AGE OF ACCOUNTABILITY
Special Investigating Unit aims to recover R150m from alleged roleplayers in Digital Vibes scandal
In its main application, the SIU seeks to hold Digital Vibes, Tahera Mather, Naadira Mitha, the former health minister Zweli Mkhize and Welcome Mthethwa jointly and severally liable for the repayment of about R150m derived from unlawfully concluded transactions between the National Department of Health and Digital Vibes during the Covid-19 pandemic.
The Special Investigating Unit (SIU) seeks to hold those allegedly involved in the Digital Vibes scandal liable for unjustified enrichment. For receipt of proceeds from the impugned transactions, the SIU also seeks consequent orders against them for the payment of the money.
This was the gist of the SIU’s heads of argument before the Special Tribunal held at the Booysens Magistrates’ Court, Johannesburg. The tribunal heard arguments for a joinder application where the SIU sought to join All-Out Trading, Tusokuhle Farming, Sithokozile Khalipe Mkhize, Cedar Falls Properties 34 and Sirela Trading.
This means they would collectively join others in the main Digital Vibes review application, which seeks to review and set aside the R150-million contract between Digital Vibes and the Department of Health. In addition, the SIU wants to recover the funds linked to the contract.
In its investigation into the contract, which led to Health Minister Zwele Mkhize’s resignation, the SIU found the six companies received proceeds from Digital Vibes. This money was later paid over to companies linked to the Mkhize family.
The SIU investigations into the Digital Vibes scandal came after Daily Maverick’s Pieter-Louis Myburgh exposed a dodgy R150-million communications tender involving Mkhize.
Barry Roux SC, appearing for the SIU, contended that joining the respondents was necessary because six companies have a legal interest in the subject matter of the main application.
In its main application, the SIU seeks to hold Digital Vibes, Tahera Ahmed Saeed Mather, Naadira Mitha, the former health minister Zwelini Lawrence Mkhize and Welcome Mthethwa jointly and severally liable for the repayment of about R150-million derived from unlawfully concluded transactions between the National Department of Health and Digital Vibes during the Covid-19 pandemic (the impugned transactions).
Roux argued: “The joinder of the respondents is necessary because they have a legal interest in the subject matter of the main application. The SIU seeks to hold them liable in unjustified enrichment, alternatively on the basis of a just and equitable remedy in terms of section 172 (1)(b) of the Constitution for receipt of proceeds from the impugned transactions and seeks consequent orders against them for the payment of the money. These orders cannot be carried into effect unless they are joined as parties.”
On Sirela Trading joining the respondents, Roux pointed out, “In the case of Sirela Trading it is alleged that the bank account of the company was deliberately used to obscure that the source of funds received by the Mkhize family was Mateta Projects, which received them from Digital Vibes.
“The joining respondents have not disputed the basis for their joinder but have instead disputed the merits of the SIU’s case against them, saying that the SIU will not succeed because the payments they received have already been ‘repaid’ by someone else.”
Roux contended that the answering affidavit deposed by Protus Sokhela, a business associate of the Mkhize family, on behalf of Sirela Trading, supported rather than refuted the SIU’s case.
“Sokhela reveals that he is the source of the funds that were repaid and that these funds were effectively gratuitously advanced by him to Welcome Mthethwa to permit the payment.
“The SIU alleges that in these circumstances it can be inferred that the purpose of the payment was to close off further inquiry and investigation into the recipients of funds distributed by Mthethwa,” the SIU contended.
It is the joining respondents’ contention that the payments by Mateta Projects, a company controlled by Mthethwa, were legitimate and flowed from genuine business transactions.
They further contend that the money sought to be recovered from them by the SIU was “repaid” by Mthethwa and Mateta on 2 September 2021 in the amount of about R11.5-million.
“This amount was funded by Sokhela by way of a loan, but the respondents are unable to furnish a single document showing any of these business transactions took place.
“The probability is that Mr Sokhela had a material interest in closing off any further enquiry into recipients of monies paid by Mateta,” the SIU argued.
Sokhela and Zweli Mkhize’s wife, Dr May Mkhize, also do not dispute the fact that Sirela paid R1.88-million to the credit of Cedar Falls’ bond account with Ithala Bank immediately after receiving some R2.3-million from Mateta.
The SIU seeks recovery of the R1.88-million and thus Cedar Falls is a necessary interested party in the main application.
On the joining of Sithokozile Mkhize, the SIU contends he is a necessary and interested party in the main application. He alleges that he sold cattle to the value of R650,089 through Sokhela and that such payments were made directly to Adluli Projects for outfitting his wife’s salon.
He did not give any specific or documentary evidence to prove this transaction.
It is the SIU’s contention that the nature of the transactions suggests “that they at best support the money laundering scheme devised to hide the R150-million paid to Digital Vibes”.
Mthethwa paid back about R11.5-million to the SIU. It is the SIU’s position that they are entitled to recover the full R150-million from whoever is proved to have been unjustifiably enriched by such impugned funds.
“Evidence the SIU obtained suggests that the R11.5-million is derived from the R150-million of stolen funds. The payment to the SIU constitutes R10.6-million of the R150-million lost by the state as a consequence of the impugned transactions to which Mthethwa is co-perpetrator and jointly and severally liable,” the SIU argued.
It is against this backdrop that the SIU submitted that the joinder application should be granted.
Tusokuhle Farming and Sirela Trading, in their heads of argument, contend that the SIU’s application for the joinder fails because in order for the Condictio (a formal claim or action against a person originally for a certain sum of money) to operate there must be an element of turpitude (wicked behaviour or character) or unlawfulness.
Tusokuhle Farming and Sirela Trading argued that such turpitude takes the form of illegal agreements. Therefore the money paid to Tusokuhle and Sirela by Mateta is not recoverable by way of the Condictio.
“The SIU, with respect, is clearly over-zealous in its attempt to join Tusokhule and Sirela and to recover the money from them.”
Tusokuhle and Sirela contend “they have not been unjustly enriched as they were required to perform in terms of contracts and, it is alleged, did so; and there was no impoverishment of the Department of Health. The application to joinder should be dismissed with cost”, argued GD Harpur SC appearing for Tusokuhle and Sirela.
CJ Pammenter SC, appearing for Cedar Falls, represented Dr May Mkhize, as the sole director of Cedar Falls Properties. The SIU seeks the repayment by her and/or her company of R1,888,727.84 derived from the proceeds of unlawful activities.
“The answering affidavit of Dr May Mkhize on behalf of Cedar Falls constitutes a bare denial and she does not make out a proper defence which could plausibly justify dismissal of the joinder application against Cedar Falls.
“There is also no dispute that Cedar Falls is the beneficiary of a payment from Sirela Trading to Ithala Bank in payment of the debt of Cedar Falls’ bond account and that the source of the funds is the payments made by Mateta to Sirela,” her papers state.
Before the payment on 23 June 2020, the debit balance in the bond account was R10,566,835.28. After the payment, it was R8,678,107.44. The conclusions the SIU seeks to draw from these facts are that the transactions were intended to indirectly benefit May Mkhize.
Her legal representative contends: “It seems very likely that the SIU hopes to go on a fishing expedition and join Cedar Falls in the proceedings in the hope that from all the evidence led in the matter, something might come out which will indicate some sort of claim against Cedar Falls.”
Hence her submission that the joinder application be dismissed. Judgment has been reserved. DM
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