Lotto operator Ithuba embroiled in Mkhize family’s Digital Vibes ‘money laundering scheme’
Lotto operator Ithuba’s televised donation of Covid-19 face masks to health officials and police officers in 2020 is at the heart of an alleged money laundering scheme involving Digital Vibes, former health minister Zweli Mkhize and his son, Dedani. Scorpio’s latest investigation unmasks the alleged plot.
A May 2020 donation of 100,000 face masks by Ithuba Holdings, operator of South Africa’s national lottery, to the department of health (DoH) and the South African Police Service (SAPS) is at the heart of an alleged money laundering scheme involving DoH contractor Digital Vibes.
Entities controlled by Mkhize’s associates pocketed millions of rands on the back of the DoH’s R150-million Digital Vibes contract and Ithuba’s donation.
Some of the funds were allegedly laundered to companies owned by Mkhize’s son, Dedani.
Scorpio’s latest investigation is supported by bank records, text messages and other documents.
Ithuba has strongly denied any wrongdoing.
However, the company refused to answer several of our queries relating to the company’s role in the alleged scheme.
On 7 May 2020, Mkhize, then deputy health minister Joe Phaahla and police minister Bheki Cele, among others, attended a televised event at Ithuba’s offices in Sandton, Johannesburg.
Seth Phalatse, Ithuba’s chairperson, announced that the company was donating 100,000 reusable cloth masks with SAPS and DoH emblems to assist in the government’s battle against Covid-19.
Cele and Mkhize both thanked Ithuba for its generosity.
On the surface, there was no reason to suspect that this was anything other than a charitable gesture from a well-known company.
However, by the time the handover ceremony took place, Dedani Mkhize had already pocketed money linked to the donation and the DoH’s Digital Vibes deal, as our investigation demonstrates.
A ‘scheme’ unmasked
The alleged scheme, as far as we could establish, kicked off roughly one month before the media event at Ithuba’s offices.
On 6 April 2020, Dr Anban Pillay sent a WhatsApp message to businesswoman Melany Viljoen, founder of Tammy Taylor South Africa.
At the time, Pillay was the DoH’s acting director-general.
Tammy Taylor is better known for its chain of upmarket nail salons, but Pillay had heard that Viljoen’s business could also source face masks.
“Can you advise on your prices for a basic mask,” Pillay had texted Viljoen.
In another text message, sent on 8 April, Pillay asked Viljoen to email him a formal quote.
This appears to have been Pillay’s final contribution to the alleged plot, at least as far as we could establish.
After Tammy Taylor South Africa had sent the quote to Pillay, they didn’t hear back from him.
Instead, the company was contacted by Tahera Mather, then minister Mkhize’s long-time associate and one of the masterminds behind the Digital Vibes deal.
Scorpio has seen some of the emails from Mather.
She told Tammy Taylor that Digital Vibes intended to order masks on behalf of the DoH, and she subsequently accepted a quote of R5,175,000 for 100,000 masks.
On 23 April, Viljoen’s company emailed an invoice to Mather, made out to Digital Vibes.
The invoice came at an ideal time.
The previous week, Digital Vibes had received nearly R8-million from the DoH, so it had plenty of cash at its disposal.
One day after it got the invoice, Digital Vibes transferred R1-million to Tammy Taylor South Africa.
Further payments followed on 28 April (R2.4-million) and on 12 May (R1.775-million).
After the last of the three payments, Tammy Taylor’s bill of R5.175-million had therefore been settled in full.
To all intents and purposes, Digital Vibes was now the owner of the 100,000 masks. The items were paid for by Digital Vibes, using monies that had come from the DoH.
So how did Ithuba end up donating these very masks to the DoH and the SAPS?
Sleight of hand
In the days before the handover ceremony at Ithuba’s offices, the masks were delivered to the health minister’s official residence in Waterkloof Ridge in Pretoria.
This is confirmed by a delivery note with the precise address, signed by Mkhize’s then domestic worker.
The domestic worker has also deposed to an affidavit regarding the delivery.
The affidavit is among the Special Investigating Unit’s (SIU) filings at the Special Tribunal, where it is seeking to recover the monies paid to Digital Vibes.
“On the 4 May 2020 [sic], around noon, a delivery arrived at the premises. I went to check and I was greeted by two Indian females who informed me that they have a delivery of masks, for Minister Mkhize,” she stated.
