IN THE SPECIAL TRIBUNAL (REPUBLIC OF SOUTH AFRICA) (HELD AT BOOYSENS MAGISTRATE’S COURT, JOHANNESBURG) In the matter between: In the matter between: SPECIAL INVESTIGATING UNIT and DIGITAL VIBES (PTY) LTD ‘TAHERA AHMED SAEED MATHER NAADHIRA MITHA. RADHA HARIRAM ‘ZWELINI LAWRENCE MKHIZE DEDANI DALUXOLO SPHELELE MKHIZE THAMIZHANBAN PILLAY FIRST NATIONAL BANK LTD GLACIER FINANCIAL SOLUTIONS (PTY) LTD SYGNIA FINANCIAL SERVICES (PTY) LTD AMODS ATTORNEYS WT GRAPHICS AND DESIGNS (PTY) LTD SUHAILA MATHER STRATEGEEWHIZ (PTY) LTD SUHAILA MATHER CONSULTING(PTY) LTD COMPOSIT TRADE AND INVESTMENTS 02 (PTY) LTD CASE NUMBER: Applicant First Respondent Second Respondent Third Respondent Fourth Respondent Fifth Respondent Sith Respondent ‘Seventh Respondent Eighth Respondent Ninth Respondent Tenth Respondent Eleventh Respondent ‘Twelfth Respondent Thirteenth Respondent Fourteenth Respondent Fifteenth Respondent Sixteenth Respondent —BEVELS COMMUNICATIONS ADVERTISING AND DIGIATAL MEDIA (PTY) LTD MATETA SPECIAL OPERATIONS (PTY) LTD MKOKWANA EVENTS MANAGEMENT (PTY) LTD WASIM AHMED MATHER ‘SP ATTORNEYS INC, SHIRAZ HOOSEN SALOOJEES CHEMIST CC HASINA KATHRADA, YENZIWE SOKHELA WELCOME (MDU) MTHETHWA MAKHOSAZANA MTHETHWA SOTOBE MEDIA (PTY) LTD ROYAL BHACA PROJECTS (PTY) LTD DIRECTOR GENERAL FOR THE NATIONAL DEPARTMENT OF HEALTH (REPRESENTING THE NATIONAL DEPARTMENT OF HEALTH FOR ‘THE REPUBLIC OF SOUTH AFRICA) Seventeenth Respondent Eighteenth Respondent Nineteenth Respondent ‘Twentieth Respondent ‘Twenty First Respondent ‘Twenty Second Respondent ‘Twenty Third Respondent ‘Twenty Fourth Respondent ‘Twenty Fifth Respondent ‘Twenty Sixth Respondent ‘Twenty Seventh Respondent ‘Twenty Eighth Respondent ‘Twenty Ninth Respondent Thirtieth RespondentCONFIRMING AFFIDAVIT |, the undersigned, HESTI MARCIA LE ROUX declare on oath as follows: 1, | am a forensic accountant engaged as a specialist consultant for Abacus Financial Crime Advisory (Pty) Lid. I have been seconded to the Special Investigating Unit ("SIU") in order to assist the SIU with the investigation into allegations of irregularities in respect of the affairs of all State Institutions in as far as it relates to. the procurement, contracting and payment of goods, works and/or services related to the National State of Disaster proclaimed on 15 March 2020. 1am a fully qualified Chartered Accountant CA (SA), with a Master's Degree in Forensics. ! have over 18 years of forensic accounting investigation experience in civil, criminal and disciplinary matters. I declare that the facts deposed to herein are, unless otherwise stated or indicated by the context, within my personal knowledge. Some of the facts are derived from documentation which | received or was provided to me during my investigation of this matter, and from interviews conducted by the SIU and by me. Their contents are to the best of my knowledge true and correct. | previously deposed to an Affidavit dated 15 June 2021 setting out the results of my investigation as at that date. The affidavit was filed as part of the founding papers in the interim interdict application brought in the Special Tribunal under case number KN 03/2021. | confirm that the contents of that affidavit are true and correct,This Affidavit sets out the results of my investigation as at 28 July 2021 insofar as is relevant to the application for the review and setting aside of the transactions between Digital Vibes (Pty) Ltd (‘Digital Vibes") and the National Department of Health (‘NDOH’), for the recovery of monies paid in terms of those transactions and for the forfeiture of monies that are subject to the interim interdict. Origins of the Investigation and mandate of the SIU 6. The SIU received allegations from a whistle-blower (who is known to the ‘SIU, but who requested the SIU to keep his/her identity confidential, in as far as possible) (‘the whistie-blower’) during February 2021 regarding potential irregularities in the award by the NDOH of the National Health Insurance (‘NHI") media campaign to Digital Vibes and the subsequent extension and variation thereof to include services regarding the Covid-19 media campaign. The whistle-blower further alleged that Digital Vibes' director Ms. Radha Hariram ("Ms. Hariram") (based in Stanger in the KwaZulu-Natal Province ("KZN"), was not actively involved in the business affairs of the company but appointed two consultants, namely Ms. Tahera Ahmed Saeed Mather ("Ms. Mather") and Ms. Naadhira Mitha ("Ms, Mitha") (Ms. Mather's niece). The whistle-blower alleged that Ms. Mather was the long-time personal ‘spokesperson of Dr. Zweli Mkhize ("Dr. Mkhize") who was appointed as the Minister of Health in 2019 and that Ms. Mitha worked as Dr. Mkhize's personal assistant when he was the Minister of Cooperative Governance and Traditional Affairs (‘COGTA’) in 2018 to 2019. The SIU was mandated by Proclamation No. R. 23 of 2020 (published in Government Gazette No. 43546 dated 23 July 2020) (‘Proclamation’), to conduct an investigation into the affairs of all State institutions (including the NDOH) Institutions in respect of, inter alia, the procurement or contracting for goods, works and services, during, or in respect of the National State of Disaster, (as declared by Government Notice No. 313 of 15 March 2020), by or on behalf or State institutions, Which included matters concerning the NDOH.10. The Proclamation required the SIU to investigate any alleged - (a) ‘serious maladministration in connection with the affairs of the NDOH; (b) improper or unlawful conduct by the officials or employees of the NDOH; () unlawful appropriation or expenditure of public money or property; (@) unlawful, irregular