IN THE SPECIAL TRIBUNAL ESTABLISHED IN TERMS OF SECTION 2(1)
OF
THE SPECIAL INVESTIGATING UNIT AND
SPECIAL TRIBUNALS ACT 74 OF 1996
(REPUBLIC OF SOUTH AFRICA)
CASE NO: KN06/2024
In the matter between:
THE SPECIAL INVESTIGATING UNIT Applicant
And
ISF CONSTRUCTION SERVICES (PTY) LTD First Respondent
SHULA CONSTRUCTIONS CC Second Defendan t
KWAZULU NATAL DEPARTMENT OF TRANSPORT Third Defendant
HEAD OF DEPARTMENT KZN DEPARTMENT OF Fourth Respondent
TRANSPORT
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JUDGMENT
FORTUIN, J
A. INTRODUCTION
I. This is an application to review and set aside the decision of the Kwa-Zulu Natal Department
of Transport ("the Department") to award a tender to the !SF Shula Joint Venture ("the JSF
Shula JV"), together with the contract subseque ntly entered into between the Department and
the JV ("the Contract"). The JV is comprised of the first respondent ("!SF") and the second
respondent ("Shula"). The tender was for the construction of a concrete barrier wall along 8km
of the South African border with Mozambique ("the tender").
2. The applicant alleges that the award of the tender was unlawful and invalid for the following
reasons:
a) The Broad-Based Black Economic Empowerment ("B-BBEE") certificate submitted by the
ISF Shula JV was fraudulent and invalid ("the fraudulent B-BBE E certificate") when a valid
B-BBEE certificate was a mandatory bid requirement.
b) The letter of Good Standing with the Compensation Commissioner subm itted by ISF was
stale and inval id. A valid letter of Good Standing was also a mandatory bid requirement.
c) The ISF Shula JV did not comply with the mandatory financial capacity requirements of the
tender. This was a mandatory requirement, and the failure should have resulted in the
disqualification of the JV's bid at the first stage of the tender evaluation process.
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d) The JV deliberately made a material misrepresentation in its bid by representing that it
would operate as a JV but had no intentio n of doing so.
3. The Contract was awarded in the amount of R85 796 470.06 (Eighty Five Mi llion Seven
Hundred Ninety Six Thousand Four Hundred and Seventy Rand and Six Cents) . The ISF Shu la
JV has been paid an amount ofR84 346 497.86 (Eighty-Four Mi llion Three Hundred and Forty
Six Thousand Four Hundred and Ninety Seven Rand and Eighty Six Cents). The JV did not
complete the tender project.
4. In an explanatory affidavit the Department stated that, on average, 74.7% of the work was done
before the Contract was cancelled . Subsequent to the cancellation, the Department issued a
fresh tender to the value of R62 288 559 (Sixty Two Million Two Hundred and Eighty Eight
Thousand Five Hundred and Fifty Nine Rand) for the completion of the work that the JV failed
to do.
5. In the result, the SIU seeks the following relief:
a) Reviewing and setting aside the awa rd of the tender to the JV (and the Contract which was
concluded pursuant thereto).
b) To pay to the SIU R84 346 497.86 , being the total amount paid by the KZN DoT to ISF
Shula JV pursuant to the award of the tender and implementation of the contract.
c) In the alternative , directing ISF and Shula to repay the profits made by the ISF Shula JV (or
th e individLJal JV partn e rs) pL1rs L1ant to the award and implementation of the tender. If thi s
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relief is granted, the SIU seeks ancillary relief that sets out the process by which the ISF
Shul JV's profits will be determined.
d) The SIU also seeks costs against any respondent opposing the relief.
6. The Department does not oppose the review whilst both the JV partners oppose the merits and
the relief sought.
B. POINTS IN LI MINE
i. FIRST RESPONDENT'S CONDONATION APPLICATION FOR LATE FILING OF
HEADS OF ARGUMENT
7. The first respondent filed an application for condonation for the late filing of its Heads of
Argument. A proper explanation is set out in its appl ication for condonation, in huge part that
it was due to the applicant not filing its Heads of Argument timeously, even after being
reminded of the directive setting out the timelines for filing . The applicant ignored this
reminder.
8. I am of the view that the late filing of the first respondent's Heads of Argument did not
prejudice any of the parties . In the circumstances , this application for condonation is granted.
ii. APPLICANT'S FAILURE TO APPLY FOR CONDONATION
9. The applicant served its Heads of Argument 9 days late without furnishing any reasons for the
lateness.
