Here’s how the Digital Vibes contract contravened SA’s Public Finance Management Act
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Johannesburg - An internal investigation has found the Department of Health’s R150 million payment to Digital Vibes irregular and in contravention of the Public Finance Management Act (PFMA).
Health Minister Dr Zweli Mkhize briefed the media on Wednesday morning following calls for him to step aside over an R150m contract awarded to his associates.
The Daily Maverick had reported that associates including Tahera Mather, Mkhize’s former assistant, and his former spokesperson, Naadhira Mitha, had involvement in a company called Digital Vibes.
Digital Vibes was awarded a R150m contract for communications work. The deal had initially focused on the NHI but was expanded last year to include Covid-19 communication work for the Department of Health.
Digital Vibes is accused of inflating pricing and doing work that the department could conduct internally.
Mkhize said he was not surprised by the outrage that followed media reports on this deal. He said the department had grown concerned over the contract and initiated an internal investigation in January. The investigation, conducted by an external tax firm, has been concluded.
A summary of its findings included that “the tender and the bidding process followed were a contravention of the Public Finance Management Act”.
It also found that the process of appointing Digital Vibes was irregular because of inconsistencies in the bidding committee and lack of disclosure over conflict of interest.
“The investigators have found that an amount of some R37m paid to Digital Vibes constitutes fruitless and wasteful expenditure,” Mkhize said.
In relation to Covid-19 work, investigators found that Digital Vibes received instructions for work from the department before the contract had been expanded to include Covid-19 communication.
The investigators also found that any money paid to Digital Vibes for work done before the expansion of the contract to include Covid-19, was wasteful expenditure and in contravention of Treasury regulations.
“The appointment of Digital Vibes was irregular and the total of R150m that was paid Digital Vibes during the period of January 2020 and January 2021 was irregular expenditure,” Mkhize said.
He said the process of “consequence management” was under way as well as taking disciplinary steps against anyone involved in the awarding of the contract.
Mkhize said a legal process is under way to recover the funds which were illegally paid. He said whether there was any corruption involved in the payment of funds is yet to be determined as an investigation of money flows was under way.
The Special Investigations Unit is also probing the same contract.
Mkhize confirmed that he had submitted the report to President Cyril Ramaphosa on Tuesday.
He said because he is co-operating with the SIU and there was no interference, he did not see the need to step aside.