or unapproved acquisitive act, transaction, measure or Practice having a bearing on State property; e intentional or negligent loss of public money or damage to public property; @ offences referred to in Parts 1 to 4, or section 17, 20 or 21 (in so far as it relates to the aforementioned offences) of Chapter 2 of the Prevention and Combating of Corrupt Activities Act, 2004 (Act No. 12 of 2004), and which offences were committed with the affairs of the NDOH; or (@) unlawful or improper conduct by any person, which had caused or may have caused serious harm to the interests of the public or any category thereof, and which took place between 1 January 2020 and the date of publication of the Proclamation (i.e. 23 July 2020), or which took place prior to 1 January 2020 or after the date of publication of the Proclamation (i.e. 23 July 2020), but was relevant to, connected with, incidental or ancillary to the matters mentioned in the ‘Schedule or involved the same persons, entities or contracts investigated under authority of the Proclamation. 11. The Schedule to Proclamation No. R. 23 of 2020 stipulates as follows: “1. The procurement of, or contracting for, goods, works and services, including the construction, refurbishment, leasing, occupation and use of immovable property, during, or in respect of the national state of disaster, as declared by Goverment Notice No. 313 of 15 March 2020, by or on behalf of the State Institutions, and payments made in respect thereof in a manner that was- (@) _ not fair, competitive, transparent, equitable or cost-effective; (2) contrary fo applicable@ legislation; (i) manuals, guidelines, practice notes, circulars or instructions issued by the National Treasury or the relevant Provincial Treasury; or (ii) manuals, policies, procedures, prescripts, instructions or practices of or applicable to the State institutions; (¢) conducted or facilitated through the improper or unlawful conduct of- () employees or officials of the State institutions; or (i) any other person or entity; to corruptly or unduly benefit themselves or any other person; or () fraudulent, and any related unauthorised, imegular or fruitless and wasteful expenditure incurred by the State institutions or the State. 2. Any improper or unlawful conduct by the officials or employees of the State institutions or any other person of entity, in relation to the allegations set out in paragraph 1 of this Schedule, including the causes of such improper or unlawful conduct and any loss, damage or actual prejudice suffered by the State institution or the State.” Scope of the investigation 12. The SIU conducted interviews with employees of the NDOH and other relevant role players, obtaining affidavits where appropriate. It collected relevant documents from the NDOH and from role players. 12.1. I have reviewed and analysed the information and evidence that has been obtained by the SIU for purposes of fulfiling the SIU’s mandate in terms of Proclamation R23 of 2020 and in particular for the following purposes: 12.1.1. _ to assess compliance with the prescribed legislation in respect of the procurement processes followed in respect of the NHI media campaign (and the resulting SLA) and the subsequent Covid-19 media campaign;12.1.2. to identify irregular and/or unlawful conduct on the part of the NDOH, its officials, employees and/or third parties; and 12.1.3. to identify and quantify losses suffered by the NDOH and to facilitate the recovery of such losses (where possible). Legislative framework 13. The legislative framework applicable to the transactions between the NDOH and Digital Vibes is as follows. 13.1. The Constitution of the Republic of South Africa, 1996 (the Constitution) 13.1.1, Section 2 of the Constitution stipulates that “This Constitution is the supreme law of the Republic; law or conduct inconsistent with itis invalid, and the obligations imposed by it must be fulfilled". 13.1.2. Section 217(1) of the Constitution stipulates that ‘when an organ of state in the national, provincial or local sphere of government, or any other institution identified in national legislation, contracts for goods or services, it must do so in accordance with a system which is fair, equitable, transparent, competitive and cost- effective.” 13.2. Public Finance Management Act, 1999 (Act No 1 of 1999) (PFMA) 13.2.1. Irregular expenditure Is defined by section 1 of the PFMA as: “expenditure, other than unauthorised expenditure, incurred in contravention of or that is not in accordance with a requirement of any applicable legislation, including . 13.2.2. Fruitless and wasteful expenditure is defined in section 1 of the PFMA as: “expenditure which was made in vain and would have been avoided had reasonable care besn exercised”. 13.2.3. Unauthorised expenditure is defined in section 1 of the PFMA as: “overspending of a vote or a main division within a vote or ‘expenditure not in accordance with the purpose of a vote, or, in13.2.4, 13.2.5. 13.2.6, 13.2.7, 13.2.8. 