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I 0. The law in respect of delay when bringing a review is trite and has been solidified by this
tribunal in numerous decisions. In casu , the delay in bringing this application is not at issue.
However, a delay by the applicant in filing its Heads of Argument is. This, in my view, points
to a total disregard for the orders of this tribunal. This Special Tribunal issued a formal directive
with timelines , which was ignored by the applicant and no formal application for condonatio n
was brought.
11. The first respondent objects to the applicant not furnishing any reasons for its late filing of its
Heads of Argument and submits that the applicant had no regard for the impact of their late
filing on the respondents, nor did it have any regard to the tribunal 's directive. I agree with
these submissions and find the behaviour of the appl icant's legal team contemptuous.
12. It is further the first respondent's case that the applicant has no prospect of success and that the
applicant 's case is vexatious and frivo lous . In addition , the first respondent submits that it
would suffer financial prejudice in that its legal representative had to rearra nge its diaries due
to this delay. The y also complain that 11 days would not be sufficie nt to prepare their Heads
of Argument.
13. I do not agree with the first respondent that the appli cation for review stands to be dismissed
on this ground alone. The issues raised are of great consti tutiona l importance. I am of the view
that, in the interest of justice , the merits of this application should be traversed. This tribunal,
howev e r, take s account of the lax. attitude of th e appl icant in this regard.
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iii. APPLICANT'S FOURTH GROUND OF REVIEW
14. The first respondent objects to the applicant raising a new ground of review in its Heads for
the first time. The objection is based on the fact that it was not given an opportunity to respond
to the allegation in its answering affidavit.
15. I am discussing the grounds of review later in this judgment and will deal with this comp laint
then.
C. COMMON CAUSE FACTUAL BACKGROUND
16. In July 2016, the communi ty of uMkhanyakude in KwaZulu-Nat al protested, complaining
about the rampant crime in the areas, in particular the smuggling and trafficking of stolen and
hijacked vehicles into neighbouring Mozambique . One of the measures adopted by the KZN
Depart ment of Transport ("t he Department ") was the construction of a barrier wall along part
of the border ("the border wal I").
17. On 29 March 2018, the Department pub I ished an invitation to tender for the construction of an
8km concrete barrier wall between uMkanyakude and Mozambique ("the Tender Notice").
18. The closing date for the bids was 4 May 2018. A total of fourteen bids were submitted. Six of
these bids were found to be unresponsive because they failed to meet the conditions and
requirements listed in the Tender Notice. The majority of these were non-responsive as they
did not meet the requirement that the tenderer must have a B-BBEE Leve l I stat us.
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19. The eight responsive bids were evaluated for functionality. Five of these did not meet the 60%
point threshold for functionality and could accordingly not progress to the assessment for the
price and preference points.
20. The ISF Shula JV bid was one of three that progressed to the evaluation on price and preference
points. The tender was approved on 12 July 2018 by the then Head of Department and
ultimately awarded to the lSF Shula JV.
21. The Department issued its Order Approval on 15 April 2019 and the contract between the
Department and the !SF Shula JV for the construction of the concrete barrier wall was
concluded on 16 August 2018 ("the Contract "). This approval stated that the budget for the
project would be divided into R30 million for the current fiscal year, and RS0 million in the
next fiscal year.
22. The !SF Shula JVC started the work on the concrete barrier wall, but did not complete the
work.
23. It is common cause that the Department eventually cancelled the Contract. It is further common
cause that the JV did not produce or place the necessary number of concrete panels at the site.
Moreover , it did not pour all of the concrete required to bind and erect the wall panels.
24. It is further common cause that in June 2023 , the Department issued a new tender to the value
of more than R62 million for completion of the required work.
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25. On 7 May 2021, the President issued Proclamation R.16 ("the Proclamation") directing the
SIU to investigate certain allegations relating to the affairs of the Department between 13 July
2016 to 7 May 2021. This included investigating the lawfulness and validity of the award of
the tender to the ISF Shula JV.
26. It is by now common cause that the SIU conducted the investigation. Consequently, on 27
March 2024, the SIU brought these proceedings to review and set aside the award of the tender
("the impugned decision") and subsequent contract , i.e. two years and IO months later.
27. The applicant brought no application for condonation, and no allegation was made by the
respondents that the application was unreasonably delayed. The issue of unreasonable delay is
therefore not relevant save for the late filing of the Heads of Argument by both the applicant
and the first respondent as discussed above.
