SAFLII Note: Certain personal/private details of parties or witnesses have been redacted from this
document in compliance with the law and SAFLII Policy
IN THE SPECIAL TRIBUNAL ESTABLISHED IN TERMS OF SECTION 2(1)
OF
THE SPECIAL INVESTIGATING UNITS AND
SPECIAL TRIBUNALS ACT 74 OF 1996
(REPUBLIC OF SOUTH AFRICA)
CASE NO: NM01/2024
In the matter between:
THE SPECIAL INVESTIGATING UNIT Applicant
and
NGAKA MODIRI MOLEMA DISTRICT MUNICIPALITY First Respondent
RENSH CC Second Respondent
RASHIDA CADER (ID NO: 70[...]) Third Respondent
(1) REPORTABLE: NO
(2) OF INTEREST TO OTHER JUDGES: YES
(3) REVISED: YES
31/03/2026
_______________ ____________
SIGNATURE DATE
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THEMAK CONSULTING CIVIL ENGINEERING
CONSULTANCY CK NO. 2007/137807/23 Fourth
Respondent
EDWIN ANDRIES HLAPI MAKOLA
(I.D. NO: 72[…] ) Fifth Respondent
Summary:
Administrative Law — Review — Jurisdiction — Undue Delay — Condonation —
Superannuation —Just and Equitable Relief —Interest of Justice .
JUDGMENT
MASHILE J
Introduction
[1] The Applicant (“the SIU”) seeks firstly, to review and set aside the decision of the
First Respondent (“the Municipality”) to award a tender to the Second Respondent
(“Rensh”) on 7 March 2020 for the provision of the services of wastewater treatment
works in the Ditsobotla Local Municipality and secondly, declare the resultant contract
concluded on 26 March 2020 by the Municipality and Rensh (“the Contract”) to be null
and void ab initio and constitutionally invalid. If the application succeeds, the SIU
requests this Tribunal to craft a just and equitable remedy as contemplated in Section
172(1)(b) of the Constitution of the Republic of South Africa (“the Constitution”).
[2] The review is sought on the basis of the principle of legality. I may at this juncture
indicate that I am mindful that Rensh and Cader, to which I will henceforth refer to
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jointly as the Respondents, deny that the Tribunal has jurisdiction to adjudicate reviews
based on the principle of legality. Perhaps it is appropriate to refer to paras 68, 69 and 70
of the Constitutional case of Ledla Structural Development (Pty) Ltd and Others v
Special Investigating Unit 1, where the following is stated concerning the power of the
Tribunal to decide reviews based on the principle of legality:
“[68] From the preamble and Section 4 of the SIU Act, the legislative intention was to
cast a wide net over the scope of the proceedings the Special Tribunal is empowered to
adjudicate upon. Therefore, a legality review is not excluded from the Special Tribunal's
jurisdiction, as there is no carve-out of its powers to adjudicate civil proceedings.
[69] In this regard, it is diametrically different to the Competition Tribunal to which
the carve-out in Section 62(2) of the Competition Act applies, as this Court has held in
Group Five. Accordingly, the Special Tribunal has the jurisdiction to adjudicate reviews
brought by the SIU and to grant an order setting aside an unlawful procurement
contract.
[70] In the result, I conclude that the Special Tribunal is not a court. However, it has
the power to adjudicate legality reviews.”
[3] The Municipality and the Fourth and Fifth Respondents ("Themak Consulting and
Makola"), respectively, are not opposing the application. However, the Respondents are
challenging it on several grounds, which I will outline later. Additionally, the
Respondents have raised two issues: the SIU bringing this review after an inordinate
delay and the late filing of the replying affidavit. As far as the first issue is concerned, the
SIU has incorporated a condonation application to the current but has not done so in
respect of the second.
1 Ledla Structural Development (Pty) Ltd and Others v Special Investigating Unit 2023 (2) SACR 1 (CC) at paras
68-70.
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[4] Other than the preliminary issues to which I have referred in the preceding
paragraph, the Respondents have raised the following:
4.1 The relief sought is non-suited as against the Respondents;
4.2 The administrative action sought to be reviewed is not a legality review;
4.3 The Tribunal does not have Jurisdiction in the review;
4.4 The SIU did not make out a case for a delictual claim;
4.5 The SIU failed to make a case for the piercing of the corporate veil;
4.6 Superannuation;
4.7 The poor way the matter has been presented has caused prejudice to the
Respondents, and it amounts to abuse of process;
4.8 Hearsay evidence is inadmissible;
4.9 Moot and conflated relief.
[5] Following an uproar concerning incidences of maladministration and corruption in
the procurement of, or contracting for goods, works and services such as constructions,
refurbishments, leasing occupations and use of immovable properties during the national
state of disaster, the President of the Republic of South Africa issued Proclamation
Number 23/2020 (“the Proclamation”) published in Government Gazette, No. 313 of 15
March 2020.
[6] The Proclamation empowered the SIU to investigate allegations made in respect of
all State Institutions which took place between 1 January 2020 and the date of publication
of the Proclamation or which took place before 1 January 2020 or after the date of the
publication of the Proclamation, but which are relevant to, connected with, incidental or
ancillary to the matters mentioned in a Schedule (“the Schedule”) attached to the
Proclamation, or which involve the same persons, entities or contracts investigat ed under
authority of the Proclamation.
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[7] Additionally, the SIU is authorised to exercise or perform all the functions and
powers given to it, including the recovery of any losses suffered by State Institutions or
the State, in relation to the said matters in the Schedule. The Schedule mimics the
Proclamation and elaborates on conduct or activities by the State i nstitutions that were
not fair, competitive, transparent, equitable or cost effective; contrary to legislation,
National Treasury’s manuals, practice notes, policies , guidelines, or tho se that were
facilitated or conducted through the improper or unlawful conduct of employees or
officials of the State Institutions or any other person or entity, to corruptly or unduly
benefit themselves or any other person fraudulently.
Factual Background
[8] Pursuant to the issu ance of the Proclamation, the SIU obtained information and
documentation from the Municipality, Rensh , Themak Consulting, and other relevant
witnesses to enable it to conduct its investigation. While this was happening, the Auditor
General of South Africa (“the AGSA”) was conducting her own investigation. She made
a referral to the SIU under the Public Audit Act, No. 25 of 2004 (“Public Audit Act”),
and the Material Irregularity Regulations (“the MI Regulations”).
[9] Analysis of the information obtained revealed, amongst others, that the
Municipality concluded the contract with the Respondents to provide services at four
water pump stations and to repair one wastewater treatment facility in the Ditsobotla
Local Municipality. The contract covered the Bies iesvlei/ Itekeng Pump Station, the
Blydeville Ext 1 Pump Station, the Blydeville Ext 3 Pump Station, and the Lichtenburg
Water Treatment Plant. It was further laid bare that the contract was entered into without
following the proper procurement processes as contemplated in S ection 217 of the
Constitution and the provisions of the Public Finance Management Act, 1 of 1999.
Constitution and the provisions of the Public Finance Management Act, 1 of 1999.
[10] In July 2020, the Standing Committee on Public Accounts (“SCOPA”) conducted
a site inspection in the Ditsobotla Local Municipality (“Ditsobotla”). Upon its site visit
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and inspection, SCOPA discovered that there was an amount of R93 000 000.00
earmarked to address water and treatment challenges during the COVID-19 pandemic.
The Municipality alleged that it had expended the funds on water infrastructure in
Ditsobotla and the district which falls within it. However, according to SCOPA, there
was nothing to show for it on the ground.
[11] After the SCOPA site inspection, there was a public outcry and widespread media
coverage of the estimated R93 000 000.00 the Municipality spent on water supply and
treatment during the COVID-19 Pandemic, but nothing translated into concrete action.
The SIU then investigated the procurement of repair and maintenance services for four
pump stations and one water treatment facility in Ditsobotla. The plumbing work at
Sawing Local Municipality’s Fire Station and water treatment material at the
Municipality were confirmed to be R49 012 638.12.
[12] Following the report of SCOPA and the public outcry, the investigation of the SIU
revealed the following:
12.1 On 19 November 2019 and 20 January 2020, Themak, a Consulting
Engineering Consultancy company, was appointed by the Municipality to
be on the panel as one of its consultants for professional engineering
services;
12.2 On 13 March 2019, Themak received its first appointment letter from the
Municipality’s Mr O A Losaba (“Mr Losaba”), the Municipal Manager or
Accounting Officer for project number NMMDM 17/18/14 PMU. On 15
March 2019, Themak accepted the appointment;
12.3 On 19 November 2019, Losaba appointed Themak on a project that did not
have a project number yet, for “professional services for the operation and
maintenance of bulk wastewater infrastructure for a period of 36 months.
Themak could therefore be used as and when required by the Municipality;
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12.4 The appointment letter above provides that: “This appointment is for
inception, concept and viability, design development, documentation and
procurement, contract administration, inspection and close-out engineering
stage of the above -mentioned project”. On 17 January 2020, Themak
accepted the second appointment;
12.5 It is common cause that these appointments by the Municipality took place
before the COVID-19 pandemic;
12.6 On 20 January 2020, Mr Mohamed Jafer Rasool (“Rasool”), the Technical
Director: Basic Services of the Municipality, instructed Themak to
commence with the assessment of four (4) critical pump stations and the
wastewater treatment plant in Ditsobotla. Themak was requested to produce
a Bill of Quantities (“BOQ”) in line with its assessment of the plants and
pump stations for repairs;
12.7 Themak complied with the above instruction, conducted the required
assessment, and produced the technical assessment report detailing the
work to be conducted as well as the amount to be paid for such work. The
BOQ amounted to R36 923 045.77;
12.8 Themak invoiced the Municipality for an amount of R3 882 665.37 for its
consulting services. The director of Themak, Mr Makola (“Makola”), who
is also the Fifth Respondent, has deposed to a declaration of facts to
confirm this.
[13] On 27 November 2019, the Municipality published a tender on e -Tender through
the Department of National Treasury under BID Number: NMMDM 19/20/15 PWBS
(A). The Bid Description read: Appointment of Service Provider for the Emergency
Refurbishment of Dysfunctional & Poor-Conditioned Pump Stations & Associated Works
in Biesiesvlei/Itekeng in Ditsobotla Local Municipality. On 5, 9 and 10 December 2019,
five service providers submitted their BOQs to the Municipality for the work to be
8
carried out in accordance with the tender requirements to repair and maintain water pump
stations and a wastewater treatment facility at Ditsobotla.
[14] It is not disputed that Rensh was not one of the five service providers that the
Municipality requested submit BOQS, and that this occurred even before the
Municipality instructed Themak to commence the consultancy work at Ditsobotla. One of
the five potential service providers, Mr Tafadzwa Kelvin Dzimbanhete of Diges Group
CC, who submitted a bid, was interviewed. His evidence is that, in December 2019, in
response to tenders advertised by the Municipality, his close corporation completed and
submitted the BOQ for the emergency refurbishment of four pump stations in the
Ditsobotla area and attended site inspections , but has never heard how the tender was
concluded or awarded.
[15] On 7 March 2020, Rasool of the technical department of the Municipality
telephonically contacted Cader, a director of Rensh , to provide a quotation for the repair
and maintenance on all facilities where Themak had already produced a BOQ in
Ditsobotla. In response, Rensh produced a quotation for an amount of R25 884 435.75. In
her affidavit, Cader states that she was telephonically contacted. There was neither a
written contract concluded with the Municipality nor was there a letter appointing Rensh.
[16] On 15 March 2020, the first case of COVID -19 in the Republic of South Africa
was identified. To ensure that the South African government responded appropriately to
the COVID-19 pandemic, on 17 March 2020, the President of the Republic of South
Africa declared a National State of Disaster . On 18 March 2020, the Minister in the
Department of Cooperative Governance and Traditional Affairs (“COGTA”) published
Regulations issued in terms of Section 27(2) of the Disaster Management Act, 2002 (Act
No. 57 of 2002 in the Government Gazette No 318, R egulations setting out Disaster
Management.