According to the delivery note, the final batch of masks was delivered to Mkhize’s ministerial residence on the day before the handover ceremony at Ithuba’s offices.
It is not clear whether the masks were distributed to DoH officials and SAPS members from the ministerial residence.
We also don’t know whether Ithuba at any point actually had the masks in its possession.
What we do know, however, is that Ithuba forked out R5.9-million for the masks — R725,000 more than what Digital Vibes had paid Tammy Taylor South Africa.
This is according to one of the few specific details Ithuba was willing to divulge.
But the company didn’t buy the masks from Digital Vibes.
The lotto operator told us it had bought the items from a company called Spin Wizards Communications Advertising and Digital Media.
In other words, there was a double payment: first, Digital Vibes, using DoH money, paid the supplier, Tammy Taylor.
Then, shortly before the handover ceremony, Ithuba paid Spin Wizards.
The effect of this curious arrangement was that Spin Wizards pocketed nearly R6-million without having to pay anyone for the masks.
In other words, the money Spin Wizards received was pure, 100% profit.
This dubious boon was made possible by two things:
First, Digital Vibes had to use some of its own revenues from the DoH contract to purchase the masks from the actual supplier, Tammy Taylor.
Second, for the intended donation, Ithuba had to buy the masks specifically from Spin Wizards.
In a sense, Ithuba was reimbursing Spin Wizards for masks that Digital Vibes had bought with DoH funds.
We first became suspicious about these dealings in March 2021 and wondered how exactly Ithuba had stumbled upon Spin Wizards as its chosen supplier.
The entity’s profile raised numerous red flags:
Spin Wizards’ director, one Mavis Ndlovu, couldn’t be reached by phone, and she never responded to text messages.
The company also didn’t have business premises, a website or a presence on any social media platform advertising its masks or other products.
Ithuba didn’t share our concerns.
“Not having a company website or online presence is by no means a key criteria (sic) that we would see as a disqualifying factor for us not to support a business,” Nomakhosi Mbatha, Ithuba’s spokesperson, said in an email in April 2021.
Ithuba emphasised that it was in no way involved in any suspicious or corrupt transactions.
But the company remained tight-lipped about how exactly it had identified Spin Wizards as a supplier.
We asked for specific details.
But apart from sending us the amount it had paid Spin Wizards, Ithuba would only make broad comments regarding its interactions with suppliers.
“We would like to confirm that we have strict processes in place when appointing new suppliers,” the company wrote in a letter in August 2021.
And: “In this instance, this specific supplier met all our vetting and accreditation requirements and was appointed as the supplier…”
According to Ithuba, the reason it couldn’t provide specific details pertaining to its dealings with Spin Wizards was this: “We respect the privacy and confidentiality of information of all our suppliers and therefore we are not at liberty to share supplier-related information.”
In the face of this reticence, we’ll have to keep wondering exactly how Ithuba stumbled upon its obscure supplier.
Did someone prompt the company to buy the masks from Spin Wizards?
Someone from Digital Vibes, perhaps, or even Dr Zweli Mkhize?
And, if this were the case, why would Ithuba agree to effectively funnel money to Spin Wizards by means of the masks deal?
Spin Wizards linked to Digital Vibes
As it turned out, we had every right to be suspicious about Spin Wizards.
In August 2021, we obtained crucial information proving that Spin Wizards was no ordinary supplier.
Spin Wizards was, in fact, intimately linked to Mateta Projects, one of the entities involved in the Digital Vibes saga.
We have previously revealed how Mateta Projects funnelled bits of the Digital Vibes loot to the Mkhize family.
What we subsequently learnt was this: On several occasions throughout 2020, Mateta had paid a small salary to Mavis Ndlovu, Spin Wizards’ sole director.
This gave us good reason to suspect that Ndlovu wasn’t really the hand that was controlling Spin Wizards.
Instead, it seemed likely that Spin Wizards was a front entity that had been set up to funnel funds to the main role players involved in the Digital Vibes affair.
As we’ll see, this is exactly what had happened.
We asked Ithuba if it knew that its mask supplier was linked to Mateta Projects or to the latter’s director, Mdu Mthethwa.
We also wondered if Ithuba had perhaps been in contact with Mthethwa regarding the mask deal, or with anyone else associated with Digital Vibes.