D. ISSUES FOR DETERMINATION
28. The Const itution is the supreme law of South Africa and any conduct inconsistent with it is
invalid. The obligations in the Constitution must be fulfilled. This is the legal framework within
which we operate , and it is the legal framework that this tribunal is to apply when hearing
matters before it. It is therefore worth repeating (which I do below) the releva nt sections of the
Constitution and the other legislation which gives effect to these sections.
29. The issues for dete rmination are th e following: whethe r the contract entered into betwe e n the
first and second respondent on the one hand and the third and fourth respondent on the other
is invalid and to be reviewed and set as ide. In the event that it is reviewed and set aside, should
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the first and second respondents retain the payment that they already rece ived for the work
already performed; would the first and second respo ndents be entit led to their proven profits.
E. ISSUES IN DISPUTE
a. APPLICANT'S SUBMISSIONS
30. It is the applicant 's case that only 5.29km of the concrete wall panels have been erecte d with a
balance of2.7 1 km stil l need to be erected. In addition, that some associated works still need
to be completed.
31. It is the appl icant's subm ission that its version of the facts is substantiated and corroborated
and should for that reason be accepted over that of the Department.
b. FIRST RESPONDENT'S SUBMISSIONS
32. It is the first respondent 's case that the award of the tender was not unlawful or invalid . It
submitted that the applicant has not made out a case for the order that it is seeking. The tribunal
was requested to consider that the third respondent did not suffer any damages. Instead , it is
the first and second respondents who suffered damages because the retention amount due to
them has not been paid. According to the first respondent there are according ly no merits to
susta in this review. Moreover , on its version, the fact that another contractor has been appointed
to the value of R62 mill ion is irrelevant.
33. The tribunal was requested to dismiss the review with costs .
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c. SECOND RESPONDENT'S SUBMISSION
34. It is the second respondent's submission that if there was a fai lure on the part of the third
respondent in its duties of evaluation, and if the award was incorrectly made , there is no
liability to be attached to the tendering parties.
35. Moreover , that granti ng an order for the return of the entire project price would effectively give
the third responde nt a substantially completed contract for free.
d. THIRD AND FOURTH RESPONDENTS' SUBMISSIONS
36. Both the th ird and fourth respondents ("the Department ") delivered a Notice to Abide.
F. DISCUSSION OF RELEVANT LEGAL FRAMEWORK
a) CONSTITUTIONAL IMPERATIVES
37. I find it necessary to quote the relevant constitutional provisions which guide a court/t ribunal
when assessing the lawfulness of a contract. The following constitut ional prov isions are
applicable when this tribunal considers whether a contract is reviewable:
'Section 217 Procurement
I. When an organ 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.
2. Subsection (]) does not prevent the organs of state or institutions referred to in that subsection
from implememing a procurement policy providing for -
a. categories of preference in the allocation of contracts; and
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b. the protection or advancement of persons, or categories of persons, disadvantaged by unfair
discrimination.
3. National legislation must prescribe a framework within which the policy referred to in subsection
(2) must be implemented'.
38. The Public Finance Management Act ("the PFMA "), The Preferential Procurement Policy
Framework Act ("the PPPFA ") and the Treasury Regulations for Departments, Trading
Entities, Constitutional Institutions and Public Entit ies ("the Treasury Regulations ") are all
legislation and regulation s giving effect to sect ion 217 of the Constitution.
39. The KwaZulu Natal Department of Transport , as all other provincial departments , is bound by
section 217 and the above regulation s.
b. SPECIAL TRIBUNAL'S REMEDIAL POWERS
40. The principle of legality is releva nt as this revie w is brought in terms of this principle. As held
in Ledla Structural Development (Pty) Ltd and Others v Special Investigations Unitl
("Ledla"), this Spec ial Tribunal is empowered to consider and decide reviews of procurement
decisions brought under the principle of legality.
4 1. In a number of judgm ents, the grounds of review under the principle of legality were laid down.
The grounds releva nt in casu are inter alia:
1 2023 (2) SACR I (CC).