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[17] On 23 March 2020, Mr Rasool of the First Respondent prepared a memorandum
requesting that Rensh be appointed using Regulation 36 of the Supply Chain
Management to do urgent/emergency repairs at the four pump stations and one
wastewater treatment plant in Ditsobotla as per the BOQ prepared by Themak. The
deviation memorandum for an amount of R25 823 883.40 for these quoted projects was
recommended by the Chief Financial Officer, Mr SS Mphato (“Mphato”) and was
approved by Losaba.
[18] The memorandum is silent on why Rensh was a suitable service provider as
against the other five service providers who furnished their BOQs in compliance with
tender document number NMMDM 19/20/15 PWBS (A). In motivating for the deviation,
Rasool states that the COVID-19 pandemic was the overriding consideration for the
invocation of Regulation 36 . Still, he omits to touch on the reasons that persuaded the
Municipality to single out Rensh as a suitable contractor.
[19] The Municipality has consistently failed to provide the SIU investigators with a
copy of the contract concluded between it and Rensh for the services rendered by the
latter. That said, it produced a letter of appointment , albeit that this came after a
considerable exertion of pressure. The SIU alleges that Rasool would also not furnish any
specific reason for how Rensh was identified, appointed and paid as a service provider
above all the other five service providers.
[20] Rensh persists that its appointment was not irregular as it was in line with
Regulation 36 of the Supply Chain Management Policy of the Municipality that governs
the procurement of goods and services during an emergency such as was during the
National State of Disaster. The appointment of Rensh was not in accordance with the
BOQ prepared by Themak.
10
[21] On 26 March 2020, the Municipality gave Rensh a Purchase Order to commence
with the work of installing and repairing the pump stations and generators at the five
different sites. On 22 April 2020, Rensh completed work at the four (4) plants and one
wastewater treatment plant, after which it invited Themak to visit the sites to issue
completion certificates. Following the visit of Themak to the four different plants and one
wastewater treatment plant, it prepared the Project Close -up Report and the Completion
Certificates for the following:
21.1 Repairs of Beises’ve Wastewater Treatment Plant;
21.2 Repairs of Blydeville Extension 1 Wastewater Treatment Plant;
21.3 Repairs of Blydeville Extension 3 Wastewater Treatment Plant;
21.4 Repairs of Boikhutso Pump Station; and
21.5 Repairs of Lichtenburg Wastewater Treatment Plant.
[22] It is not disputed that paragraph 7.6 of the Project Closeout Report of Themak
states that all parties accepted the overall quality of the works, and that paragraph 8.3
reads that all substandard work was rectified as per the standards. Although the work was
not yet completed on 20 April 2020, Cader agrees having already prepared an invoice in
an amount of R25 884 435.75 in anticipation. On 8 May 2020, the Municipality paid
R25 884 435.75 into the Standard Bank Account of Rensh.
The Report of The AGSA
[23] In February 2024, the deponent to the founding affidavit deposed to a
supplementary affidavit necessitated by an MI referral made by the AGSA to the SIU
regarding the R25 884 435.75 amount paid to Rensh for the services rendered because of
the contract between the Municipality and Rensh. The AGSA holds the view that the
contract is not only irregular but that the entire transaction and process are fraudulent.
[24] The AGSA also found that prior to the declaration of the National State of Disaster
and subsequent appointment of Rensh , tenders were advertised and that the Municipality
11
had received approximately 17 BOGs from different entities. These tenders and BOQs
were already happening and well at an advanced stage for the tender known as Ditsobotla
Local Municipality emergency refurbishment: dysfunctional and poor conditions pump
stations and associated works. According to both the finding of the SIU and AGSA, the
procurement processes were mysteriously discarded and only to appoint Rensh later.
[25] The AGSA’S finding was also that the conclusion of the contract between the
Municipality and Rensh was not fair, equitable, transparent, competitive or cost effective,
and was contrary to the provisions of Section 217 of the Constitution and other
procurement prescripts. It is common cause that Rensh did not submit any tender
documents for any of the advertised bids, nor did it submit a BOQ to the Municipality.
[26] The appointment was aberrant, remarks the SIU, for how could the Regulation 36
deviation be requested so that it would be granted to the Second Respondent without it
having participated in any bidding process. It was even more peculiar and unlawful for
Rasool to request a Regulation 36 deviation in favour of Rensh in circumstances where it
was not in the running for any tender. The SIU concludes that the Municipality ditched a
legitimate procurement process in favour of using a deviation to appoint Rensh, which
did not submit a bid at all.
[27] Losaba and Mphato were only too happy to consent and approve the request
without raising concerns or questions. In doing this, the AGSA found, they simply,
illegally, unreasonably, unfairly, and unlawfully failed to execute the constitutional duties
entrusted upon them individually and collectively.
[28] On 7 July 2020, the AGSA sent a referral of a Material Irregularity (“MI”) for
further investigation in terms of the Public Audit Act to the SIU following her audit cycle
of 2020-21. According to the referral letter, the AGSA identified MI at the Municipality
of 2020-21. According to the referral letter, the AGSA identified MI at the Municipality
during this audit cycle, and she approved the referral of the MI to the SIU in terms of
12
Section 5(1A) of the Public Audit Act , read with Regulations 5 to 7 of the Material
Irregularity Regulations.
[29] The Memorandum of Understanding , read with the Service Level Memorandum
(“SLM”), duly signed between the AGSA and SIU, further refines the roles and
responsibilities of the respective parties when MI is referred for investigation. The SLM
outlines the terms of reference between the AGSA and SIU. In line with the requirements,
as set out in the Public Audit Act read with the Material Irregularity Regulations and also
regulated in terms of the Memorandum of Understanding read with the SLM, the SIU
must, on completion of the investigation, p rovide the AGSA with the outcome of an
investigation, subject to the conditions as set out in paragraph 18 of the SLM.
[30] The instances of MI as discovered by the AGSA were that Rasool of the
Municipality falsely and fraudulently stated that the National COVID-19 lockdown
constituted an ‘emergency ’ as provided for by Regulation 36(1)(a)(i) of the SCM
Regulations and alleged that the situation posed a number of health hazards and
unpleasant conditions for the communities of Ditsobotla Local Municipality. This could
not have been an appropriate basis for the invocation of Regulation 36 Deviation given
that on the 27 Novembe r 2019, the Municipality had already published a tender for the
provision of the same services.
[31] Besides, there were issues with the machines already and in any event, the
Municipality had already received several complaints from Ditsobotla Local Municipality
offices and surrounding communities regarding the sewage overflowing onto the main
roads and private gardens. These complaints were long standing having prompted the
Department of Water and Sanitation (“DWS”) to issue a directive to Ditsobotla Local
Municipality on the non -compliance concerning the sewage spillage. These could not
have been percei ved as creating an emergency as understood in Regulation 36 of the
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SCM. The variation and deviation were approved notwithstanding these manifestly
irregular and unlawful orders.
[32] Another instance of irregularity is that Rensh had to deliver and install four
100KV A, 8kW diesel generators, at a rate of R250 000 (excluding V AT). Each site was to
be provided with one such generator. The purpose of the generators was to assist in
maintaining the Wastewater Treatment Plants. In violation of the variation order approved
on 16 April 2020, Rensh procured and delivered 137 KV A diesel generators at a revised
amount of R550 000.00 (excluding V AT) for which it submitted an invoice and received
payment.
[33] In February 2021, the AGSA communicated this finding to Losaba of the
Municipality. His response was that the 100KV A generators were not available at the
time of procuring these generators and the Municipality opted for the 137 KV A with an
output of 100kw. That said, there is nothing from the Municipality, Rensh and Cader
supporting this answer prior to the AGSA’s finding and communication to Losaba, the
Accounting Officer.
[34] The ineluctable conclusion is that the bigger generators were simply acquired to
justify a higher amount paid therefor. This is the only conclusion that one can arrive at
given the statement of the owner of the shop where these generators were purchased.
[35] On 4 February 2021, the AGSA sent out her Communication of Findings to
Losaba, which she identified during the audit of the Financial Statements/the Annual
Performance Report/Compliance with Legislation of the Municipality for the year end ing
on 30 June 2020. In this Communication, the AGSA advised the Accounting Officer that,
on 10 December 2020 and 28 January 2021, she conducted site visits to verify the actual
work done against the payment certificates for various pump stations and a sewage
treatment plant forming part of the contract.
14
[36] The AGSA indicated that she observed during the visit that some items were
claimed on the payment certificate even though there was no indication that work had
been executed on site. Insofar as contingencies were concerned, she noted that the
payment certificate accommodated even those that had in fact been claimed on all the
sites. That said, there was no documentary proof of additional work done to support the
expenditure on the contingencies.
[37] The AGSA noted further that during the site visit, there was also no noticeable
additional scope of work performed on all sites. According to the AGSA, that no
additional scope of work was carried out on all the sites visited, was confirmed by the
municipal representatives and the contractor. The total amount for the contingencies
claimed and paid (including V AT) is R4 314 072.63.
[38] The AGSA referred these MI findings and recommendations to the management of
the Municipality for comment. The AGSA received the response of the management of
the Municipality on 15 September 2021. The Municipality did not accept responsibility
insofar as the response was inadequate or wrong and, in certain instances, misleading. On
17 August 2021, the AGSA upgraded some of her earlier financial -year findings to MI.
She then drew the attention of Losaba to the revision. In these MI findings, the AGSA
was concerned, amongst other things, with the changed specifications and the pricing of
the generators.
[39] In reaction to the MI letter of the AGSA dated 17 August 2021, on 15 September
2021 Losaba, stated that the Municipality had appointed external investigators to identify
the perpetrators in the incurring of the financial losses, irregular expenditure and for the
investigation outcomes to enable him as the Accounting Officer to determine how the
loss will be recovered and prevented in future on 23 September 2021, Losaba informed
the AGSA that the Municipality had appointed a panel of service providers t o conduct
15
investigation on the MI raised by the AGSA on 7 September 2021 and to that end,
attached Terms of Reference for the Investigators.
[40] Dissatisfied with Losaba’s response to the MI’s raised and the way he addressed
them, the AGSA wrote a formal notification to Losaba , wherein she advised that, due to
the lack of appropriate action to address the MI, she had escalated and referred the matter
to the Directorate for Priority Crime Investigation (“DPCI”). The AGSA later
reconsidered this referral, and on 29 May 2023, she formally notified Losaba that she was
referring it to the SIU. For some reason, the AGSA held back on this referral in favour of
affording the Municipality another opportunity to address her fully on the MIs.
[41] Thus, on 6 July 2023, the AGSA once again wrote a formal notification to Losaba,
giving him an extended deadline to address the MI by 31 January 2024. In this
notification, the AGSA put Losaba on terms and gave several guidelines and timeframes
to which she expected Losaba to adhere when addressing the MI with the hope that the
outcome would be different and satisfactory.
[42] In consequence of Losaba's objectionable response on 7 July 2023, the AGSA
once again wrote a formal referral letter to the SIU. The letter referred the MI to the SIU
for further investigations as envisaged in Section 5(1A) of the Public Audit Act, read with
the MI Regulations. Following the AGSA’S initial submission of her MI report to the
SIU, she made further adverse findings against the Municipality.
[43] These findings are that the Municipality unilaterally changed the specifications for
the required generators as per the BOQ of Themak on more than one occasion. The
Municipality did not record the changes or refer to the Bid Specification Committee or
Bid Adjudication Committee for review or approval. According to the 27 November 2019
tender, the required generators were supposed to be 50KV A. However, the payment
16
certificate issued to Rensh and the variation order recorded the generators required as
100KV A. Despite all this, the generators supplied by Rensh were 137KV A.
Issues
[44] To the extent that the Respondents have alleged that the delay in launching this
application was unreasonable, caused them prejudice, it is poorly explained, and that it
should not be excused, the application for condonation of the SIU must take precedence
over the other issues. This must be the first to attend because it could be dispositive of the
matter, depending, of course, on the outcome. Other issues that stand for adjudication are
the jurisdiction of this Tribunal and whether this application is a legality review.