13.2.9. the case of a main division, not in accordance with the purpose of the main division”. Section 38(1) of the PFMA imposes several obligations on accounting officers. Section 38(1)(a)(i) requires the accounting officer of a department to ensure that the department “has and maintains effective, efficient and transparent systems of financial and risk management and intemal control". Section 38(1)(a)(ill) stipulates that the accounting officer of a department must ensure that that department has and maintains “an appropriate procurement and provisioning system which is fair, equitable, transparent, competitive and cost effective”. Section 38(1)(b) stipulates that the accounting officer of a department ‘is responsible for the effective, efficient, economical and transparent use of the resources of the department. Section 38(1)(c)(iii) stipulates that the accounting officer of a department must ‘manage available working capital efficiently and economically”. Section 38(1)(g) stipulates that the accounting officer of a department, ‘on discovery of any unauthorised, irregular or fruitless and wasteful expenditure, must immediately report, in writing, particulars of the expenditure to the relevent treasury and in the case of irregular expenditure involving the procurement of goods and services, also to the relevent tender board”. Section 38(1)(h) stipulates that the accounting officer of a department must take effective and appropriate disciplinary steps against any official in the service of the department who contravenes or fails to comply with a provision of the PEMA, commits an act which undermines the financial management and intemal control system of the department or makes or permits an unauthorised expenditure, irregular’ expenditure or fruitless and wasteful expenditure.13.2.10, 13.2.11. 13.2.12. 13.2.13, 13.2.14. 13.2.15. 13.2.16. 13.2.17. Section 38(1)(n) stipulates that the accounting officer of a department ‘must comply, and ensure compliance by the department..., ... with the provisions of this Act’. Section 38(2) stipulates that “An accounting officer may not commit a department...to any liability for which money has not been appropriated”. Section 39(1)(a) stipulates that “The accounting officer for a department Is responsible for ensuring that expenditure of that department is in accordance with the vote of the department and the main divisions within the vote” Section 39(1)(b) stipulates that “The accounting officer for a department is responsible for ensuring thet effective’ and appropriate steps are taken to prevent unauthorised expenditure’. Section 39(2)(a) stipulates that “An accounting officer, for the purposes of subsection (1) must take effective and appropriate steps fo prevent any overspending of the vote of the department or @ main division within the vote”. Section 39(2)(b)(ji) stipulates that “An accounting officer, for the purposes of subsection (1) must report to the executive authority and the relevant treasury any impending overspending of the department's vote or main division within the vote". Section 39(c) stipulates that “An accounting officer, for the Purposes of subsection (1) must comply with all remedial measures imposed by the relevant treasury in terms of this Act fo prevent overspending of the vote or a main division within the vote”, Section 40 of the PFMA imposes several obligations on the accounting officer of a department in respect of reporting on, amongst others, the expenditure incurred by a department. Section 40(1)(a) stipulates that “The accounting officer for a13.2.18, 13.2.19, 13.2.20. 13.2.21. 13.2.22. department...must keep full and proper records of the financial affairs of the department... in accordance with any prescribed norms and standards”. Sections 40(3)(b)(i) and (ji) stipulate that the accounting officer of a department should include, in its annual report and financial statements, particulars of any material losses through criminal conduct, and any unauthorised expenditure, irregular expenditure and fruitless and wasteful expenditure that occurred during the financial year. The section further stipulates that an accounting officer must further include particulars of any criminal or disciplinary steps taken as a result of such losses, unauthorised expenditure, imegular expenditure and fruitless and wasteful ‘expenditure. Section 41 stipulates that “An accounting officer for a department... must submit to the relevant treasury or the Auditor- General, such information, retums, documents, explanations and motivations as may be prescribed or as the-relevant treasury or the Auditor-General may require”. Section 43(2) stipulates that “The amount of saving under a main division of a vote that may be utilised in terms of subsection (1), may not exceed eight per cent of the amount appropriated under that main division". Section 43(3) stipulates that “An accounting officer must within seven days submit a report containing the prescribed particulars conceming the utilisation of a saving in terms of subsection (1), to the executive authority responsible for the department and to the relevant treasury”. Section 43(4)(a) stipulates that “This section does not authorise the utilisation of a saving in and amount specifically and exclusively appropriated for @ purpose mentioned under a main division within a vote”.13.2.23. 13.2.24, 13.2.25. 13.2.26. 13.2.27, Section 44(2)(d) stipulates that “A delegation or instruction to an official in terms of subsection (1) does not divest the accounting officer of the responsibility conceming the exercise of the delegated power or the performance of the assigned duly”. Section 45(a) compels an official in that “An official in a department ..amust ensure that the system of financial management and internal control established for that department... is carried out within the area of responsibility of that official”. Section 45 (b) and (c) of the PFMA compels an official in a department to use, within that official’s area of responsibility, financial and other resources effectively, efficiently, economically and transparently and to take effective and appropriate steps to prevent, within that official's area of responsibility, any unauthorised expenditure, irregular expenditure and fruitless and wasteful