The Special Investigating Unit (SIU) welcomes the judgment of the Supreme Court of Appeal (SCA), which has dismissed an application by Caledon River Properties (Pty) Ltd t/a Magwa Construction and Profteam CC to reconsider the refusal of special leave to appeal. This was the contractors’ bid to retain profits earned from the unlawful R40 million contracts for the construction of a 40 km mesh border fence at Beitbridge between South Africa and Zimbabwe during the COVID-19 National State of Disaster.
The SCA confirmed that the contracts were constitutionally invalid due to procurement irregularities and upheld the principle that no party should profit from unlawful conduct. The Court ruled that the contractors are entitled only to reimbursement of reasonable and proven expenses, subject to a debatement of accounts, and not to retain profits derived from the irregular contracts.
This judgment reinforces the SIU’s mandate to ensure consequence management and accountability in public procurement. It vindicates the rule of law and protects public funds from unjust enrichment. The SIU welcomes the Court’s emphasis that justice and equity require denying profit where contractors were active participants in irregular processes.
In March 2020, during the COVID-19 National State of Disaster, the National Department of Public Works and Infrastructure awarded contracts worth approximately R40.4 million to Caledon River Properties (Pty) Ltd t/a Magwa Construction and Profteam CC for the construction of a 40 km razormesh border fence at Beitbridge, between South Africa and Zimbabwe.
The contracts were awarded without a competitive bidding process, in violation of section 217 of the Constitution and Treasury Regulations. The contractors received large advance payments of approximately R21,8 million before any substantial work was performed. Soon after completion, the fence began to fall apart.
In July 2020, President Cyril Ramaphosa authorised the SIU, through Proclamation R.23 of 2020, to investigate COVID-19 procurement. The SIU’s investigation revealed procurement irregularities and led to proceedings before the Special Tribunal.
- Special Tribunal (March 2022): Declared the contracts invalid and ordered the contractors to be stripped of profits, limiting recovery to reasonable and proven expenses.
- High Court (December 2023): Dismissed the contractors’ appeal and confirmed the Tribunal’s order, requiring audited statements and debatement of accounts.
- Supreme Court of Appeal (April 2024): Refused special leave to appeal, finding no prospects of success.
- Supreme Court of Appeal (January 2026): Dismissed the reconsideration application under section 17(2)(f) of the Superior Courts Act, closing the door on any further appeal at the SCA.
The Supreme Court of Appeal upheld the High Court’s order and conditions, which are:
- The application is dismissed with costs.
- The service providers must, within 30 days, file audited statements and a debatement of accounts reflecting their respective income and expenditure in the contracts.
- The SIU and public works department are ordered to appoint, within 30 days thereafter, qualified expert(s) to compile a report as to the reasonableness of the service providers’ expenses and file papers.
- The service providers are ordered to pay the public works department, within 30 days, the profit earned from the contracts as agreed by the experts and made by the order of the Tribunal.
The SIU welcomes the Supreme Court of Appeal’s order, which enforces the implementation of the SIU’s investigation outcomes and consequence management to recover financial losses suffered by the State due to negligence or corruption.
Enquiries:
Kaizer Kganyago
Spokesperson: Special Investigating Unit
082 306 8888
KKganyago@siu.org.za