[45] If the SIU succeeds in its condonation application, the starting point will be to
determine whether its award of the bid to Rensh and the subsequent conclusion of the
contract, flowing from the bid, contravened Section 217 of the Constitution and other
legal cannons governing the procurement processes of Organs of State. Central in this
regard will be the way the Municipality awarded the bid and concluded the contract. This
will place Regulation 36 of the SCM Policy of the Municipality into sharp focus.
Legal Framework
[46] Section 217 of the Constitution governs the procurement of goods and services by
Organs of State . Subs ection (1) provides that when Organs of State in the national,
provincial, or local sphere of government, or any other institution identified in national
legislation, contracts for goods or services, it must do so in accordance with a system
which is fair, equitable, transparent, competitive and cost -effective. The legal position is
that when Organs of State , like the Municipality, procure goods and s ervices, they are
enjoined, in terms of Subsection (1) of the Constitution, to act in the manner prescribed in
the Subsection.
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[47] Section 217(3) of the Constitution further provides that national legislation must
be enacted to provide a framework within which these constitutional imperatives may be
realised. Flowing from the aforesaid provision, the Legislature has enacted the
Preferential Procurement Policy Framework Act, 5 of 2000 (“the PPPFA”) whose
objectives are, among others, to give effect to Section 217 of the Constitution by
preferring certain categories of identified people in government procurement projects.
The preamble to the PP PFA aims “To give effect to s 217(3) of the Constitution by
providing a framework for the implementation of the procurement policy contemplated in
Section 217(2) of the Constitution.”
[48] In terms of Section 1 of the PPPFA, a Preferential Procurement Policy is one that
is contemplated in s 217(2) of the Constitution. Procurement policies of O rgans of S tate
must be compliant with Section 217 of the Constitution and must be implemented within
the framework prescribed by national legislation. The national legislation contemplated
in Subsection (3) of Section 217 is the PPPFA and should be read in conjunction with
Part 1 of Chapter 11 of the Local Government: Municipal Finance Management Act , 56
of 2003.
[49] In terms of Section 152(1) of the Constitution, the constitutional objectives of
local government are—
“(1) …
(a) to provide democratic and accountable government for local communities.
(b) to ensure the provision of services to communities in a sustainable manner.
(c) to promote social and economic development;
(d) to promote a safe and healthy environment; and
(e) to encourage the involvement of communities and community
organisations in the matters of local government.
(2) A municipality must strive, within its financial and administrative capacity, to
achieve the objects set out in Subsection (1).”
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[50] Section 217(2) of the Constitution acknowledges that a procurement system may
provide for categories of preference and for the advancement of categories of certain
groups of persons. Giving effect to Section 217(3) of the Constitution supra is the
PPPFA, which lays down that Organs of State must determine their preferential
procurement policies based on a points system.
[51] Among those is Section 2(1)(g), which provides that once bids have been scored in
terms of the PPPFA:
“2. Framework for implementation of preferential procurement policy—
(1) An organ of state must determine its preferential procurement policy and
implement it within the following framework:
(a) …
(g) any contract awarded on account of false information furnished by
the tenderer to in order to secure preference in terms of this Act,
may be cancelled at the sole discretion of the organ of state without
prejudice to any other remedies the organ of state may have.”
[52] The purpose of the SCM Manual is to give effect to the procurement policy
contemplated in Section 217(2) of the Constitution and as prescribed in the PPPFA. SCM
Policy 12.21 – Ngaka Modiri Molema District Municipality provides as follows:
“12.21. Deviation from, and ratification of minor breaches of procurement
processes—
(1) The Municipal Manager may:
(a) dispense with the official procurement processes
established by this policy and to procure any required
goods and/or services through any convenient process,
which may include direct negotiations, but only:
19
(i) in an emergency.
(ii) if such goods and/or services are produced or
available from a single provider.”
[53] Regulation 36 of the Municipal Supply Chain Management Regulations deals with
deviation from SCM, and it provides:
“(1) a supply chain management policy may allow the accounting officer-
(a) to dispense with the official procurement processes established by the
policy and to procure any required goods or services through any convenient
process, which may include direct negotiations, but only-
(i) in an emergency
…
(v) in any other exceptional case where it is impractical or impossible to
follow the official procurement processes; and
(b) to ratify any minor breaches of the procurement processes by an official or
committee acting in terms of delegated powers or duties which are purely of
a technical nature.”
[54] Regulation 16A.6.4 provides that if, in a specific case, it is impractical to invite
competitive bids, the Accounting Officer or accounting authority may procure the
required goods or services by other means, provided that the reasons for deviating from
inviting competitive bids must be recorded and approved by the Accounting Officer or
accounting authority. Considering the provisions of this Regulation, the Court in Chief
Executive Officer, South African Social Security Agency, and others v Cash Paymaster
Services (Pty)
2 held that a material requirement of regulation 16A.6.4 is that “there must
be rational reasons for the decision” not to comply with a Supply-Chain Policy.
2 Chief Executive Officer, South African Social Security Agency, and others v Cash Paymaster Services (Pty) Ltd
2012 (1) SA 216 (SCA) at para 21.
20
[55] In Department of Transport v Tasima (Pty) Ltd3, the Court stated that in a case of
an emergency or where there is only one supplier who can provide goods or services, the
regulation permits a deviation from inviting competitive bids in terms of a fair,
transparent and cost-effective tendering process. Explaining that the word ‘impractical’ is
context specific, the Court in Rain Chartered Accountant Incorporated v South African
Social Security Agency4 held that:
“To use the hackneyed but useful legal phrase, what is impractical must surely depend on
the circumstances of each case. In some instances, impracticality may manifest in
absolute impossibility to engage in a competitive bidding process. Below that there may
be a range of what constitutes impracticality. At the centre though must be the question
whether a competitive bidding process is well and sensibly suited for the circumstances.
A dictionary meaning of ‘ impractical’ is ‘not adapted for use or action; not sensible ’.
Ultimately what is impractical is a matter of a judgement call to be made by the organ
of state concerned. But what the organ of state may decide is not unbounded; it must be
informed by the operative word – ‘impractical’. And that is an objectively accessible
notion.”
[56] Instruction Note 3 of 2016, passed on 19 April 2016, gives guidance on measures
to prevent and counter abuse in supply chain management systems. It was extant and
applicable at the time the department procured goods and services from Thema k. It
provides for the registration, investigation, reporting, and remedying of complaints of
irregularities in S upply Chain Management. Paragraph 8 of Instruction Note 3 concerns
deviations from the normal bidding process. Paragraph 8.1 provides that an Accounting
Officer must not deviate from inviting competitive bids except in cases of emergency. An
emergency procurement, per paragraph 8.2, may occur when there is a serious or
emergency procurement, per paragraph 8.2, may occur when there is a serious or
unexpected situation that poses an immediate risk to health, life, property, or
3 Department of Transport and Others v Tasima (Pty) Ltd - 2017 (2) SA 622 (CC) (“Tasima (Pty) Ltd”) at para 22.
4 Rain Chartered Accountant Incorporated v South African Social Security Agency [2021] ZACC27;2021(11) BCLR
1225 (CC) at para 30.
21
environment, which calls an agency to action, and there is insufficient time to invite
competitive bids.
[57] Paragraph 8.4 states that the Accounting Officer must invite as many suppliers as
possible and select the preferred supplier using the competitive bid committee system.
Paragraph 8.5 says that any other deviation will be allowed in exceptional circumstances,
subject to the prior written approval of the relevant treasury. In Rain supra, the Court
explained the relationship between regulation 16A.4.6 and paragraph 8 of Instruction
Note 3:
“That said, paragraph 8 of Treasury Instruction Note 3 sheds light on what is
‘impractical’. Paragraph 8 deals with deviations. ‘Impractical’ must be read in the light
of this paragraph, which accords in some respects with what I have just said. In
paragraph 8.1, the note states that an Accounting Officer must only deviate from a
competitive bidding process in cases of emergency and sole supplier status.’ The first of
those concepts is defined as occurring ‘when there is a serious and unexpected situation
that poses an immediate risk to health, life, property, or environment, which calls an
agency to action, and there is insufficient time to invite competitive bids. The second
occurs ‘when there is evidence that only one supplier possesses the unique and
singularly available capacity to meet the requirements of the institution.’ Paragraph 8.5
provides that ‘any other deviation will be allowed in exceptional cases subject to the
prior written approval from the relevant Treasury.’ Paragraph 8.5 serves to indi cate that
deviations may be made in situations that are wider than just those typified in paragraph
8.1. And this harks back to the point that at its widest impracticality, which – in terms of
Treasury Regulation 16A.6.4 – is the jurisdictional fact for deviation, is an objectively
accessible notion.”
[58] Treasury Practice Note 8 of 2007 sets out threshold values for goods and services
[58] Treasury Practice Note 8 of 2007 sets out threshold values for goods and services
that must undergo competitive processes. 3.4.3 of the Practice Note prescribes:
“Should it be impractical to invite competitive bids for specific procurement, e.g. in
urgent or emergency cases or in case of a sole supplier, the accounting officer/authority
22
may procure the required goods or services by other means, such as price quotations or
negotiations in accordance with Treasury Regulation 16A6.4. The reasons for deviating
from inviting competitive bids should be recorded and approved by the a ccounting
officer/authority or his/her delegate. Accounting officers/authorities are required to
report within ten (10) working days to the relevant treasury and the Auditor -General all
cases where goods and services above the value of R1 million (VAT inclusive) were
procured in terms of Treasury Regulation 16A6.4. The report must include the
description of the goods or services, the name/s of the supplier/s, the amount/s involved,
and the reasons for dispensing with the prescribed competitive bidding process.”
[59] The above is the legal background against which the alleged irregularities will be
evaluated. If the facts demonstrate that these facets of legal canon were breached in any
manner, this Tribunal will have no choice but to declare the award of the bid and
subsequent contracts constitutionally invalid, review and set them aside. However, before
delving into the assessment of the merits, it is appropriate to first attend to the other
matters raised by the Respondents.
Undue Delay
[60] The Respondents have vehemently contended that the SIU has unreasonably
delayed launching this application. Moreover, the SIU has failed to furnish a reasonable
account covering the entire period of its delay. It is only in those circumstances where the
SIU is found to have given a satisfactory explanation of the undue delay that this Tribunal
can consider granting the application for condonation. The Respondents do not believe
that this is a legality review. As such , the delay should be assessed in te rms of the
provisions of the Promotion of Administrative Justice Act, 3 of 2000 (“PAJA”), which,
unlike legality, has a time bar of 180 days from the date of acquisition of knowledge of an
unlike legality, has a time bar of 180 days from the date of acquisition of knowledge of an
administrative decision, beyond which a party must apply for condonation.
23
[61] The Respondents argue that the ‘high water mark’ of the SIU in seeking
condonation is a dysfunctional system of providing instructions to C ounsel within the
Office of the State Attorney. The Respondents further contend that this does not excuse
the Lackadaisical way the SIU went about giving instructions. In fact, state the
Respondents, it was not in the interest of justice to delay this matter for so long. There is
no justification why it took the SIU more than four years - from the occurrences in March
2020 to April 2024. This was in circumstances where all the evidence was available to
the SIU as far back as September 2022. Prior thereto, the AGSA had investigated this
matter in 2021.
[62] Persisting that this review is in terms of PAJA, the Respondents maintain that the
application has been filed out of the six -month statutorily permitted period and was not
instituted for approximately eighteen months after the Applicant was aware of all the
facts relevant to this matter. The Tribunal does not have the authority to condone the
statutory non-compliance provided for in PAJA, which should be the yardstick here. The
Tribunal cannot create rules with the intention and purpose of circumventing statutory
and common law requirements. For those reasons, the Respondents have urged this
Tribunal to refuse to exercise its wide discretion to grant condonation in favour of the
SIU.
[63] I have already referred to the Ledla case supra, where the Constitutional Court
makes it clear that this Tribunal has authority to decide matters of legality , it being
inconsequential that it is not a Court. Accordingly, the SIU was not time -barred by
Section 7 of PAJA to launch this application within 180 days. The Tribunal has the
authority to condone the late launching of this application. As such, this application falls
to be adjudged in terms of the provisions of Rule 14 of the Rules of this Tribunal and not
to be adjudged in terms of the provisions of Rule 14 of the Rules of this Tribunal and not
Section 7 of PAJA, the Respondents’ persis tent attempt to talk its application into
existence here notwithstanding.