expenditure. Section 45(d) stipulates that “An official in a department... must comply with the provisions of this Act to the extent applicable to that official, including any delegations and instructions in terms of section 44", Section 64 of the PFMA stipulates that "(1) Any directive by an executive authority of a department to the accounting officer of the department having financial implications for the department must be in writing. (2) If implementation of the directive is likely to result in unauthorised expenditure, the accounting officer will be responsible for any resulting unauthorised expenditure unless the accounting officer has informed the executive authority in-writing of the likelihood of that unauthorised expenditure. (3) Any decision of the executive authority to proceed with the implementation of the directive, and the reasons for the decision, must be in wnting, and the accounting officer must promptly file @ copy of this document with the National Treasury and the Auditor General and13.2.28. 13.2,29, if @ provincial department is involved, also with the relevant provincial treasury.” Insofar as financial misconduct and disciplinary proceedings are concemed, section 81 of the PFMA stipulates as follows: "(1) An accounting officer for a department or a constitutional institution commits an act of financial misconduct if that accounting officer wilfully or negligently - (a) fails to comply with a requirement of section 38, 39, 40, 41 or 42; or (b) makes or permits an unauthorised expenditure, an irregular expenditure or a fruitless and wasteful ‘expenditure, (2) An official of @ department, a trading entity or a constitutional institution to whom @ power or duty is assigned in terms of section 44 commits an act of financial misconduct if that official wilfully or negligently fails to exercise that power or perform that duty." Section 86 of the PFMA deals with offences and penalties. Section 86(1) of the PFMA stipulates that “An accounting officer is guilty of an offence and liable on conviction to a fine, or to imprisonment for a period not exceeding five years, if that accounting officer wilfully or in a grossly negligent way fails to comply with a provision of section 38, 39 and 40” 13.3. The Treasury Regulations, 2005 13.3.1. The Treasury Regulations set out the regulatory framework in terms of the PFMA, prescribe norms and standards for SCM practices in State institutions where the PFMA finds application. The Treasury Regulations highlight, inter alia, the requirements that proper planning should be in place, a need should be13.3.2, 13.3.3. 13.3.4, 13.3.5. identified, analysed and included in the strategic planning of a department and therefore budgeted for. The Treasury Regulations emphasise the constitutional prescripts relating to SCM processes. In effect, they require that a Procurement system must be fair, equitable, transparent, competitive and cost-effective and that ordinarily a competitive bidding process must be followed. The Treasury Regulations stipulate that when an accounting officer determines the appropriateness of disciplinary steps against an official in terms of section 38(1)(g) of the PFMA, the accounting officer must take into account the circumstances of the transgression, the extent of the expenditure involved and the nature and seriousness of the transgression. The Treasury Regulations stipulate that the recovery of losses or damages resulting from fruitless and wasteful expenditure must be dealt with in accordance with regulation 12 of the Treasury Regulations. The aforementioned Treasury Regulation stipilates that losses or damages suffered by an institution because of an act committed or omitted by an official, must be recovered from such an official if that official is liable in law. The accounting officer must determine the amount of the loss or damage and, in writing request that official to pay the amount within 30 days or in reasonable instalments. If the official fails to comply with the request, the matter must be handed to the State Attorney for the recovery of the loss or damage. Regulation 12 specifically stipulates that a claim against an official must be waived if the conditions in paragraph 12.2.1(a) to (g) of the Treasury Regulation are not applicable. Regulation 9.1.5 stipulates that all imegular expenditure and fruitless and wasteful expenditure must be disclosed as a note to the annual financial statements.13.3.6. 13.3.7. 13.3.8. 13.3.9. 13.3.10. Regulation 16A8.2(a) stipulates that ‘A supply chain management system must, in the case of procurement through a bidding process, provide for the adjudication of bids through a bid adjudication committee”, Regulation 16A6,2(b) stipulates that “A supply chain management system must, in the case of procurement through a bidding process provide for the establishment, composition and functioning of bid specification, evaluation and adjudication committees”. Regulation 16A6.2(e) stipulates that “A supply chain management system must, in the case of procurement through a bidding process provide for the approval of bid evaluation and/or adjudication committee recommendations", Regulation 16A8.3(b) stipulates that “The accounting officer... must ensure that bid documentation include evaluation and adjudication criteria, including the criteria prescribed in terms of the Preferential Procurement Policy Framework Act, 2000 (Act No. 5 of 2000) and the Broad Based Black Economic Empowerment Act, 2003 (Act No. 53 of 2003". Regulation 16A6.4 stipulates that “if in a specific case it is impractical to invite competitive bids, the accounting officer or accounting authority may procure the required goods or services by other means, provided that the reasons for deviating from inviting competitive bids must be recorded and approved by the accounting officer or accounting authority’. The Preferential Procurement Policy Framework Act, 2000 (Act No 5 of 2000) (PPPFA) 13.4.1, The PPPFA in section 2(1)(f) stipulates that “An organ of stato ‘must determine it preferential procurement policy and implement it within the following framework the contract must be awarded to the tenderer who scores the highest points, unless’ objective +t~. wo13.5. 