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a) A mandatory and material condition of the empowerin g provision - the tender
specific ation - was not complied with. See in this regard Diggers Development (Pty) Ltd
v City of Matlosana and Others. 2
b) The decision was taken because irrelevant considerations were taken into account or
relevant considerations were not taken into account. In this regard see Democratic
Alliance v President of South Africa and Others •3
c) The decision was based on a material mistake and/or misrep rese ntat ion of facts . In the
regard see Pepcor Retirement Fund and Another v Financial Services Board and
Another.4
d) The decision was taken in fraudem legis. In this regard see Diggers Development,
supra; and
e) The decision was not rationally related to the evidence before the decisionmaker . In this
regard see SA Predator Breeders' Association and Others v Minister of
Environmenta l Affairs and Tourism5.
c) DISGORGEMENT OF PROFITS
42. A detailed discussion on disgorgementofprofits can be found under the heading " Remedy"
further below.
43. 1 now proceed to deal with the grounds ofreview relied on by the app licant before this tribunal.
2 20 IO JDR 0214 (GNP).
3 2013 ( I) SA 248 (CC).
4 2003 (6) SA 38 (SCA). 5 [20 11 ) 2 All SA 529 (SCA).
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G. GROUNDS OF REVIEW
a. FALSE AND /OR FRAUDULENTLY ISSUED B-BBEE CERTIFICATE
i. APPLICANT'S VERSION
44. The Tender requir ed a certified copy of the bidders ' B-BBEE certificate, showing a Leve l I B
B BEE status . Where a bidder was a JV, it was required to submit a certifie d copy of a
consolidated B-BBE Verification Cert ificate issued for the JV in accordance with the
promulgated Codes of Good Practice .
45. The ISF Shula JV provided a consolidated Joint Venture B-BBEE cert ificate, number CSG
SPC-260895-08JV, dated I December 2017 ("the JV Certificate "). This certificate states that
it was issued by lnforcomm and reflected a B-BBEE contribution status for the ISF Shu la JV.
It also reflects a 50/50 split between ISF and Shula.
46. It is the appl icant's case that the JV Certifica te was patently fraudulent or false for the following
reasons:
a) Firstly, it is submitted that the Chief Executive Officer at lnforcomm provided a swo rn
statement confirmi ng that Inforcomm did not issue a B-BBEE certificate number CSG
SPC-260895-08 JV to the ISF Shula JV. He states that, 'If it ;s a B-BBEE cert(ficate it is a
false and or fraudulent B-BBEE certificate'. He also states that Inforcomm has no record
of a joint venture B-BBEE certificate being issued to ISF Shula JV.
b) Secondly, the app licant submits that the JV Certificate states that the Shula and ISF both
gave a 50% share in the JV. This is contrary to what is stated in the JV Agreement submitt ed
by the JV as part of its bid docum ents. The JV Agree ment provides that ISF has a 70%
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share and Shula a 30% share in the JV. The contents of the B-BBEE certificate are therefore
inconsistent with the JV Agreement.
c) Thirdly, it is subm itted that the JV Certificate reflects that it was issued in terms of the B
BB EE Codes of Good Practice 2007 ("the 2007 Codes"). It is commo n cause that these
codes were repealed by publication of the 2013 Amended B-BBEE Codes of Good Practice
("the 20 I 3 Codes") which came into effect on I May 2015 . Accordi ngly, at the time of the
issuing of the fraudulent certificate, the 20 I 3 Codes were applicable.
d) Fourthly, that the JV Certificate reflects that the ISF Shula JV has a Level I B-BBEE
contributor status, with a B-BBEE score of 80 points. This is inconsistent with both the
2007 and the 2013 Codes . The 2007 Code determines that an entity with 80 points is only
a Level Three contributor and the 20 I 3 Code determine that a score of 80 points is a Level
Four contributor. Under both the 2007 and the 2013 Codes the !SF Shula JV could never
achieve a Level I 8-BBEE contributor status.
e) Fifthly, the app licant submitted that the JV Certificate does not have the features of a
normal B-BBEE certificate issued by Inforcomm for a joint venture . The tribunal was
pointed to the following aspects:
1. The certificate claims to be valid 'for 12 months from the date of issue', being I
December 2017. The reflected date of exp iry is I December 2018 and not 30
November 2018 as it should be.
11. The B-BBEE certificate submitted by the ISF Shula JV does not contain any of the
required details i.e.
a. the name of the joint venture;
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b. the objective of the joint venture (typica lly in the form of the tender
number); and
c. the date of commencement of the joint venture
111. The Measurement Date on the JV Certificate is 28 February 2018, which is after the
date of issue. It is the applica nt's case that the B-BBEE calculations cannot be made
prior to the fiscal year having ended.