24
[64] I turn to condonation as applied in legality reviews. The starting point is Rule 14
of this Tribunal, which provides:
“14. Extension of time, Removal of Bar and Condonation—
(1) In the absence of agreement between the parties, the Tribunal may , upon
application on notice and on good cause shown, make an order extending
any time prescribed by these Rules.
(2) Any such extension may be ordered. However, the application therefore is
not made until after expiry of the time prescribed or fixed, and the Tribunal
may make any order as it seems meet in that regard.
(3) The Tribunal may, on good cause shown, condone any non- compliance
with these Rules.”
[65] A legality review does not have a time -bar within which it must be launched.
However, and like a review under PAJA after the expiry of the 180 day period, a
condonation application must be brought within a reasonable time. The Supreme Court of
Appeal (“SCA”) in Altech Radio Holdings (Pty) Limited and Others v City of Tshwane
Metropolitan Municipality
5, held that:
“[18] A legality review, unlike a PAJA review, does not have to be brought within a
fixed period. However, whilst the 180- day bar set by s 7(1) of PAJA (which may be
extended under s 9) does not apply to a legality review, in both the yardstick remains
reasonableness. It is a long-standing rule that a legality review must be initiated without
undue delay and that courts have the power (as part of their inherent jurisdiction to
regulate their own proceedings) to either overlook the delay or refuse a review
application in the face of an undue delay.
[19] The test for assessing undue delay in the bringing of a legality review application
is: first, it must be determined whether the delay is unreasonable or undue (this is a
factual enquiry upon which a value judgment is made, having regard to the
5Altech Radio Holdings (Pty) Ltd and Others v Tshwane City 2021 (3) SA 25 (SCA) (Altech Radio”) at paras 18 –
20.See also Buffalo City Metropolitan Municipality v Asla Construction (Pty) Ltd - 2019 (4) SA 331 (CC) at para 56.
25
circumstances of the matter); and, second, if the delay is unreasonable, whether the
court's discretion should nevertheless be exercised to overlook the delay and entertain
the application.”
6
[66] The SIU admits that there has been a delay in launching this application , but has
implored this Tribunal to weigh the delay in the factual context in which it happened. I
am therefore obliged to consider how it came about that the SIU launched this application
so late and to determine whether such background facts constitute a justification for this
Tribunal to exercise its discretion to excuse the delay.
[67] Tersely, it can safely be surmised that by 28 September 2022, the SIU was in
possession of all the relevant information that could have allowed it to launch this
application. That conclusion is inescapable if regard is had to the date of 28 September
2022, being one on which the senior investigator referred the matter to the SIU. The
Respondents’ criticism is that if that was the position, why did the SIU wait for eighteen
months before launching the application in April 2024?
[68] The SIU states that at the start of COVID-19 and its aftermath, it experienced an
upsurge in litigation stemming from criminal activities that surfaced, requiring the SIU to
investigate. This was the background against which the President promulgated the
Proclamation. The SIU soon encountered a backlog in executing instructions to appoint
attorneys and C ounsel in various matters and paying for such services. Some of these
6 Ibid. The Court in Altech Radio goes on to state:
“[20] As it was recently put in Valor IT v Premier, North West Province and Others:
'Whether a delay is unreasonable is a factual issue that involves the making of a value
judgment. Whether, in the event of the delay being found to be unreasonable,
condonation should be granted involves a “factual, multi-factor and context- sensitive''
enquiry in which a range of factors — the length of the delay, the reasons for it, the
enquiry in which a range of factors — the length of the delay, the reasons for it, the
prejudice to the parties that it may cause, the fullness of the explanation, the prospects
of success on the merits — are all considered and weighed before a discretion is
exercised one way or the other.'
26
representatives refused to take further instructions when the SIU failed to settle their fees
promptly. This frustrated urgent cases that demanded immediate attention.
[69] As a result of the above, the SIU recruited attorneys to assist in the resolution of
the problems. Additionally, to fast -track the process, it seconded its own attorney to the
Office of the State Attorney. However, this did not yield the desired results immediately .
Faced with these difficulties, the SIU endeavoured to avoid the challenges associated
with the Office of the State Attorney by appointing private attorneys on Service Level
Agreements. The AGSA called this process into question as she believed that it was
unlawful. A different controversy materialised when the SIU contested the AGSA’s
finding while simultaneously seeking to progress its matters.
[70] To have matters that required litigation back on track, on 6 July 2023, the SIU
cancelled the appointment of private firms of attorneys. It reverted to the Office of the
State Attorney on 30 August 2023. The SIU alleges that these internal processes are not
only commonly accepted as elaborate in nature but also known to be laborious. Usually,
they involve the invitation of Counsel to complete the tender documents, and a panel of
attorneys to discuss them and select one. Thereafter, provide the appointed Counsel with
files and consult with him or her and the SIU’s officials. This only occurred in early
December 2023, before the beginning of the recess period, and again approximately three
weeks after the recess period, on 6 February 2024.
[71] The issue is whether the facts supplied by the SIU are reasonable and with good
cause. If they are, the ground is fertile for this Tribunal to exercise its discretion in favour
of condonation. In the case of Kwasa Food Suppliers
7, this Tribunal held that the second
stage of the inquiry entails a determination of the following factors:
71.1 The nature of the decision to be reviewed;
71.1 The nature of the decision to be reviewed;
7 Special Investigating Unit v Kwasa Food Suppliers (Pty) Limited and Others (EC 02/2024) [2025] ZAST 3 (12
February 2025)
27
71.2 The duty to review in terms of the relevant empowering legislation;
71.3 The consequences of setting aside the decision to be reviewed;
71.4 The potential prejudice to the affected parties;
71.5 The court’s ability to grant just and equitable relief; and
71.6 The interests of justice.
The Nature of The Decision to Be Reviewed
[72] The decision to award the tender to Rensh was invalid and irregular because the
Municipality had invited certain service providers to submit bids. Those service providers
responded by completing bid documents and submitting their bill of quantities. No one,
including those service providers who participated, knows what happened to the process.
All that they know is that Rensh , a company that was never part of the process, was
preferred. Rensh did not even submit a bill of quantities but used one that w as prepared
by Themak, which amounted to R36 million . While that was the amount of the bill of
quantities, Rensh surprisingly decreased it to R26 Million.
The Duty to Review in Terms of The Relevant Empowering Legislation
[73] In terms of the SIU Act, the SIU is authorised to launch civil proceedings to
review and set aside decisions unlawfully made and to seek damages where appropriate.
However, the SIU is not seeking damages at this stage.
The Consequences of Setting Aside the Decision to be Reviewed
[74] The decision under review is one where the Department irregularly and unlawfully
appointed Rensh on a deviation brought about by an emergency. There was never such an
emergency as the situation that the Municipality sought to resolve by appointing Rensh
on a deviation that prevailed before the advent of COVID-19. The AGSA and the
Standing Committee on Public Accounts (“SCOPA”) reported that the work that has been
executed does not square up with the amount spent – large amounts have been expended
for very little work. The consequences will be like the status quo ante. Reviewing and
28
setting aside will ensure adherence to the rule of law, which has been undermined by
Rensh’s appointment.
The Potential Prejudice to the Affected Parties
[75] The Municipality has expended public funds in an attempt to resolve an
unbearable situation that has been with the community for a while. Prejudice against the
Municipality will necessarily follow because it has not received value for the money it
has paid to Rensh . Rensh was irregularly appointed ; consequently, it cannot be
prejudicial to it where the legality of its appointment is concerned.
The Tribunal’s Ability to Grant Just and Equitable Relief
[76] The SIU seeks relief that the award of the tender be reviewed and set aside. In
addition, that the Tribunal grants just and equitable relief. It is manifest from the admitted
facts of this matter that the award to Rensh was irregular and unlawful. As such, in terms
of Section 8(2)(b) of the SIU Act, it will be just and equitable for this Tribunal to review
and set aside the award of the tender.
The Interest of Justice
[77] The Municipality had meant to repair the water and sewage infrastructure of the
community, which was disintegrating. There was no indication at the time of the hearing
of this application that the project was complete. Moreover, the Municipality totally
disregarded the service providers it had invited to bid in favour of Rensh , a party that had
not been requested to participate in the bidding process. The procurement process was not
fair, equitable, transparent, competitive, or cost-effective as required by the provisions of
Section 217 of the Constitution. Against that backdrop, it will be in the interests of justice
to review and set aside the award of the tender.
[78] Other factors for consideration when determining whether to grant condonation for
the delay are: the nature of the relief sought, the extent and the cause of the delay, the
29
effect of the delay on the administration of justice, the reasonableness of the explanation
for the delay and the importance of the issue raised.
[79] Another important factor for consideration here is the presence of prospects of
success. This, particularly with and in mind of the unashamed manner in which the
Municipality breached Section 217 of the Constitution when awarding the tender to
Rensh. It unfairly abandoned the process of procuring services from other service
providers without advising them. It appointed a party that had neither completed any
tender documents nor submitted a BOQ. There was no competition at all because only
one service provider was selected without the advantage of comparison.
[80] There was no transparency as it is only the Municipality and Rensh that know
what led to the appointment. Lastly, the award could not have been cost -effective as the
Municipality deprived itself of the opportunity to select a party with the best offer.
Besides, by the time the SIU began to investigate this matter, two other institutions, the
SCOPA and AGSA, had found the procurement of the services of Rensh to have flouted
the provisions of the Constitution and other legal prescripts governing the procurement
process of Organs of State.
[81] From the account furnished for the delay in launching the application, the SIU was
not responsible for the delay. Most of the difficulties it confronted especially between 28
September 2022 to April 2024 when the application was issued, were external from its
sphere of influence. Under the principle of legality, a party must launch the application
within a reasonable time. Given what had transpired in this matter, the delay is
justifiable.
8
8 South African Broadcasting Corporation SOC Limited and Another v Former Chief Operating Officer:
Motsoeneng and Others (GP01/2021) [2022] ZAST 23 (18 October 2022) at para 63.
30
[82] Other critical factors when considering delay are public policy, certainty, and
finality of a matter. 9The use of State funds for public benefit must be done in a lawful
and procedurally fair manner. No party can be given an advantage over the other. There
is a duty on officials in office to comply fully with the procurement laws. It is therefore a
matter of public policy that the unlawful conduct that occurred in awarding the tender be
authorised. The Municipality was mindful that it could not justify the deviation on the
emergency of COVID -19 because the situation existed before and the Municipality had
been made aware of its existence hence it had embarked on a procurement process which
it mysteriously abandoned in favour of Rensh.
[83] The matter is enormously important to the Community of Ditsobotla, whose
dignity and other human rights have been ripped off by the Municipality’s officials, the
Respondents, Themak and Makola. It will not sit well with the public for this matter to be
finalised without affording the SIU opportunity to levy any evidence before this Tribunal,
especially as it concerns issues of corruption and misappropriation of public funds.
[84] Was the decision, although unlawful, made in good faith? The Municipality, as a
government institution that deals with bids month -in and month-out, was alive to the fact
that it had abandoned a lawful procurement process to which several parties had
responded. To date the parties who submitted bids remain in the dark why the process the
Municipality initiated was never implemented. Given that the Municipality awarded the
bid to a party that was never part of the procurement process to the exclusion of those
who followed the legal process, it cannot be said that it did so in good faith.
10
[85] Losada’s appointment of Themak on 19 November 2019 on a project that did not
have a number, yet, for: “professional services for the operation and maintenance of bulk
have a number, yet, for: “professional services for the operation and maintenance of bulk
9 SIU v MEC Department of Transport supra. Special Investigating Unit v Member of the Executive Council for the
Department of Transport, Kwazulu-Natal and Another (KN/01/2021) [2024] ZAST 2 (27 February 2024) at para 51.