13.6. 13.4.2, criteria in addition to those contemplated in (d) and (0) justify the award to another tenderer’. ‘The PPPFA in section 2(1)(g) stipulates that “An organ of state must determine it preferential procurement policy and implement itwithin the following framework: any contract awarded on account of false information fumished by the tenderer in order to secure preference in terms of this Act, may be cancelled at the sole discretion of the organ of state without prejudice to any other remedies the organ of state may have". ‘The Preferential Procurement Regulations, 2017 13.5.1. Regulation 7(8) stipulates that “Subject fo subregulation (9) and regulation 11, the contract must be awarded to the tenderer scoring the highest points”. Guidelines issued by the office of the Accountant-General 13.6.1. 13.6.2. During May 2014, the Office of the Accountant-General issued Guidelines regarding fruitless and wasteful expenditure and irregular expenditure. The Guideline on fruitless and wasteful expenditure, provides guidance in respect of the interpretation of matters related to fruitless and wasteful expenditure. It indicates that fruitless and wasteful expenditure will always emanate from an action or lack of ‘action instigated by an official which has resulted in a financial loss to the institution. According to the Guideline, an investigation must be conducted in order to determine whether any person could be liable in law for the fruitless and. wasteful expenditure. The Guideline stipulates that if an investigation reveals that the employee is liable in law, then accountability for the fruitless and wasteful expenditure and any losses relating thereto, shall be vested in that official.13.6.3, The Guideline on irregular expenditure stipulates further elucidation regarding the procedures to be followed when dealing with the identification and application of irregular expenditure. The Guideline does not prescribe any new principle or procedure relating to the identification and application of irregular expenditure but is merely a consolidation of provisions contained in Practice Note 4 of 2008/2009. The Guideline stipulates that, when applying the test to determine whether irregular expenditure has been incurred, it must be clear that the contravention must relate to how the transaction, condition or event was entered into and by whom - @8 opposed to when the transaction, condition or event was entered into. 13.7, National Treasury Instruction Notes. 13.7.1, 13.7.2, 13.7.3, Practice Note 4 of 2003 issued on 3 December 2003 sets out the Code of Conduct to be adhered to by SCM practitioners. The Code sets out the obligations imposed on SCM practitioners. In effect, it stipulates as follows. Firstly, supply chain management practitioners should perform their duties efficiently, effectively and with integrity, in accordance with relevant legislation, regulations and practice notes. Secondly, practitioners are accountable for their decisions and actions to the public, and that they should use public property scrupulously. Thirdly, practitioners should record and account for all transactions in an appropriate accounting system and should not make any false or misleading entries into such system. Fourthly, no person should interfere with the SCM system of an institution, Practice Note 6 of 2007/2008 (18 Apri! 2007) stipulates for the procurement of goods and services by means other than through the invitation of competitive bids. The practice note emphasises the provisions of regulation 1646.4 of the Treasury Regulations and sets out the reporting to National Treasury of instances where f>.. J ATgoods and services were procured above the value of R 1 million Were procured in terms .of regulation 16A6.4 of the Treasury Regulations. 13.7.4. Practice Note 4 of 2008/2009 (28 April 2008) stipulates clarity to accounting officers regarding the procedure to be followed when dealing with irregular expenditure and the condonation of irregular expenditure. It stipulates certain examples of irregular expenditure and the competent officiaVauthority empowered to condone such irregular expenditure. . 13.7.5. _ Practice Note 3 of 2016/2017(19 April 2016) stipulates guidelines and instructions to prevent and combat abuse of the SCM system. The Practice Note in paragraph 8.1 states that “The Accounting Officer/Accounting Authority must only deviate from inviting competitive bids in cases of emergency and sole supplier status”. 13.7.6. In paragraph 9.1, the Practice Note 3 of 2016/2017 (19 April 2016) stipulates “The Accounting Officer/Accounting Authority must ensure that contracts are not varied by more than 20 % or R 20 million (including VAT) for construction related goods, works and services and 15% or R 15 million (including VAT) for all other goods and or services of the original contract price”. 13.7.7. In. paragraph 9.2, Practice Note 3 of 2016/2017 (19 April 2016) stipulates that “Any deviation in excess of the prescribed thresholds will only be allowed in exceptional cases subject fo prior written approval from the relevant treasury’. 