Zweli Mkhize could face criminal charges relating to Digital Vibes: SIU
Among a host of issues relating to the scandal, the unit says a second bidder for the work was disqualified irregularly
Former health minister Zweli Mkhize could face criminal charges for his role in the controversial Digital Vibes contract.
In a presentation to standing committee on public accounts (Scopa), the Special Investigating Unit (SIU) said Mkhize may have committed actions of criminality and failed to execute his function in compliance with the constitution, general oversight responsibilities in respect of the affairs of the national health department and obligations in terms of Section 63 of the Public Finance Management Act (PFMA).
The SIU also concluded that Mkhize caused irregular, fruitless and wasteful expenditure to be incurred, may have acted contrary to a relevant cabinet decision, may have been negligent when approving budgets in respect of the National Health Insurance (NHI) and Covid-19 media campaigns and that possible conflict of interest existed in the appointment of Digital Vibes.
Briefing Scopa, the SIU’s Johnny le Roux, a forensic investigator, said Mkhize approved two budget applications for Digital Vibes for the NHI communication, first a sum of R46,939,550 on January 20 2020, 52 days after Digital Vibes’s service level agreement was signed on November 29 2019.
The second budget approval was on June 16 2020 – R85,502,500 for NHI communication work.
The SIU said at the time Digital Vibes submitted its quotation on March 6 for Covid-19-related work, it stopped working on the NHI contract. The second budget was approved 99 days after Digital Vibes’s service level agreement was signed, said the SIU.
Mkhize resigned as health minister last month, vowing to challenge the SIU findings, saying it had a predetermined outcome and a closed mind in its investigation of the contract.
SIU head Andy Mothibi said Mkhize’s resignation would not hamper their ongoing investigations.
He said they continued to receive information and allegations of wrongdoing involving the Digital Vibes contract, even after submitting their final report to President Cyril Ramaphosa at the end of June.
In the report we did qualify that although this is the final report, should evidence come our away ... we will continue to look at that and we are doing so more particularly [regarding] that statement that says ‘[he] may have committed criminal act’.SIU head Andy Mothibi
“In the report we did qualify that although this is the final report, should evidence come our away ... we will continue to look at that and we are doing so more particularly [regarding] that statement that says ‘[he] may have committed criminal act’.
“We say so because we have found evidence pointing to criminal action,” said Mothibi.
The SIU had referred 19 criminal matters and relevant evidence about Digital Vibes to the National Prosecuting Authority (NPA) and other law-enforcement agencies, he added.
The evidence would be evaluated by the NPA, Mothibi said.
“When we say ‘may have committed’ it’s because of the evidence we found. We want the evidence to be further verified so it can be actual, so that charges are returned.”
The SIU revealed that one of the service providers who received money from Digital Vibes paid back R11,5m to the unit last Thursday.
“This money is part of those that we traced back to a certain individual who was paid without having performed and they acknowledged and immediately offered to pay back,” said Mothibi. The money is in a trust account and will be returned to the national department of health when legal processes conclude.
The SIU’s chief legal counsel, Dr Jerome Wells, told Scopa the unit wanted a preservation order of R266m for Digital Vibes and 11 others.
In June the Financial Intelligence Centre (FIC) issued intervention directions to place a hold on about R22m, derived from money paid to Digital Vibes by the health department. This followed a request for the preservation order by the SIU, which is investigating allegations of unlawful or irregular procurement of Covid-19 communication services by the health department.
Wells told Scopa that attachment was only valid for 10 working days, but the unit had successfully applied for the interim preservation order to be in place pending the outcome of a review application to set aside the appointment of Digital Vibes in respect of the NHI and Covid-19 media campaigns for a total value of R266m.
The review application was filed at the end of July and parties exchanged pleadings.
Wells said the SIU would apply for case management with the special tribunal on September 16.
According to the SIU, the national department of health irregularly concluded a contract with Digital Vibes for the procurement of a media awareness campaign in respect of the NHI for R141m, in terms of which R25m was paid and irregularly extended to include a Covid-19 awareness campaign. In the latter case, R125m was paid.
Digital Vibes quoted R141m and the second bidder quoted R69m. It should be noted that Digital Vibes was R72m (104%) more expensive than the second bidder, that was disqualified irregularly.
Outlining the timeline of awarding the contract, Le Roux said the national department of health initially attempted to employ Tahera Mather, Mkhize’s special adviser, as a contractor for the NHI communication.
On July 12 2019 the National Treasury was asked to approve a deviation from the normal procurement processes to appoint Digital Vibes a “turnkey costing” for 12 months for R133m.
On July 30 2019 the National Treasury declined the request, saying the national department of health should advertise a tender for 14 days.
Subsequently, a meeting was held between the two departments and it was agreed that a minimum of 10 suppliers should be invited from the Central Supplier Database (CSD). It was agreed Digital Vibes would be among those invited to submit bid proposals.
On September 5 2019 the health department submitted a letter to the National Treasury with the names of 10 potential suppliers.
The National Treasury responded 12 days later, saying it was not sure whether the 10 identified by the department of health were the only service providers able to do the required communication work.
On September 25 that year a tender proposal was e-mailed to 10 suppliers, with a closing date of October 14 2019. That day, only two companies, Digital Vibes being one of them, submitted bid proposals.
About a month later the department of health submitted a second RFP and informed all 10 suppliers that the “functionality evaluation criteria” were not included in the first RFP. Companies were required to collect their bid documents and resubmit on/or before October 30 2019.
Again, only two bidders submitted bid proposals. During bid evaluation, Digital Vibes was awarded a score of a 100% by all bid evaluation committee (BEC) members for each evaluation criterion, despite it having only one year’s experience.
He said it should have been awarded a score of 3/5 for lack of experience and this amounted to the process being irregular.
Le Roux said the other bidder had more than five years’ experience, but was scored 3/5 for “experience”, with the exception of one bid evaluation committee member awarding it 4/5.
The SIU determined that one BEC member’s score was altered for the second bidder from three to two, which resulted in the second bidder’s overall scoring being 59.2%.
“If the score was not changed, the second bidder would have qualified for functionality.”
The end result was that the second bidder failed to meet the required 60% for functionality, disqualifying it from advancing to the next stage of the tender process.
Digital Vibes quoted R141m and the second bidder quoted R69m. It should be noted that Digital Vibes was R72m (104%) more expensive than the second bidder, that was disqualified irregularly, said the SIU.