10 South African Broadcasting Corporation SOC Limited and Another v Former Chief Operating Officer:
Motsoeneng and Others (GP01/2021) [2022] ZAST 23 (18 October 2022) at para 64.
31
wastewater infrastructure for a period of 36 months was not without significance.” The
plan was that Themak would be used as and when required by the Municipality during
the period of the appointment. Themak knew this when it accepted the appointment on 17
January 2020. Needless to state that this happened before the arrival of COVID- 19. On
20 January 2020, Rasool of the Municipality instructed Themak to commence with the
assessment of four (4) critical pump stations and the wastewater treatment plant in
Ditsobotla. Themak was requested to produce a BOQ in line with its assessment of the
plants and pump stations for repairs. When Rasool issued this instruction to Themak, the
five potential service providers had already provided the Municipality with BOQs , yet, a
party which did not bother to submit a BOQ was preferred. That could not have been in
good faith especially in the absence of reasons.
[86] Themak observed its instruction and conducted the assessment. It produced the
technical assessment report detailing the work to be carried out as well as the amount to
be paid for such work. The BOQ amounted to R36 923 045.77. It invoiced the
Municipality for an amount of R3 882 665.37 for its consulting services. The director of
Themak, Makola confirmed this in an affidavit. On 27 November 2019, the Municipality
published a tender on e -Tender through the Department of National Treasury under B id
Number: NMMDM 19/20/15 PWBS (A). On 5, 9 and 10 December 2019, five service
providers submitted their BOQ’s to the Municipality for the work to be carried out in
terms of the tender requirements to repair and maintain water pump stations and
wastewater treatment facility at Ditsobotla.
[87] Rensh was not one of the five service providers the Municipality had requested to
submit BOQs. In any event, this was even before the Municipality instructed Themak to
commence with the consultancy work. On 7 March 2020, Rasool telephoned Cader to
commence with the consultancy work. On 7 March 2020, Rasool telephoned Cader to
provide a quotation for the repair and maintenance on all facilities where Themak had
already produced a BOQ in Ditsobotla. In response, Rensh produced a quotation for an
amount of R25 884 435.75. In her affidavit, Cader states that she was telephonically
32
contacted. There was n o written contract concluded with the Municipality , nor was there
a letter appointing Rensh . Th is begs the question, why did the Municipality instruct
Themak to produce a BOQs where five companies had already done so?
[88] Following the declaration of the National State of Disaster in mid -March 2020,
Rasool prepared a memorandum on 23 March 2020 requesting that Rensh be appointed
using Regulation 36 of the SCM to do urgent/emergency repairs at the four pump stations
and one wastewater treatment plant in Ditsobotla as per the BOQ prepared by Themak.
The deviation memorandum for an amount of R25 823 883.40 for these quoted projects
was recommended by the Chief Financial Officer, Mphato and was approved by Losaba.
[89] Rasool’s memorandum fails to give reasons for finding Rensh to be a suitable
service provider as against the other five, which furnished their BOQs in compliance with
Bid N umber NMMDM 19/20/15 PWBS (A). In motivating for the deviation, Rasool
states that the COVID-19 pandemic was the overriding consideration for the invocation
of Regulation 36, but he omits to touch on the reasons that persuaded the Municipality to
single out Rensh as a preferred service provider.
[90] Everything said about the above, how could COVID-19 be the dominant factor in
the consideration of the emergency deviation invoked in terms of Regulation 36 when
this situation prevailed even before the declaration of the National State of Disaster by
the President of the Country? This is contrived and demonstrates that the use of the
Regulation was inappropriate and unlawful. It further shows that it was invoked to
sidestep the legally recognise procurement process. Thus, there could not have been any
talk of good faith on the part of the Municipality w hen it made the decision as the
violation was deliberate.
[91] The discretion of this Tribunal in deciding whether to condone a delay is broad.
[91] The discretion of this Tribunal in deciding whether to condone a delay is broad.
The reasons furnished for the delay in this matter constitute good cause for this Tribunal
33
to exercise its discretion in favour of condonation. In the circumstances of this
application, it is befitting for this Tribunal to frown upon the process by which the
Municipality appointed Rensh . To the extent that the award of the tender and the
subsequent conclusion of the contract were irregular and invalid, this Tribunal is
authorised to exercise its discretion in favour of condonation. The preliminary point fails.
Irregular Step Notice - Rule 30A Application
[92] The second preliminary point, which the Respondents submitted must be
addressed before the merits, pertains to the abovementioned Rule. The irregular step rule
applies in this matter because Rule 28(1) of the Tribunal Rules states that: “If a situation
for which these Rules do not provide arises in proceedings or contemplated proceedings,
the Tribunal may adopt any procedure that it deems appropriate in the circumstances,
including the invocation of the High Court Rules.” The applicability of the Uniform
Court Rules to this matter, where necessary, is contested by neither party.
[93] Before plunging into it, it will be instructive to first give a background on how the
Respondents came to raise it as an issue. The Respondents served their answering
affidavit on 29 July 2024. The SIU’ s replying affidavit was due for service within 10
days of the service of the answering affidavit. The 10 -day period lapsed on 12 August
2024. The SIU only served its replying affidavit on 31 October 2024 and has not applied
for condonation for the late service. The affidavit is therefore more than two m onths late.
The Respondents claim that they have been prejudiced because of the SIU’s failure to
serve the replying affidavit timeously and have implored this Tribunal to refuse to admit
the affidavit into evidence.
[94] In response to the Respondents, the SIU admits that while it has served the
replying affidavit more than two months late, it was not under obligation to apply for
replying affidavit more than two months late, it was not under obligation to apply for
condonation for the late service. According to the SIU, it served the replying affidavit
when it did because following the service of the answering affidavit, the parties engaged
34
in settlement negotiations. When the negotiations collapsed, the SIU enquired if the
Respondents would still be proceeding with the irregular step application but was met
with silence. In any event the Respondents’ Rule 30A, submitted the SIU, was not
perfected as it was not followed by an application for dismissal after the expiry of the 10 -
day period stipulated in the Rule.
[95] Rule 30A is headed: “Non -compliance with Rules and Court Orders ”. It provides
that:
“(1) Where a party fails to comply with these Rules or with a request made or notice
given pursuant thereto, or with an order or direction made by a court or in a
judicial case management process referred to in rule 37A, any other party may
notify the defaulting party that he or she intends, after the lapse of 10 days from
the date of delivery of such notification, to apply for an order—
(a) that such rule, notice, request, order or direction be complied with; or
(b) that the claim or defence be struck out.
(2) Where a party fails to comply within the period of 10 days contemplated in
subrule (1), application may on notice be made to the court and the court may
make such order thereon as it deems fit.”
[96] I agree with the SIU that the Respondents have failed to take forward the matter of
the irregular step alleged to have been committed by the SIU when it served the replying
affidavit. The 10 -day period within which they should have applied for dismissal has
come and gone. The matter has been argued as if there had not been the irregular step
notice. To cry foul in circumstances where the matter has proceeded this far is too late
and besides, I am at loss how the Respondents can claim prejudice. They, t hemselves,
abandoned the process that would have led them to the dismissal. Even after the SIU had
asked whether they intended to proceed they still sat back and did nothing. In the result
the point in limine must fail.
35
[97] In attacking the case of the SIU, the Respondents have adopted the ‘spray and
pray’ approach hoping that one of the points raised will be sufficient to have the
application dismissed. Consistent with this, they have raised numerous points, some of
which are in fact settled law as this Tribunal or Courts have pronounced themselves on
the interpretation of the statutory provisions governing this Tribunal. That said, I am still
obliged to fully address them and decide on each and every one.
Non-Suited Relief
[98] Here the argument of the Respondents is that the relief sought in paragraphs 3 to 5
of the notice of motion is factually and legally non -suited. Paragraph 4 seeks relief to
declare the contract the parties concluded on 7 March 2020 null and void. The
Respondents say that the contract was not concluded on that day. The Municipality only
requested a quotation on 7 March 2020. Following receipt of Rensh ’s quote, the
Municipality issued a purchase order to it on 26 March 2020 requesting it to begin to
deliver the works in terms of a deviation of emergency as contemplated in Regulation 36.
Thus, according to the version of the Respondents, the contract was concluded on 26
March 2020.
[99] Conversely, the SIU argues that the contract was entered into on 7 March 2020
when the Municipality asked Cader to supply it with a quote. The issuing of the purchase
order by the Municipality on 26 March 2020, contends the SIU, should be understood as
confirmation of a contract concluded on 7 March 2020. The granting of the amendment
in favour of the SIU has superseded this debate on the precise date of the conclusion of
the contract, making any discussion on this gratuitous. That said, factually and looking at
the principles of offer and acceptance, the quotation represented an offer to the
Municipality, and the latter implicitly accepted it by issuing the purchase order on 26
March 2020.
36
[100] The Respondents also contend that this matter is instituted in the Tribunal in terms
of the provisions of Section 8 of the SIU Act and is as such, a creature of statute, a quasi -
judicial forum with statutory powers. The Tribunal cannot set aside the Municipality’s
administrative action, and the SIU does not seek such appropriate relief. Section 8 of the
SIU Act headed: “Powers and functions of Special Tribunal” does not provide the
Tribunal with such powers and functions. I have already referred to Section 8(2)(b) of the
SIU Act, which categorically states the Tribunal has the power to ‘make any order’ to
give effect to its decisions or ruling. Accordingly, the argument that the Tribunal lacks
authority to hear an application for the review or setting aside of an administrative action
taken by the Municipality is fallacious and stands to be rejected.
[101] Another strange argument of the Respondents is that the Tribunal cannot review
and set aside the award and resultant contract. The Respondents’ reason is that there is no
practical remedy to set aside a contract that is fully executed and finalised four years ago.
They regard the launching of this application as an abuse of process. This argument must
be rejected for the simple reason that , without first declaring the impugned decision
constitutionally invalid, the SIU cannot claim back any monies unlawfull y paid to any
juristic or non -juristic entity. I perceive no impediment to allow a claim arising from a
contract that was concluded and finalised four years ago if it is brought on the legality
principle. Accordingly, this argument is flawed and is dismissed.
Declaratory Relief
[102] The Respondents contend that the SIU’s allegation that Section 8 of the SIU Act
provides the Tribunal with wide powers is nonspecific and baseless. The wide powers do
not include an inherent jurisdiction to be found. The powers of the Tribunal are contained
not include an inherent jurisdiction to be found. The powers of the Tribunal are contained
within the Act, which does not include powers to review and set aside administrative
actions of an organ of state. The High Court, continues the argument, is the primary
forum for judicial review in terms of PAJA. If a matter falls under PAJA and there is no
37
specialised tribunal with review powers, the High Court is the appropriate and only forum
to hear and adjudicate upon review applications.
[103] The Respondents are totally misguided in their approach to the declaratory relief.
Firstly, they are persistent that this is a PAJA review when all is considered in this matter,
and in terms of the Ledla case supra, this is a legality review. Secondly, Section 8(2) of
the SIU Act is specific as far as what this Tribunal can do. It provides:
“A Special Tribunal shall have jurisdiction to adjudicate upon any civil proceedings
brought before it by a Special Investigating Unit in its own name or on behalf of a State
institution or any interested party as defined by the regulations, emanating from the
investigation by such Special Investigating Unit, including the power to-
(a) issue suspension orders, interlocutory orders, or interdicts on application
by such Unit or party;
(b) make any order which it deems appropriate to give effect to any ruling or
decision given or made by it; and
(c) make any order which it deems appropriate as to costs.”
[104] Section 8(2)(b) is sufficiently wide to give this Tribunal the power to ‘make any
order which it deems appropriate so as to give effect to any ruling or decision given or
made by it.’ I am therefore at a complete loss why the Respondents seek to limit the
power of this Tribunal to make review orders. Paragraph (b) of Subsection (2) expressly
provides that the Tribunal can ‘make any order’. I regard this as adequately wide to
accommodate declaratory orders of the nature sought by the SIU in this matter. Section
8(2)(b) therefore authorises the Tribunal to make any order that would advance the
purpose of the Act or decision at which it arrives. Accordingly, if the award together with
the subsequent contract are found to have been unlawful for want of compliance with the
Constitution or any of the procurement prescripts, this Tribunal would have power to
declare it constitutionally invalid.