13.7.8. Furthermore, the Practice Note in paragraph 11 stipulates that “The Accounting Officer/Accounting Authonity must not advertise a bid for which no provision has been made in the budget”. 13,8. Disaster Management Act, 2002 (Act No 57 of 2002) (DMA) 13.8.1. _ In terms of section 27(1)(a) of the DMA, “In the event of a national disaster, the Minister may, by notice in the Gazette, declare a13.9. 13.8.2. 13.8.3. national state of disaster if existing legislation and contingency arrangements do not adequately provide for the national executive to deal effectively with the disaster’. In terms of section 27(1}(b) of the DMA, “In the event of a national disaster, the Minister may, by notice in-the Gazette, declare a national state of disaster if other special circumstances warrant the declaration of a national state of disaster’. On 15 March 2020, the authorised minister declared a national state of disaster. Subsequent to this declaration, National Treasury issued Instructions regarding the measures to be implemented during the procurement of goods and services during the national state of disaster. National Treasury Instruction Notes issued in response to the Declaration of the National State of Disaster 13.9.1, 13.9.2. On 19 March 2020, Practice Note No. 08 of 2019/2020, which applied for the period 19 March 2020 to 14 April 2020, came into effect. In paragraph 3.5.1(ii) of the Practice Note concerned, National Treasury waived the prescripts of paragraph 9.2 of National Treasury Instruction SCM No. 3 of 2016/17 - as such, the ‘State Institutions could vary/expand any pre-existing contracts or ‘SLA(s) in respact of “goods” and “for the procurement of items related to COVID-19" to a contract value in excess of 15 % of the original contract value or R15 million (whichever is the lesser amount), when purchasing any items related to Covid-19. ‘On 15 April 2020, Practice Note No. 3 of 2020/21, which applied for the period 15 April 2021 to 27 April 2020 came into operation. The Instruction Note repealed Practice Note No. 8 of 2020/21. In paragraph 5, it provided for the emergency procurement of items. which was considered to be a specific requirement of an institution to combat Covid-19. The Practice Note authorised the use of a deviated emergency procurement process, as provided for in13.9.3. National Treasury Instruction 3 of 2016/2017 and required Teporting of the deviation within 10 working days to the relevant ‘Treasury and the AGSA in all cases where goods and services above the value of R 1 million (Value-Added Tax inclusive) had been procured in terms of regulation 16A6.4 of the Treasury Regulations. On 28 April 2020, Practice Note No. 5 of 2020/21, which applied for the period 28 April 2020 to 31 May 2020, came into operation. In paragraph 3.6 of Practice Note No. 5 of 2020/21, National Treasury waived the prescripts of paragraph 9.2 of National Treasury Instruction SCM 3 of 2016/17, but limited any variation/expansion to any pre-existing contract to 25 % of the original contract value or R 25 million. Any contract variations or increases above these thresholds may only be done with the prior written approval of the relevant Treasury. 13.10. Other National Treasury Measures 1310.1. 13.10.2. On 24 March 2006, National Treasury issued its Code of Conduct for Bid Adjudication Committees (the BAC Code). The BAC Code, which re-affimed Practice Note 4, applies to all national and provincial departments. Its stated goal is “to provide guidelines on the mandate, role, function, composition, duties, meeting procedures and conduct” of a SCM BAC. Firstly, BAC members must be familiar with and adhere to all relevant SCM legislation, regulations, policies, guidelines, practice notes, directives, and circulars. Secondly, the integrity of SCM practitioners must never be compromised and the highest level of professional competence must be maintained, On 24 October 2010, National Treasury issued a Circular which re-affimmed the provisions of section 38(1)(g) of the PFMA and re- affirmed the requirements of the PFMA as to what constitutes irregular expenditure and the requirement to report irregular expenditure. —13.11. SCM Policy of the NDOH 13.11.1, The NDOH issued a “Policy and Delegations on Procurement for National Department of Health” which was approved by the Director-General on 19 November 2012 ("NDOH SCM Policy”). 13.11.2. A copy of the Policy was provided to the SIU by Mr. Sifiso Dlamini, the Deputy Direttor: Demand and Acquisition of the NDOH since 4 May 2015. 13.11.3, The policy is applicable to the purchases of goods, services, consultancies, specialised equipment etc. by the NDOH. 13.1.4, The Policy instructs SCM officials as follows regarding budgeting and the compulsory use of bidding procedures: 6.1 Budgeting and avaliability of funds * As far as possible, make an accurate estimate of what the goods and or service in ‘total will cost. © Determine if funds are available before calling for bids or quotations, * Procurement or bid procedures must still be followed even if: © specific expenditures were budgeted for; © it was included in operations! plans: © Inssuations were fecalved ffom the Minister and or Director-General or ary ther ofl in the Department and the Director-General end or Deputy Director-General granted approval under ‘any other Departmental Financial Delegation. Before an employee commits the Department, for the procurement of any goods and or services: ‘+ itmust be confirmed, that funds are avaitable; and ‘= _ an order number must be obtained from Logistical Management. if not, such an employee will face disciplinary stops in terme of section 38(1)(h) of the Public Finance Management Act (PFMA) snd ean be held personally lable, tor ‘such expenditure, ‘SUMMARY OF FACTS AND FINDINGS Digital Vibes’ contract with MISA 14. During the course of its investigation, the SIU ascertained that Digital Vibes signed an Agreement with the Municipal Infrastructure Support Agent ("MISA") on —16. 