“With regards to our verification process at Ithuba we can confirm that we have no link nor can we associate Mr Mdu Mthethwa to the service provider,” the company responded.
New financial records
On Ithuba’s version of events, Spin Wizards was just a random supplier of masks.
It claimed it was not aware of the entity’s links to individuals associated with Digital Vibes, and it certainly didn’t willingly partake in any dubious scheme.
However, Ithuba cannot deny the startling flow of funds we eventually managed to piece together, partly thanks to additional financial records the SIU obtained.
These records, also filed at the Special Tribunal, helped to reveal the following:
Of the nearly R6-million Ithuba had paid Spin Wizards, almost R5-million was funnelled to one of Tahera Mather’s entities, Composit Trade and Investments, and to Mthethwa’s Mateta Projects.
Crucially, Composit Trade and Investments and Mateta Projects then forwarded chunks of this money to entities owned by Dedani Mkhize.
The timing and sequence of these transactions are highly suspicious.
It seems all but certain that Ithuba’s mask supplier, Spin Wizards, was indeed nothing but a conduit for monies forwarded to other front entities involved in the Digital Vibes affair.
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Follow the mask money
The R5.9-million from Ithuba showed up in Spin Wizards’ account on 25 April 2020.
Spin Wizards immediately started moving some of this money to Mather’s Composit Trade and Investments, the financial records confirmed.
Between 25 April and 13 May, a period of roughly two weeks, Spin Wizards transferred R3.3-million to Composit.
This was done in a series of no less than 11 separate transactions.
Ranging between R100,000 and R800,000, the string of transfers had all the hallmarks of a classic “smurfing” operation.
In money laundering parlance, “smurfing” is the act of moving a large chunk of money from one account to another by means of several smaller transactions.
This is done to avoid the kind of attention one might attract by transferring, say, more than R1-million in one go.
Dedani Mkhize shared in these spoils almost right from the start.
By 2 May 2020, Spin Wizards had already transferred R1.2-million of the Ithuba cash to Mather’s Composit Trade and Investments.
On that day, after another R100,000 had landed in Composit’s account, the latter entity transferred R300,000 to All Out Trading, one of the companies owned by the former minister’s son.
Mateta ma Chance
Monies stemming from Ithuba’s payment to Spin Wizards flowed to Mthethwa’s company, Mateta Projects, in a similar fashion.
And, like Composit Trade and Investments, Mateta also made payments to companies owned by Dedani Mkhize.
In the roughly two weeks between 4 May and 15 May 2020, Spin Wizards “smurfed” nearly R1.5-million to Mateta Projects.
Two weeks after the last payment in this series of six transactions, Mateta Projects paid R105,000 to Tusokuhle Farming, Dedani Mkhize’s agriculture enterprise.
And in June 2020, Mateta, through several transactions, also transferred R370,000 to All Out Trading, Mkhize Jr’s other entity.
The payments to Dedani Mkhize’s entities were at least partly bankrolled with the funds Spin Wizards had forwarded to Mateta Projects.
During that timeframe, Mateta had also received large payments directly from Digital Vibes.
The Ithuba cash that Spin Wizards had transferred to Mateta had therefore been mixed with the monies Mateta got from Digital Vibes.
These co-mingled funds enabled Mateta to pay Mkhize’s entities.
Ithuba may plead innocence regarding its involvement in any deliberate scheme, but it can’t deny the fact that some of the proceeds from its deal with Spin Wizards found its way to the former health minister’s son.
Most of the individuals involved in these dealings ignored our attempts to get their input.
Mthethwa, Mateta’s owner, did not respond to our queries.
Neither did Dedani Mkhize.
We reached out to Dr Zweli Mkhize for comment, but he did not respond.
To the best of our knowledge, Mather has left South Africa. She did not respond to messages and could not be reached for comment.
Pillay read our queries regarding his role in the masks transaction, but he chose not to address them.
He said our questions needed to be directed at the DoH, seeing as he is an employee of the department.
In one of its statements, Ithuba said: “If there was anything to hide on our part, certainly, we would never have ventured into making a public event of it.”
Yet the company won’t tell us specifically how it identified Spin Wizards as a supplier.
One could understand why Ithuba might want to conceal that tidbit.
After all, its obscure supplier has been unmasked as a front, casting doubt over the legitimacy of Ithuba’s dealings with Spin Wizards.
Below are Ithuba’s full responses: DM