38
[105] There is also no merit to the argument that the relief the SIU seeks would be
academic and incapable of being granted. I agree with the SIU that the declaratory relief
is the legal basis through which the Tribunal can order recovery of assets or monies lost
to illegal, unlawful and corrupt practices. This Tribunal has authority in terms of Section
2 of the SIU Act, to deal with issues involving unlawful and illegal conduct; serious
maladministration in connection with the affairs of any State Institution ; (b) improper or
unlawful conduct by employees of any State Institution ; (c) unlawful appropriation or
expenditure of public money or property; (d) unlawful, irregular or unapproved
acquisitive act, transaction, measure or practice having a bearing upon State property.
The Respondents’ contention is rejected as lacking in merit.
Statement and Debatement of Account
[106] The Respondents argued that the SIU is not entitled to a debatement and rendering
of an account from Rensh. The duty, they maintain, may arise from a limited set of
circumstances. It may occur from a fiduciary relationship parties have towards each
other. These include partners, agents and trustees or a contractual obligation. Examples of
these would be an attorney’s mandate or a statutory duty. In this regard, the Respondents
referred this Tribunal to the matter of Absa Bank Ltd v Janse van Rensburg
11. The duty,
as they understand it, does not arise in this matter. As such, Rensh is not obliged to
debate and render an account to the SIU.
[107] Similarly, assert the Respondents, the SIU is not entitled to the relief that Rensh be
directed to submit its audited financial statements to the SIU. The Respondents’ assertion
in this regard seeks to diminish the submission of Rensh’s audited financial statements.
This must be rejected because the submission of the audited financial statements is the
necessary corollary of the debatement exercises to determine whether the monies
necessary corollary of the debatement exercises to determine whether the monies
received from the Municipality regarding the alleged unlawful contract accord with the
works.
11 Absa Bank Bpk v Janse van Rensburg - 2002 (3) SA 701 (SCA) at paras 15-16.
39
[108] The Respondents have correctly identified the applicable case law insofar as
debatement and rendering of an account is concerned yet, they persist that the SIU is not
entitled thereto. The SIU is enabled to seek the relief it wants because Section 4(1)(c) of
the SIU Act allows it to do so. The Section provides:
“The functions of a Special Investigating Unit are, within the framework of its terms of
reference as set out in the proclamation referred to in Section 2 (1)-
(a) …
(b) ….
(c) To institute and conduct civil proceedings in a Special Tribunal or any court
of law for-
(i) any relief to which the State institution concerned is entitled,
including the recovery of any damages or losses and the prevention
of potential damages or losses which may be suffered by such a
state institution.
(ii) any relief relevant to any investigation; or
(iii) any relief relevant to the interests of a Special Investigating Unit.”
[109] The SCA in Absa Bank Ltd v Janse van Rensburg supra, a case mentioned by both
Counsel, held that:
“It is now settled law that in order to succeed in a claim for delivery and debatement of an
account, the person seeking such an order must establish that a fiduciary relationship
existed between the parties; or that there was a contractual agreement between the parties;
or that there is a statutory obligation on the other party to deliver and debate the
account.”
12
[110] It is common cause that this whole controversy in this matter emanates from the
contract the parties concluded. The SIU is in terms of Section 4(1)(c) empowered by SIU
because the contract concluded between the Municipality, an Organ of State, and Rensh
12 As translated from the original Afrikaans text, at para 13.
40
is alleged to be in contravention of the Constitution. Accordingly, the basis of the
debatement is the contract contemplated in Absa Bank Ltd v Janse van Rensburg supra .
The Respondents’ contention cannot stand, and it is rejected as devoid of any merit.13
Administrative Action Sought to be Reviewed is not a Legality Review
[111] The Respondents flatly deny that this application is based on the principle of
legality. They assert that stripped of its veneer, the basis of the application is PAJA and
not a legality review. In justification of that approach, the Respondents argue that the
appointment by Purchase Order, approval of Regulation 36 Deviation and decision to
launch this application, which the SIU is challenging, are administrative decisions. They
contend further that a competent C ourt would not hesitate to set aside the decision to
launch it. I agree that given that argument, it is somewhat strange that there is currently
no application for such a relief. Due to the Respondents’ persistence that this is a PAJA
review, the Respondents are at cross purposes with the SIU. It should suffice to state that
the Respondents are misguided in their approach and that the Ledla case supra is not
distinguishable, as the Respondents would have this Tribunal believe on whose behalf the
SIU launch this review in terms of Section 4 of the SIU Act.
Regulation 36 of the SCM-Policy
[112] The Respondents persist that the appointment of Rensh by the issuing of a written
purchase order is valid as the Municipality had complied with Regulation 36 of the
policy. The Respondents argue further that to contradict the appointment, the SIU must
seek relief to overturn Regulation 36, or alternatively, the application of Regulation 36 by
the Municipality. Further, alternatively, the SIU ought to reverse the decision of the
Municipality to implement Regulation 36. The fact that the contract was executed,
finalised and all obligations arising therefrom discharged, refutes any such invalidity ex
finalised and all obligations arising therefrom discharged, refutes any such invalidity ex
post facto.
13 See also Victor Products (SA) (Pty) Ltd v Letelier Manufacturing (Pty) Ltd 1975 (1) SA 961 (W) at 963
41
[113] The essence of the SIU’s case in this regard is that the Municipality should not
have invoked the provisions of Regulation 36 as the circumstances did not present an
emergency. The evidence levied before this Tribunal suggests that what the Municipality
and the Respondents refer to as an emergency needing the immediate intervention of
Rensh has always existed even before the onset of COVID-19. The Municipality and
Respondents took advantage of the advent of COVID- 19 that brought with it a genuine
emergency. The use of Regulation 36 of the Municipality’s SCM was as such, engineered
to suit the emergency to seize the opportunity to access funds irregularly.
[114] This whole process of appointing Rensh on an emergency deviation was contrived.
The Municipality dismally failed to explain why, if there was an emergency, it did not
appoint from those potential service providers which had submitted BOQs. It also does
not state anything on why it thought Rensh was, even though it did not tender, stood out
as the most appropriate to carry out the works. The Municipality would further not state
why it utilised a BOQ prepared by Themak, a company that did not submit any bid
documents and BOQ, instead of using those from the invited companies. Even more
staggering is that when this bid was initially published on 27 November 2019, the
Municipality did not mention any emergency associated with the project yet; shortly after
the declaration of the National State of Disaster, the emergency suddenly materialised,
albeit with very little physical evidence of change.
[115] This was clearly in violation of Section 217 of the Constitution insofar as the fact
that the decisions of the Municipality were unfair, inequitable, non -transparent, non -
competitive and not cost -effective. The Constitutional Court in Tasima (Pty) Ltd, supra,
stated that : “in a case of an emergency or where there is only one supplier who can
stated that : “in a case of an emergency or where there is only one supplier who can
provide goods or services, the regulation permits a deviation from inviting competitive
bids in terms of a fair, transparent and cost- effective tendering process .”
14 The facts of
this current matter do not fit this mould because there was no emergency, the
14 Department of Transport and Others v Tasima (Pty) Ltd - 2017 (2) SA 622 (CC) at para 99.
42
Municipality had, without furnishing any reasons, simply abandoned a legitimate
procurement process in favour of the irregular appointment of Rensh. The Municipality’s
actions have violated all the provisions of Section 217 of the Constitution and all those
prescripts that govern the procurement process in every manner possible.
[116] In appointing Rensh, the Municipality never alleged that it was impractical or
impossible to follow the normal official procurement processes, as required by
Regulation 36. The Municipality’s failure to explain its choice in Rensh leads to an
inescapable inference that its officials preferred to appoint it because there was
connivance to loot the funds of the Municipality. The Court in Rain Chartered
Accountant Incorporated supra stated that the word, ‘impractical’, is context specific.
While the word s must be assessed in a given context, I am unable to do so because the
Municipality does not lay out such background that would allow this Tribunal to make a
value judgment of what prevailed at the time other than the false reason that the
declaration of the National State of Disaster had intervened in the or dinary course of
events, bringing about the emergency. My evaluation of the situation is that there was
nothing preventing the Municipality from engaging in a normal competitive bidding, a
process it had mysteriously abandoned.
Failure to Plead a Delictual Claim
[117] According to the Respondents, the SIU is suggesting that Rensh is guilty of a
delictual action known as disgorgement of secret profits. The Respondents allege that the
requirements of such an action, which is a delict upon which a claim for damages may be
based, would consist in the SIU averring and proving that:
117.1 Breach of a duty of good faith;
117.2 Rensh had such a duty; and
117.3 Rensh breached the duty.
43
[118] This need not occupy this Tribunal for long because the claim pursued by the SIU
is clearly not based on delict. The simple fact is that the SIU derived power to launch this
application from Section 4(1)(c) read with Section 8(2)(b) of the S IU Act. To seek to
pigeonhole and label it a ‘delictual claim’ for purposes of criticising and rejecting it takes
the case of the Respondents no further. The SIU Act allows the SIU to claim damages
where it is found that a transaction was constitutionally invalid. This i s one such matter
consequently, the SIU had the power to pursue this claim in the manner it did.
[119] The notion that the Respondents cannot be ordered to repay the amount invalidly
paid to Rensh on the ground that it is impossible to distinguish it from what constitutes
unlawful payment or profits made from the transaction i s an issue that cannot c arry
favour with this Tribunal. I agree with the SIU that such an approach is fallacious and
undermines the ability of the SIU and, ultimately , this Tribunal, to make that judgment.
Indeed, the relief is competent, practical, often sought and generally granted by this
Tribunal where the evidence is established.
[120] To the extent that the Respondents may be implying that the length of time that has
elapsed before the launching of this application means that the records upon which the
SIU wishes to rely for the relief it seeks are not available anymore, it needs to be stated
that Rensh is in any event obliged to keep its records for a minimum period of five years.
Accordingly, if the Tribunal finds it fitting, it will be entitled to order production of those
audited financial statements for analysis and determination of the funds unlawfully
expended.
Jurisdiction of the Tribunal in a Review
[121] The Respondents assert that the Tribunal is not vested with the necessary
jurisdiction to hear the review and setting aside orders, with the consequential declaratory
jurisdiction to hear the review and setting aside orders, with the consequential declaratory
or just and equitable relief. This argument has been addressed elsewhere in this judgment,
but for what it is worth, I reiterate that this Tribunal derives its authority to entertain this
44
matter from the SIU Act, specifically Section 8(2)(b). In doing so, the Tribunal will
neither be usurping the review powers of the Judiciary, which are exclusive to High
Courts, nor will it be creating laws and jurisdiction of its own. Instead, it will be fulfilling
its functions and powers bestowed upon it by the SIU Act and confirmed by the Ledla
case supra.
[122] The Respondents maintain that this Tribunal is an extension of the SIU. As such, it
should not be permitted to hear matters due to the principle of judicial deference towards
the decisions of the executive. This argument is extraordinary and is disappointing that
the Respondents hold such an estimation of the Tribunal. I agree with the SIU that this
Tribunal must reject it with the disdain it deserves because the SIU Act draws a
distinction between the SIU and this Tribunal. To that end, it declares t hat: “A Special
Tribunal shall be independent and impartial and perform its functions without fear,
favour or prejudice and subject only to the Constitution and the law.”
[123] Besides, the functions of this Tribunal are undoubtedly separate and distinct from
those of the SIU whose primary purpose is to investigate corruption matters and to bring
them before the Tribunal for hearing. The argument to judicial deference is completely
inappropriate in circumstances where a Tribunal such as the present has been established
to deal with matters involving fraudulent, illegal, and unlawful or improper decision or
conduct of Organs of State that causes loss of money or assets to the State. This Tribunal
has authority to hear this matter , the argument of judicial deference raised by the
Respondents aside.