17. 18. 14 August 2018 for an amount of R 3 947 000, MISA is an agency of the Department of CoGTA (Exhibit 1). The MISA Contract commencement date was 20 July 2018, irrespective of when the contract had been signed. The end date was 19 July 2019. The services to be provided by Digital Vibes entailed developing the MISA Communications strategy and implementation plan, Design and development of the MISA branding and / or corporate identity and developing an effective framework for MISA communications and communications management (Exhibit 1 and Exhibit 2). ‘The MISA Contract was signed by Ms Hariram, the director of Digital Vibes (Exhibit 1). Ms Mather was Minister Mkhize’s private spokesperson during this period while he was the Minister of COGTA. On 10 May 2021, the SIU had an interview with Mr. Michael Bongumusa Zondi ("Mr. Zondi”) (Exhibit 3). According to Mr. Zondi: 18.1. Mr. Zondi stated that he was Minister Zweli Mkhize's spokesperson at COGTA for the period September 2018 to June 2019. 18.2. According to Mr. Zondi, as the Minister's spokesperson, his duties included the following: 18.2.1. _ Responding to media queries 18.2.2. Organising and hosting press conferences 18.2.3. Writing media statements 18.2.4. _ Scanning the media space for opportunities to positively profile the Minister and therefore the department. 18.3, Mr. Zondi stated that (Exhibit 3): “As soon as I took up my post | noticed that the Minister already had a spokesperson working with him. This person was known as Thaheera Mether. | was informed by fellow colleagues that this person was contracted to do social media services at MISA, a subsidiary of COGTA. | found it strange as ! was employed to be the Minister's; >,‘spokesperson and Thaheera was contracted to do work at MISA, but was however acting as the Minister's spokesperson. | am not aware of which company Thaheera is associated with, | already, from the onset found myself in a very confficted situation but nonetheless performed my duties for which I was employed to do.” 18.4. In addition to the above, Mr. Zondi stated that (Exhibit 3): “The members of the SIU further asked me if | know of an individual by the name of Popo Maja. | replied yes that | know of him as the heed of communications at the National Department of Health. As we both work in communications space, we have met on several occasions. 1 also informed the members of the SIU that when the Minister Zweli Mkhize was elected as the Minister of Health, | contacted Mr. Maja and briefed him as to how the Minister likes his affairs to be handled and also gave him the names of the people that are closely associated with the Minister, for eg, Thaheera Mather{sic) and Nadheera Mithajsic). The members of the SIU asked me if | supplied the name of Digital Vibes to ‘Mr Maja and | replied that, at no stage did | ever give him the name of Digital Vibes as a service provider of COGTA.” The NHI media campaign 19, According to the whistle-blower’s evidence (Exhibit 6): 19.1. The former Director-General, (Ms. Precious Matsoso) ("Ms. Matsoso”) and the Deputy-Director General (Dr. Thamizhanban (known as Anban) Pillay) (‘Dr. Pillay”) informed the SCM department of NDOH that the NHI Bill had been approved by cabinet and that SCM had to procure the services of a supplier who would be able to communicate the NHI to the public. 19.2. For the communication strategy, the whistleblower: was requested not to ‘appoint any service provider but was provided the name of an individual, namely Ms. Tahera Mather. This name was provided via an email from Dr Pillay and Ms. Matsoso. 19.3. According to the whistleblower this attempt was not successful, because the ‘SCM Division of the NDOH informed them that an individual could not be19.4. 19.5. 19.6. 19.7. 19.8. 19.9. 19.10. appointed for the required communication campaign, and that a service provider had to be appointed by means of a compliant SCM process. Allegedly, the NDOH: then irregularly and unlawfully proceeded to appoint Digital Vibes, who then appointed Ms. Mather and Ms. Mitha as contractors/consultants, The whistleblower alleged that Ms. Mather was the long-time Personal ‘Spokesperson and/or acquaintance of the Minister. Ms. Mather is also a personal and close friend of the Minister's son. ‘The whistleblower informed Ms. Dikeledi Tshabalala (‘Ms. Tshabalala”) that @ person cannot be appointed to carry out the delivery of the communication ‘strategy of the NHI but that a service provider would have to be appointed, Dr. Pillay then provided the SCM with the name of a company based in Soweto. However, the service provider was on the CSD system listed as a general supplier company whose mandate did not include communications, ‘Therefore, this service provider could not be appointed for the communication ‘strategy of the NHI. ‘Thereafter, Dr. Pillay provided the name of a company called Digital Vibes to the SCM. According to the whistleblower, ‘it was expected that this company must be appointed”. On 15 July 2019, the Minister of Health sent the following WhatsApp message to the Director-General (Ms. MP Matsoso). Ms. Matsoso then forwarded the WhatsApp message to Dr. Pillay, who forwarded it to the whistleblower: “HiDG Kindly sort out contractual arrangement Please ask for preliminary NHI implementation plan and draft communication plan by Friday from each individual as discussed” f£20. 