts.”
In similar vein, the SIU reports that when it queried Mkhize about the maintenance work at his home, “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.
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 DOH had irregularly and unlawfully awarded contract(s) to Digital Vibes in respect of the NHI – and the Covid-19 media campaigns.”
The SIU said the evidence collected justified the institution of disciplinary action against a number of other DoH officials:
Mr Maja (Head of Communications at the DOH and Technical Evaluation Commitee member)
Ms Pardesi (Chief Director and TEC member)
Ms Ngubane (TEC member)
Mr Ngcobo (TEC member)
Ms P Ngobese (Administration Clerk at the DOH and Personal Assistant to Ms Pardesi)
Mr Ian Van Der Merwe (CFO at the DOH)
In court papers filed in the Special Tribunal in July, the SIU applied to have the R150m contract reviewed and set aside, and for those implicated to be ordered to pay the SIU or the DoH the money they received with interest.
Presidential Report.30 June 2021 Digital Vibes (1)
See more from MedicalBrief archives:
SIU: Mkhize ignored Cabinet resolutions; processes manipulated
The long, slow exit of Health Minister Mkhize is over at last
SIU demands that Mkhize and family repay R4m