Piercing the Corporate Veil
[124] Here, the argument of the Respondents is that since the decision of the
Municipality to use emergency deviation by issuing Regulation 36 has not been
challenged and invalidated, the contract between Rensh and the Municipality cannot be
challenged and invalidated, the contract between Rensh and the Municipality cannot be
illegal. The Respondents conclude that if the contract is not reviewed or set aside, there is
45
no basis to pierce the corporate veil. As such, the ancillary relief is legally incompetent.
Regarding piercing the corporate veil for Cader to be liable to the Municipality, jointly
and severally with Rensh for the losses suffered by the Municipality, the argument is that
the issue is exclusively regulated by Section 20(9) of the 2008 Companies Act.
[125] The SIU has not laid the necessary grounds that will permit this Tribunal to lift the
corporate veil, continue the Respondents. It has neither made a case for personal liability
in its founding affidavit in terms of Section 424(1) of the Companies Act, 61 of 1973 nor
has it provided reasons why Cader should incur personal liability for any debts of Rensh.
For these reasons, the Respondents deny that the corporate veil should be pierced. This
can only be done in circumstances where the corporate personality of Rensh was
fraudulently abused during the conduct of its business or its affairs. In this regard,
Counsel for the Respondents referred to several cases as authority, most notably , City
Capital SA Property Holdings Ltd v Chavonne’s Badenhorst ST Clair Cooper.
15
[126] The Respondents’ argument that Regulation 36 should be challenged and set aside
before the contract is declared invalid has been exhaustively discussed. I see no need to
repeat it here. The Respondents would have this Tribunal believe that Section 20(9) of the
Companies Act is the only suitable means by which to seek piercing of the corporate veil.
That is misleading because p iercing the corporate veil is also a common law remedy
available to combat fraud. As will be seen below, the Companies Act is not the only
source for the piercing of the corporate veil. There have been instances where piercing of
the veil happened in a context different from that of the Companies Act – common law.
15 City Capital SA Property Holdings Ltd v Chavonne’s Badenhorst St Clair Cooper 2018 (4) SA 71 (SCA) at paras
27-30. Paragraph 28 reads:
27-30. Paragraph 28 reads:
“[28] Section 20(9) of the 2008 Act provides a statutory basis for piercing the corporate veil. On its
plain wording, s 20(9) permits a court to disregard the separate juristic personality of the company where
its incorporation, use or an act performed by or on its behalf 'constitutes an unconscionable abuse of the
juristic personality of the company as a separate entity'. The term 'unconscionable abuse' is not defined in
the 2008 Act and must therefore be given its ordinary meaning.”
46
[127] In the case of Knoop NO and Others v Birkenstock Properties (Pty) Ltd and
Others16, the Court held that:
“The corporate veil may be pierced where there is proof of fraud or dishonesty or other
improper conduct in the establishment or the use of the company or the conduct of its
affairs and in this regard it may be convenient to consider whether the transactions
complained of were part of a ‘device’, ‘stratagem’, ‘cloak’ or a ‘sham’.”
[128] Thus, the lifting of the corporate veil can be applied in cases where there are
instances of commercial abuse or fraud by the directors of companies and the use of
corporate forms to avoid legitimate obligations. When there is fraud, dishonesty or other
improper conduct, policy dictates that the court engage in a balancing exercise. The court
considers the circumstances and facts of each case to determine whether, in the
appropriate case, it is right to disregard the corporate personality and apportion liability
where it belongs.
17
[129] From the aforegoing I must determine whether the facts in this matter are perfect
for the lifting of the corporate veil. It will be sufficient to lift the corporate veil if the SIU
establishes that Rensh and Themak were used to commit fraud. When Rensh was
awarded the bid and subsequently entered into the contract with the Municipality, Cader
knew or ought to have known that something was amiss. The bid awarded to it did not
emanate from a legitimate tender procurement process as is the position with all Organs
of State. Accepting that Rensh thought that it was being appointed on emergency
deviation, surely as a party conducting business in Mahikeng, Province of North West , it
would or ought to have known that there had been a tender published by the Municipality
inviting potential bidders to complete bid documents and submit B OQs and that it was
not part of those.
16 Knoop NO and Others v Birkenstock Properties (Pty) Ltd and Others (FB) (unreported case no 7095/2008, 4 -6-
2009), quoting with approval The Shipping Corporation Of India Ltd v Evdomon Corporation and Another 1994
(1) SA 550 (A) at 556 C – F, at para 11.
17 Ibid.
47
[130] If it were being appointed on the same bid, there could not have been any
emergency because the situation prevailed before the onset of COVID-19 or the
declaration of the National State of Disaster. If all this information was at Rensh’s
disposal, the fact that the Accounting Officer, Losaba and the Chief Financial Officer,
Mphato, still went ahead to approve the emergency deviation without raising any
questions suggests that Rasool, Losaba, Mphato and Cader were all colluding to defraud
the Municipal ity. The evidence before this Tribunal is that Cader’s husband has done
some work for the Municipality in the past yet, a company headed by Cader, with no
experience in the area, is awarded the bid and contract. Given this, it is not far -fetched to
surmise that Rensh was set up for the use of its juristic personality so that it may have
separate liability from its shareholders – Cader.
[131] Another obvious instance of fraud where Rensh was utilised as a vehicle concerns
the purchase and sale of the generators. Rensh had to deliver and install four 100KVA,
8kW diesel generators at a rate of R250 000 (excluding VAT). Each site was to be
provided with one such generator. The purpose of the generators was to assist in the
maintenance of the Wastewater Treatment Plants. In violation of the variation order
approved on 16 April 2020, Rensh procured and delivered 137 KVA diesel generators at
a revised amount of R550 000.00 (excluding VAT) for which it submitted an invoice and
received payment. There is no proof that this was sanctioned by the relevant committee.
[132] When the AGSA confronted the Accounting Officer, Losaba, in February 2021
with this finding, the response she received was that the 100KVA generators were not
available at the time of procurement, in consequence of which the Municipality chose the
137 KVA with an output of 100kw. This was an unadulterated lie as there is nothing from
137 KVA with an output of 100kw. This was an unadulterated lie as there is nothing from
the Municipality and Respondents supporting that answer before the AGSA’s finding and
communication to Losaba. The falsity of the aforegoing is further exposed by the
affidavit of the owner of the shop where these generators where purchased, Mr Fourie.
48
According to his affidavit, the 100KVA 8KW diesel generators were available at the
time.
[133] The alteration of the initial specification and purchase price of the generators must
have been the joint creation of Cader, on behalf of Rensh , and the Municipality,
represented by Rasool, Losaba and Mphato. All of them would have colluded to use
Rensh to consummate their fraud against the Municipality. This explains the willingness
of Losaba to lie about the availability of the generators and the disinterest in the
modification in the specification and purchase price of the generators. Rensh was as such
used to accomplish fraud.
[134] The AGSA also made further adverse findings against the Municipality which
required Losaba to respond fully as the Accounting Officer. The AGSA reported to
Losaba that she visited the project sites to verify the work done against payment
certificate for various pump stations and a sewage treatment plant forming part of the
contract on 10 December 2020 and 28 January 2021. Her findings were that she noticed
that some items were claimed on the payment certificate even though there was no
indication that work had been performed on site.
[135] Turning to contingencies, she recorded that the payment certificate accommodated
even those that had in fact been claimed on all the sites. That said, there was no
documentary proof of additional work done to support the expenditure on the
contingencies. Additionally, the AGSA stated that during her site visit, there was also no
obvious extra work performed on all sites. The AGSA’s finding of no additional scope of
work having been done on all the visited sites, was confirmed by the municipal
representatives and the contractor. The total amount for the contingencies claimed and
paid (including VAT) is R4 314 072.63.
49
[136] Having discovered these discrepancies, the AGSA notified the Municipality on 4
February 2021 and invited comments. These inconsistencies arose during the AGSA’s
audit of the Financial Statements/the Annual Performance Report/Compliance with
Legislation of the Municipality's compliance with legislation for the year ended 30 th of
June 2020. When the AGSA ultimately received the Municipality's response on 15
September 2021, she found it dissatisfactory, as it was inadequate or incorrect and
contained aspects that were misleading.
[137] The point of the AGSA’s report is that Rensh was deeply involved in defrauding
the Municipality. The fact that the officials of the Municipality paid for some of the items
appearing on the payment certificate for the different pump stations and sewage plant,
even though there was no evidence of work having been carried out for them, strongly
suggests that both the Municipality and Rensh had wanted the Municipality to pay for
that false information. The Municipality honoured the payments to its detriment.
[138] A similar result was realised with the unlawful and irregular alteration of the
prices of the generators. The Municipality was made to pay a higher amount in
circumstances where it could have paid far less. This benefited Rensh and placed the
Municipality at a disadvantage. This is a clear instance of criminality where Cader used
Rensh to defraud the Municipality. In these circumstances or contexts therefore, piercing
of the corporate veil must be permitted to expose the directors and/or shareholders of
Rensh, the actual perpetrators of the fraud, to assume liability.
18
[139] A further instance of fraud involving the officials of the Municipality, Rensh and
Themak is where the latter issued a variation order for R3 751 376.50 on 15 April 2020.
The reason furnished by Themak for the variation order was that it would cover
additional work. This contradicted the reason supplied by the Municipality’s Bulk
additional work. This contradicted the reason supplied by the Municipality’s Bulk
Treatment Works Manager - the request for approval of the variation order addressed to
18 Ibid.
50
the Accounting Officer was because there was a site hand -over to Rensh in March 2020
and that there would be additional work to be done. This further work to be done was not
part of the BOQ.
[140] The above said, at paragraphs 6.1.2 and 6.1.3 of the Project Close -Out Report,
Themak records that there was no application for the variation order. As though that was
not enough, on 22 April 2020, Themak issued a Close -Out Report and a Completion
Certificate stating that the work was completed at the pump stations. This was false as it
later transpired that the three (3) 137 KVA generators were installed on 13 May 2020,
long after the Close -Out Report and the advance payment had been unlawfully made to
the Respondents. Once again, Themak was actively involved in this corrupt activity and
had enabled it. The AGSA’s Notice of Material Irregularity has identified and quantified
the outstanding or undelivered work at an estimated amount of R5 555 650.00 (including
VAT).
[141] Another discrepancy arising from Themak’s Variation Order and the Project Close
Out Report is that, again on 15 April 2020, Themak prepared and signed a Variation
Order for approval by the Municipality’s Accounting Officer. The concerns the AGSA
had raised about the Variation Order’s updated specifications involving: the unblocking
of the sewerage outfall and a rising main is that it was indicated that the work would not
require a period of more than ten days.
[142] Notwithstanding that this was impossible, the Municipality paid for all the ten
days as the variation order was approved on 16 April 2020 and Rensh is alleged to have
completed the work six days thereafter on 22 April 2020. This suggests that Rensh could
have only worked for seven days or less, considering that Rensh ’s invoice was issued on
20 April 2020. It is manifest that all the Respondents, except for the Municipality, aided
by the officials of the latter, actively stole money from the Municipali ty. Shocked by
51
these irregularities, the AGSA issued, over the course of 2020, at least two Notices of MI
against the Municipality to which the Accounting Officer failed to respond as required.
[143] Again, these anomalies notwithstanding, the officials of the Municipality approved
the variation and deviation orders without any controversy. The Municipality’s
authorisation of the variation and deviation orders was unlawful, unreasonable and
irrational. Any argument contrary to the SIU having demonstrated that Cader has misused
Rensh to commit the fraud is rejected as bereft of merit. The lifting of the corporate veil
of Rensh and Themak is inevitable and necessary in these circumstances.
Superannuation
[144] The contention of the Respondents here is that while the SIU may have started
legal proceedings against the Respondents timeously, it has delayed in its prosecution of
the case subsequently. This argument is in line with the definition of superannuation. The
Respondents add that litigants have a right to finality in matters. If this does not happen,
fairness to both parties is compromised and is prejudiced by the indifference of a
litigating party failing to take the case forward. That said, it is not only to the prejudice of
a Respondent that matters are delayed but the courts too become affected. The
Respondents conclude that it is in the interests of justice that all parties be allowed to
have a fair and expeditious hearing.