21. 19.11, The whistleblower stated the following: “Digital Vibes was then identified as a proposed service provider and Taheere[sic] remained as @ consultant to work with Digital Vibes”. ‘The documents obtained by the SIU establish that the NDOH did attempt to appoint a contractor for the NDOH as a communication expert at a rate of R800 per hour: 20.1. On 12 July 2019, the NDOH sent a deviation request to Dr. Pillay (Exhibit 4) reading as follows: ‘Deviation from Normal Procurement Processes: NHI Bill Communication Strategy "8, The National Department of Health will be required to prepare this plan within a very short time frame and hence the Minister will require @ person with the appropriate skills to immediately start working on this matter. 16. Hourly rate of R800 excluding Disbursements, on a contract term of 12 months" 20.2. The deviation request was compiled by Dr. Pillay (at the top of the document, ‘the following is reflected “Enquiries: Dr. A. Pillay’) (Exhibit 4). 20.3. This deviation request was signed as proof of recommendation by Dr Pillay (Deputy Director-General), Ms. Tshabalala (Chief Director/Cluster Manager: ‘Supply Chain and Asset Management) and Mr. lan van der Merwe (CFO). The deviation request was approved by Ms. Matsoso (former Director- General) (Exhibit 4). According to the whistleblower, Ms. Tshabalala was then informed that an individual cannot be appointed for this communication and that a service provider had to be engaged (Exhibit 6). ‘On 12 July 2019 the same day, Ms. M.P, Matsoso sent a letter to Ms, Basani Dulker of National Treasury, requesting the following (Exhibit 6): "Requesting Approval for Deviation from Normal Bidding Process in Accordance with Section 8.5 of National Treasury SCM Instruction Note 3 of 2016/17 - Digital Vibes”,23. The SIU interviewed Dr. Pillay on 10 March 2021 (Exhibit 6.1). During the interview, the SIU asked Dr. Pillay, how he got to know Digital Vibes and his response was as follows: “Ido not recall the exact detail of how | leamt about them. | do recall Mr Maja (Head of ‘NDOH communications) talking about them in the context of identifying a communications team to support NHI communications”. 24, The SIU interviewed Mr. Maja on 13 April 2021 (Exhibit 6. 24.1. Mr. Maja confirmed that he was the Head of Communication and Stakeholder Engagement at the NDOH (Exhibit 6.2). 24.2, According to Mr. Maja, after the national elections of May 2019 and the subsequent appointment of the new Cabinet, the 6 Administration prioritised the implementation of the NHI as part of the World Health Organisation that led a universal health coverage global movement. The NHI Bill was then just approved by Cabinet to undergo the necessary parliamentary processes (Exhibit 6.2). 24.3. Mr. Maja stated that the NDOH had to embark on a “rigorous mass communication campaign to educate the public on the benefits of NHI" (Exhibit 6.2). 24.4. According to Mr. Maja, the NDOH did not have the necessary resources and capacity to implement the NHI communication strategy (Exhibit 6.2). 24.5. Mr. Maja stated that somewhere between October and November 2019 (Exhibit 6.2): “called a fellow communicator at Cogta by the name of Musa Zondl, The purpose of my call was to check with him if his Department has an existing tender that the National Department of Health could participate so that | could prepare a ‘submission to our DG to request participation on it. Musa informed me that the two tenders, which “apparently had expired” were not directly Cogta but with Municipality Infrastructure Agency (MISA) which reports to Cogta. In my mind, @ communication agency that had done worked for Cogta will be better laced to understand the communication needs and style of my new politic Principal. Hence the desire to want to enlist their services. ifAfter my desktop research, | recommended Digital Vibes to the former DG (Ms Precious Matsoso) and Dr Anben Pillay (Deputy. Director General responsible for the entire NHI process) during an informal meeting at out{sic] Partiamentary Offices in Cape Town. | do not recall the date of this informal meeting and | did not ‘880 the need to keep record of meeting.” 24.6. The SIU interviewed Mr. Musa Zondi on 6 May 2021. However, Mr. Zondi stated the following (Exhibit 3): “The members of the SIU asked me if | supplied the name of Digital Vibes to Mr Maja and | replied that; at no stage did | ever give him the name of Digital Vibes as a service provider of COGTA.” Interactions with Treasury attempting to appoint Digital Vibes 25. On 26 July 2019, Mr. Sizwe Majavu sent a letter to Ms. Rose Mahiaule, requesting ‘approval from the National Treasury for the following (Exhibit 7): “Requesting approval for Deviation from Normal Bidding Process in Accordance with ‘Section 8.5 of NT SCM Instruction note 3 of 2016/2017 - Digital Vibes (Pty) Ltd” for R133 million’. 26. The following reasons were provided for the deviation (Exhibit 7): 26.1. The NHI Bill has been finalised and. submitted to Parliament by Cabinet. ‘Therefore, the communication campaign should start with immediate effect. 26.2. Also, as result of the negative publicity because of a leaked letter that stated that the NHI Bill changed and the draft report of PwC that leaked to the media. 26.3. The NDOH department currently do not have the capacity to deal with the issue. 26.4. Digital Vibes has the capacity and has a team with extensive experience. 27. On 30 July 2019, Mr. Willie Mathebula (“Mr. Mathebula’) of National Treasury, sent a letter to Ms. MP Matsoso stating the following (Exhibit 8):