Papers reveal minister was in the thick of things as the main players hatched plot.
The Special Investigating Unit (SIU) this week outlined how the R150 million heist involving the department of health through the Digital Vibes contract was executed, describing a fraudulent scheme disguised as an ordinary communications services contract with the National Health Insurance (NHI) system during the Covid-19 pandemic.
On Thursday, the SIU court submission showed that out-of-office Health Minister Zweli Mkhize seemingly held the keys to the safe, while his special adviser Tahera Mather pulled all the strings. In the end, the health department and South African taxpayers were left R150 million poorer, while Mkhize and associates laughed all the way to the bank.
The SIU argued in court that, although the information they submitted amounted to “hearsay evidence”, in the coming hearing, the anti-corruption unit would submit that the court ought to admit it as factual.
Tracing the origin of Digital Vibes, the SIU investigation homed in on Radha Hariram, a 61-year-old woman based in Stanger, KwaZulu-Natal, who was a 95% shareholder of Digital Vibes. Oddly, while the company operated as communications specialists, Hariram’s career background was in banking and in management at a petrol station in Stanger.
Mather persuaded her to register Digital Vibes in 2014 and, by 2018, the company had scored a R4 million contract with the Municipal Infrastructure Support Agent (MISA), an agency of the department of cooperative governance and traditional affairs, which was then under Mkhize’s stewardship.
The MISA contract, in which Hariram was merely a pawn, would become the blueprint for the bigger Digital Vibes scheme, the SIU told the court.
A year later, Mkhize found himself heading the health department. He brought Mather along with him on the day of his swearing in and introduced her to then director-general, Malebona Matsoso, as his strategic adviser on communications. From that day, Mather acquired the authority to issue instructions to Matsoso in Mkhize’s name.
Through these interactions, Matsoso learnt that Mkhize wanted Mather to handle the NHI communications.
Mather was duly given a consultancy contract at the rate of R800 an hour. However, the supply chain processes in the department rejected the arrangement, since the communications service provider was supposed to be a company. An anonymous whistle-blower spoke of the pressure placed on supply chain officials to ensure Mather’s appointment, which they resisted.
According to the whistle-blower, it was then that health department deputy director-general Anban Pillay introduced Digital Vibes to substitute the Mather arrangement, and “it was expected that this company should be appointed”. Soon thereafter, Mkhize sent a WhatsApp message to Matsoso, instructing her to “kindly sort out the contractual arrangements”.
Similarly, Treasury received a request for deviation from normal tender processes, citing that “the minister would require a person with the appropriate skills”.
Treasury did not comply with the request, saying it was “not clear how [Digital Vibes] was selected”, and that there was no evidence that it was “the only communication services provider with the required experience and capacity”.
A consensus would later be reached that at least 10 service providers would be invited to bid for the contract. However, according to the SIU, the contract was rigged in favour of Digital Vibes from the start. Eight other companies that were invited to bid lacked the necessary experience for the service and one company, Brandswell – which submitted a quotation lower than that of Digital Vibes and seemed to fulfil the requirements – had its score manipulated so that it could be eliminated.
In August 2019, Digital Vibes brought in a new director, Reuben Naidoo, who was unknown to Hariram. He appeared to have the necessary experience, as outlined in the request for a proposal, and was described in bid papers as the “team leader”. The “team”, however, turned out to be fictitious – their activities could not be traced by the SIU, which concluded that these were false claims that were simply intended to satisfy the tender brief.
In addition, the department signed a R2.5 million a month retainer for Digital Vibes, even though the service level agreement stated that the cost would be activity-based. The person who signed the agreement, Shireen Pardesi, was not authorised to do so. Nevertheless, in a very short time, the NHI contract was a “done deal”.
As if this were not enough, the SIU submitted that, in March last year, the department, “without following any procurement process at all and without any contractual basis for doing so, shifted the role of Digital Vibes from providing NHI communication to providing communication in respect of Covid-19, whereafter Digital Vibes invoiced the [department] for – and was paid – some R125 million over the course of a single year for Covid-19 communication services”.
Pillay had authorised the transaction based on a request for quotation and, three months later, asked Treasury to provide the necessary approval in a submission that the SIU found to be littered with “misrepresentations”.