[145] The SCA in Cassimjee v Minister of Finance
19 held that a Respondent must show
the existence of the following requirements to succeed with the defence of
superannuation:
145.1 Delay in the prosecution of an action;
145.2 The delay must be inexcusable; and
145.3 The delay must seriously prejudice the D efendant, the Respondents in this
instance.
19 Cassimjee v Minister of Finance -2014 (3) SA 198 (SCA) at paras 11-12.
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[146] As is evident from the aforegoing, some of the reasons required to avert the
dismissal of Superannuation or Condonation are similar. However, the two are distinct
because in matters brought under the principle of legality, condonation is sought for late
launching of a review application. The Respondents’ complaint in this matter, for
example, is that this Tribunal should dismiss this application as the delay in launching it
is unjustifiable. Conversely, with superannuation, the inexcusable delay concerns failure
to prosecute the matter post issuing and delivery of the papers.
[147] I have therefore assumed, correctly so, that in raising superannuation, the
Respondents are complaining about the delay that occurred after April 2024, the time
when the SIU launched this application. While that assumption may be correct, the
Respondents have not demonstrated the occurrence of delay from the time this
application was launched. I too could not find any evidence of a serious delay worth
raising superannuation. The only delay raised is in respect of the period before
commencement of this application, which cannot be accommodated under
superannuation. I find it inexorable to conclude that the Respondents have raised
superannuation in circumstances where it is irrelevant. Accordingly, the defence must
fail, and I find no need to deal with the other cases to which the Respondents have
referred this Tribunal.
Hearsay Evidence
[148] The Respondents contend that the SIU's case is contingent on the findings of the
AGSA and various BOGs from different companies . Without confirmatory affidavits
from the AGSA or any purported experts with personal knowledge to validate the SIU’s
averments, the evidence is hearsay, and they urge this Tribunal to refuse its admission.
Quantity Surveyors commonly prepare the BO Qs. These documents constitute the
opinion of the Quantity Surveyors and therefore fall into the category of inadmissible
opinion of the Quantity Surveyors and therefore fall into the category of inadmissible
hearsay evidence unless confirmed by the author. The Respondents then proceed to refer
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to paragraphs of the SIU's affidavits; this Tribunal should strike out and disregard those
paragraphs.
[149] The SIU’s response to the hearsay argument is appropriate – it is incorrect that the
SIU has largely relied on hearsay evidence. The SIU, in referring to the BOQs, has not
ascribed any version to any of the persons who submitted the BOQs in respect of the
tender issued by the Municipality on 27 November 2019. Confirmatory affidavits would
not be required in instances, such as the present, where all the SIU did was to utilise the
BOQs as a demonstration of the existence of a process.
[150] Like in the case of the BOQs, the SIU has used the reports of the AGSA to
confirm the presence of a fact. Apart from this, the documents are public documents
published on the AGSA’s websites. Besides, it would be unconscionable to demand the
AGSA to depose to confirmatory affidavits in all the applications where various
institutions rely on her reports. Such a demand would be an unreasonable one on the
office of the AGSA. Everything said above, it is extraordinary that the Respondents place
reliance on the very documents of the AGSA they seek to declare hearsay. This is
disingenuous. In the result, the hearsay argument lacks merit and is dismissed.
[151] The Respondents, together with the officials of the Municipality, have colluded to
defraud the Municipality. The Municipality, through Rasool, abandoned a legitimate
procurement process that commenced with the publishing of the tender on 27 November
2019. The Municipality unjustifiably invoked the provisions of Regulation 36 of the
Municipality’s SCM Policy to unlawfully appoint Rensh , claiming that there was an
emergency when the situation existed prior to the declaration of the National State of
Disaster. This was in violation of Section 217 of the Constitution.
[152] The award of the bid and the resultant conclusion of the contract with Rensh was
[152] The award of the bid and the resultant conclusion of the contract with Rensh was
not fair, equitable, transparent, competitive and cost- effective as required by Section 217
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of the Constitution and all the other legal prescripts governing the procurement of goods
or services by an Organ of State. These prescripts have been discussed above particularly
when discussing the prospects of success under condonation. Accordingly, I see no need
to repeat them here.
Declaration of Invalidity
[153] Section 172 of the Constitution provides:
“When deciding a constitutional matter within its power, a court –
(a) must declare that any law or conduct that is inconsistent with the Constitution is
invalid to the extent of its inconsistency; and
(b) may make any order that is just and equitable, including –
(i) an order limiting the retrospective effect of the declaration of invalidity; and
(ii) an order suspending the declaration of invalidity for any period and on any
conditions, to allow the competent authority to correct the defect.”
[154] The consequences of parties deliberately contravening procurement processes to
enrich themselves invariably have far reaching and unbearable repercussions on the very
communities the projects are meant to uplift. In this matter, it has been found that the
quality of the work performed by Rensh was not per the BOQ of Themak. The amount
originally set aside for the project has ballooned but the community finds itself in the
same unendurable and disadvantaged situation. It is deeply troubling and unfortunate that
the officials of Organs of State who are often the enablers and perpetrators of the fraud
against the Municipalities never face the consequences of their deeds. If they do, the
public seldom know the outcome.
[155] It has become natural that where the findings are that the Constitution has been
contravened and the procurement processes undermined, as is the case here, this Tribunal
is in terms of Section 172(1)(a) of the Constitution, directed to declare the award of the
bid to Rensh unconstitutional, unlawful and invalid. In doing so, I am following in the
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footsteps of a plethora of case authorities, among which the State Information
Technology Agency SOC Limited v Gijima Holdings (Pty) Limited 20, where the
Constitutional Court held that:
“We concluded earlier that, in awarding the DoD agreement, SITA acted contrary to the
dictates of the Constitution. Section 172(1)(a) of the Constitution enjoins a court to
declare invalid any law or conduct that it finds to be inconsistent with the Constitution.
The award of the contract thus falls to be declared invalid.”
Just and Equitable Remedy
[156] The relief the SIU seeks is that once this Tribunal has condoned the late launching
of this application, declared the award of the Tender and the resultant contract to Rensh
invalid, reviewed and set aside, it must direct:
156.1 Rensh to submit its audited financial statements for the year 2019 – 2020
and 2020 - 2021 within 15 days of this order;
156.2 Rensh to conduct a debatement exercise to determine all monies received
from the Municipality in respect of the unlawful contract, as well as the
actual, reasonable and lawful out -of-pocket expenses that Rensh may be
able to prove that it has incurred in rendering the services within 30 days of
the submission of the audited financial statements;
156.3 The Respondents to pay all the monies that are due to the Municipality
within 15 days of the determination of the statement and debatement
exercise;
156.4 That the corporate shield of Cader be pierced and that she be liable for the
loss that she and Rensh caused to the Municipality;
156.5 That the corporate shield of Makola be pierced and that he be liable for the
loss that he and Themak caused to the First Respondent;
20 State Information Technology Agency SOC Limited v Gijima Holdings (Pty) Limited [2017] ZACC 40; 2018 (2)
SA 23 (CC) at para 52.
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156.6 The Respondents to pay to the Municipality the profit made by them from
the execution of the contract with the Municipality, within 30 days after the
determination thereof from the statement and debatement;
156.7 Themak and Makola to pay to the Municipality monies paid to them in
respect of the above contract;
156.8 The Respondents to pay to the Municipality the amount determined from
the debatement, and the monies received by Themak and Makola, with
interest calculated in accordance with the Prescribed Rate of Interest Act 55
of 1975, from the date of this application until the date of final payment;
156.9 All the Respondents, except for the Municipality, to pay the costs of this
application at a scale as between an attorney and client, jointly and
severally, the one paying the others to be absolved, in the event of
opposition by them.
[157] The Respondents assert that the relief the SIU seeks under Section 172(1)(a) and
(b) may only be granted by a competent court and not the Tribunal. They argue further
that the approach as aforesaid was confirmed by the Constitutional Court in Electoral
Commission v Mhlophe
21 when it held that:
“Section 172(1)(b) clothes our courts with the remedial powers so extensive that they
ought to be able to craft an appropriate or just remedy even for exceptional, complex or
apparently irresoluble good situations.”
Against that backdrop, the Respondents conclude that this Tribunal has no jurisdiction to
grant a relief of a constitutional damage’s nature, as sought by the SIU.
[158] This Tribunal has no difficulty with the case authority cited by the Respondents, as
it is correct. However, the Respondents’ reference to it is in vain. I say this because the
Ledla case has long confirmed that while this Tribunal is not a C ourt, it nonetheless has
21 Electoral Commission v Mhlope and Others - 2016 (5) SA 1 (CC) at para 132.
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the power to decide legality matters. See para 70 of the case quoted above. The
Respondents’ persistence in contesting the power of this Tribunal to make a just and
equitable remedy is confounding, and it is rejected.
[159] The Respondents further argue that the services rendered by Rensh have been
finalised. As such, so continues their argument, it will be academic, moot, and impractical
to review, set aside, or remit the decision to appoint Rensh long after the fact. A reference
to cases dealing with mootness is misguided because this is not such a case. The power of
the Tribunal to declare an award and subsequent conclusion of a contract is contained in
the SIU Act. It is neither here nor there that Rensh finalised the work a while back. This
is a remedy that is often requested and granted by this Tribunal.
[160] The fact that any recourse the Respondents may have against the Municipality
may have prescribed cannot be a bar to the declaration of invalidity, the review, and the
setting aside of the award of the bid and contract. The Respondents should not have , in
the first place, connived to defraud the Municipality. In any event, this Tribunal doubts
that the Respondents can, in the circumstances of this case, have such a recourse.
Accordingly, their protestations are disregarded as devoid of any merit. Everything
considered above, I find the following order befitting:
Order
[161] T he following order is made:
1. The SIU’s late launching of this application is condoned;
2. The decision of the Department to conclude a contract with Rensh for the
provision of the services of wastewater treatment works in the Ditsobotla
Local Municipality is reviewed and set aside;
3. The contract concluded b etween the Department and Rensh on 7 March
2020, alternatively, on 26 March 2020 is declared constitutionally invalid
and null and void ab initio;
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4. Rensh is directed to submit its audited financial statements for the period,
2019 - 2020 and 2020 – 2021, within 15 days of this order;
5. Rensh is further directed, within 30 days of the submission of the audited
financial statements , to conduct a debatement exercise to determine all
monies received from the Department in respect of the unlawful contract, as
well as the actual, reasonable and lawful out of pocket expenses that Rensh
may be able to prove that it has incurred in rendering the services;
6. Rensh and Cader are directed to pay all the monies that are due to the
Department within 15 days of the determination of the statement and
debatement exercise;
7. Cader’s corporate shield is pierced and she is personally liable for the loss
that she and Rensh caused to the Department;
8. Makola’s corporate shield is pierced and he is liable for the loss that he and
Themak caused to the Department;
9. Rensh and Cader are directed to pay to the Department the profit made by
them from the execution of the contract with the Department , within thirty
days after the determination thereof from the Statement and Debatement;
10. Themak and Makola are directed to pay back to the Department monies
paid to them in respect of the contract;
11. Rensh and Cader are ordered to pay to the Department the amount
determined from the debatement, and the monies received by Themak and
Makola, with interest at the applicable legal interest in terms of the
Prescribed Rate of Interest Act, 55 of 1975, from date of this order until the
date of final payment;
12. Rensh and Cader are liable for the costs of this application a s at the Scale
between party and party Scale B, jointly and severally, the one paying the
others to be absolved.
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________________________________
JUDGE BA MASHILE
MEMBER OF THE SPECIAL TRIBUNAL
Appearances
Counsel for the Applicant: Adv T Machaba SC and Adv SJ Maisela
Instructed by: State Attorney, Pretoria
Counsel for 2nd & 3rd Respondents: Adv J de Beer and Adv T.I Ngwana
Instructed by: Denga Incorporated
Date of Judgment: 31 March 2026
Mode of delivery
This judgment is handed down by email transmission to the parties’ legal representatives,
uploaded to Caselines and releaseed to SAFLII and AFRICANLII. The date of delivery is
deemed to be 31 March 2026.