1v. The formatting and arrangement of the JV certificate . is different to that of an
lnforcomm B-BBEE certificate for a joint venture in more than one respect.
47. It is noteworthy that the fact that the JV certificate was falsified and fraudulently issued is not
seriously contested by the respondents. They raise only the following issues:
a) The Departme nt states that it verified with SANAS that lnforcomm was accred ited by
them but did not verify the JV certificate itself. On the ir version they had no reason to
suspect that the certificate was not issued by lnforcomm. The Departme nt does not
however deny that the certi ficate was not issued by Inforcomm and that it was falsified.
b) Shula also does not deny that the JV Certificate was falsified. It instead shifts the blame
onto one Mr Budden for procuring the falsified cert ificate.
c) Likewise, !SF does not deny that the JV Certificate was falsified but adds that it did not
at the time when it included it in the bid document know that it was falsified. !SF also
shifts the blame to Mr Budden for procur ing the false certificate adding that Mr Budden
apologised for the false certificate.
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48. Two issues arise in relation to fraud. They are:
a) The first issue is whether the certificate was falsified and issued fraudulent ly. In my view,
the app licant has estab lished this.
b) The second issue is whether the JV (both ISF and Shula) was aware that the B-BBEE
certificate was falsified and knowingly subm itted the falsified certificate as part of the bid
documents.
49. In my view, it is not necessary for me at this stage to determ ine whether the falsified cert ificate
was know ingly submitted as part of the bid documents. This issue of fraud is not relevan t at
this stage but rather at the time of determining which remedy would be appropriate.
ii. FIRST RESPONDENT 'S VERSION
50. The first respondent denies that it subm itted a fraudu lent and false B-BBEE certificate . It is
the first respondent 's version that it, together with the second respondent engaged the serv ices
of a professiona l, one Mr Budden, an acco untant, to obtain the said B-BB EE cert ificate . On
their version, Mr Budden gave them a list of documents he required in order for them to obtain
a level I B-BBEE certificate and they provided him with such information. The certificate was
then issued. A copy of this certificate was certified by Mr Budden which was then submitted
by first and second respondents.
5 1. On the ir version, they did not have any reason to suspect that the certificate could have been
fraudulent and/o r false. On enqu iry from Mr Budden, he exp lained that his company did not
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issue the certificate but outsourced that function to a third party. He stated that he was not
aware of the allegations.
52. It is the first respondent's case that it was the Bid Committee's responsibility to disqua lify the
JV and eliminate it at this stage of the process if the JV did not qualify. Moreover, that it was
the Bid Committee's responsibil ity to have the subm itted information verified. Accordingly,
because the first and second respondents were not part of the Bid Committee , they cannot be
punished for the negligence of the Bid Committee.
53. The tribunal is requested to consider that the . fact that the information must be verified,
confirms that the persons handling the process have to be thorough and meticulous. Moreover,
that it would be unfair to expect of the first and second respondents to interrogate the
information of the certificate while the Departm ent stated that it had no reason to suspect that
the certificate was not issued by Inforcomm. All that was done by the department was to check
whether lnforcomm was registered with SANAS. This was evidently not suffic ient.
54. It is submitted by the first and second respondents that this activity does not meet the
requirements of the common law offence of fraud .
55. In respect of the allegation that a materially false statement was made with the intent to deceive,
it is the first and secon d respondents' submission that they would not have made enquir ies from
Mr Budden if they had the intention to deceive. They had no knowledge of the falsity. It is
subm itted that the third respondent is not a victim because they had a duty to verify the
information. Moreover , that nobody suffers any damages as a result of the B-BBEE certificate .
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Because the third respondent submitted that 74,7% of the work was done by the first and
second respondents who were indeed paid for this work.
56. As a result of the above submissions, this tribunal is requested to accept the denia l that the B
BB EE certificate was fraudulent and false.
iii. SECOND RESPONDENT'S VERSION
57. In most part, the submissions by the second respondent mirrors that of the first respondent. On
its version, the cert ificate was submitted bona fide on the bidders ' part and that no fraud was
shown.
58. Due to the difficulty in obtaining a confession from Mr Budden , it is the second respondent's
submission that fraud was therefore not proven. In add ition, the applicant did not ask for a
referral to oral evidence.
59. As stated earlier, it is my view that the certificate was falsified and issued fraudulently. Whether
the first and second respondents knowingly submitted a fraudulent certificate, and if so, what
the effect thereof should be, wi II be discussed later in this judgment.
