The Special Investigating Unit (SIU) welcomes the judgment handed down by the Special Tribunal, which declared the R646 million contract awarded to AECOM SA (Pty) Ltd for the emergency upgrading of the Thukela–Goedertrouw Transfer Scheme in KwaZulu-Natal, constitutionally invalid, reviewed and set aside. The scheme, by the Department of Water and Sanitation, was meant to prevent the Richards Bay area from running out of water. The project had initially been budgeted at R407 million, but the contract value was inflated to R646.5 million, resulting in irregular expenditure and losses to the State.
The Tribunal found that the procurement process leading to the award of this contract contravened Section 217 of the Constitution, which requires that all government procurement be conducted in a manner that is fair, equitable, transparent, competitive, and cost-effective.
The judgment noted that AECOM was not formally invited to participate in the closed tender process but was irregularly included and ultimately appointed. The Bid Adjudication Committee did not support the recommendation to appoint AECOM, but the Acting Director-General proceeded with the award regardless. This resulted in irregular expenditure exceeding R357 million and losses totalling R429 million.
Wrongdoing of Officials
The SIU investigation and the Department’s Risk Management Committee found that senior officials failed to discharge their legislative responsibilities:
- The Acting Director-General, Mr Sfiso Mkhize, approved the appointment of AECOM despite clear procedural irregularities and without proper adjudication.
- Ms Zandile Makhathini, then Chief Director: Supply Chain Management, bypassed the competitive bid system and submitted the request for approval directly to the Acting Director-General.
- Mr Mpho Mofokeng, Chief Financial Officer, signed off on submissions despite being aware of irregularities in the process.
- The Chief Director: Strategic Asset Management and the Chief Financial Officer failed to implement controls to prevent irregular expenditure, in contravention of Section 45 of the Public Finance Management Act.
These failures directly contributed to unlawful procurement, irregular expenditure, and the undermining of constitutional procurement principles.
The Tribunal ordered AECOM to, within 30 days, provide audited financial statements, invoices, and supporting documents relating to the R646 million contract. While the SIU must, within 60 days, determine the profits earned by AECOM and inform the company of the amount to be repaid. AECOM must repay the determined profits to the SIU, failing which the matter may be reenrolled before the Tribunal for determination. The Tribunal ordered AECOM to pay the SIU’s legal costs, including the costs of two counsel. The Tribunal reserved jurisdiction to make further orders necessary to ensure recovery and compliance.
The SIU is empowered by Proclamation R.28 of 2019, authorising the SIU to investigate allegations of maladministration and irregularities in the Department of Water and Sanitation, specifically relating to the emergency upgrading of the Thukela–Goedertrouw Transfer Scheme and to recover losses suffered by the State.
The SIU remains committed to protecting public resources, advancing clean governance, and reinforcing constitutional values in the management of state contracts. The Tribunal’s ruling strengthens the principle of legality in public procurement and ensures that wrongdoing by officials and service providers does not go unchecked.
The SIU is empowered to institute a civil action in the High Court or a Special Tribunal in its name to correct any wrongdoing uncovered during investigations into acts of corruption, fraud, or maladministration. In line with the Special Investigating Units and Special Tribunals Act 74 of 1996, the SIU will refer any evidence pointing to criminal conduct it uncovers to the National Prosecuting Authority (NPA) for further action.
Enquiries:
Kaizer Kganyago
Spokesperson: Special Investigating Unit
082 306 8888
KKganyago@siu.org.za