60. It is astonishing how the first and second respondents fail to take responsibility for this
fraudulent 8 -BBEE certificate . This was a document in their names, submitted for a tender in
their name s and all the respo nsibility is shifted to a third party(s).
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61. This atti tude persists throughout this application and will, as it should , be conside red as one of
the factors in determining an outcome .
b. EXPIRED LETTER OF GOOD STANDING
i. APPLICANT'S VERSION
62. All bidders were required to submit a valid letter of Good Stand ing with the Compensatio n
Comm issio ner. This was a mandatory tender requirement. This was to be submitted for both
parties in a joint venture. Any bidder who failed to do so would be ineligible to bid.
63. It is common cause that both ISF and Shula had to submit this letter. ISF submitted a letter
issued on 7 May 2017, while on ISF 's own version the letter expired on 30 April 2018.
ii. FIRST RESPONDENT'S VERSION
64. Once again, the first respondent submitted that the responsib ility to verify the lette r of Good
Standing and to disqualify the first and second respondents was with the Bid Adjudication
Committee. Because the first and second respondents were not part of the evaluat ion
comm ittee, they are not in a position to justify the decision of the committee.
iii. SECOND RESPONDENT'S VERSION
65. The second respondent submitted that, where the requirement was mandatory , as in this
instance, the respo nsibility to eval uate the validity of the letter and to disq ualify a non-
complia n t bid d er o nce agai n 1·ests w ith the B id Adjudicat ion Commi ttee.
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66. In my view, the letter was indeed stale and invalid for the purpo ses of the tender. In effect,
therefore no Lette r of Good Standing was submitted by Shula .
c. NON-COMPLIANCE WITH FINANCIAL CAPACITY REQUIREMENTS
i. APPLICANT'S VERSION
67. One of the Tender Notice requi rements was that a bidder score at least 60% (24 out of 40) in
the functio nality (qua lity) assessme nt. This required bidde rs to submit a certified letter from
their banking institution , confirming their credit rating. ISF failed to meet this mandatory
tender requirement in the following respects:
a) The Tender Evaluatio n Report states that the ISF Shula JV scored a total of 26 points. This
equated to 65% in the 'quality' assessment. In the 'Financial Capacity' category the JV
scored 6 out of a possible IO points.
b) In order to receive a score of 6 points in this category , a credit rating of Grade C was
needed.
c) The ISF Shula JV should not have been awarded 6 points for the following reasons:
1. The JV bid documents contained a letter from Nedbank confirming that the JV
had a Grade I (CRG) and bank Code C.
11. the JV's bid documents from FNB confirming the account of 'Shula Construction
CC but, however, did not state Shula's credit rating.
d) Thus, the ISF Shula JV failed to subm it a certified letter from the relevant banking
institutio ns confirming both JV members' credit ratings. In the result, the score awarded
should have been zero .
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e) Had the proper score of zero been given for 'Financial Capacity' , the ISF Shula JV wou ld
have scored 20 after 14 in the functionality eval uation. This would have resulted in a score
of 50%, which fell short of the mandatory threshold of 60%. At most, the JV should have
been awarded a score of 2 points for cred it rating of Grade C. This would have resulted in
a score of 22 out of 40 being 55%. On any interpretation therefore, the JV's bid should
have been disqualified at the first stage of evaluat ion and should not have advanced to
evaluation on price and preference points.
68. Therefore , the applicant submits that under the legality principle, the award of the tender to
the ISF Shula JV was unlawful.
11. FIRST RESPONDENT'S VERSION
69. The first respondent disputes the applicant's contention that the JV failed to comply with this
requirement. It contends that the JV had submitted a letter of good standing confirmi ng that
ISF was in good standing with ISF being the 70% beneficiary of the JV, and that this resulted
in the JV being awarded 6 points.
iii. SECOND RESPONDENT'S VERSION
70. The second respondent submits that they compl ied with the requirement as, on their version,
they submitted a letter of good standing which resulted in the JV being awarded 6 points.
Moreover, that neither the first nor the second respondents were part of the decision-making
process.
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71. In my view, whether the respondents were part of the decision-making or not is not relevant in
the determination of whether there was compliance with the tender requirements or whether
the contract is unlawful and to be reviewed and set aside.
a. FRAUDULENT MISREPRESENTATION REGARDING INTENTION TO OPERATE
ASAJV
i. APPLICANT'S VERSION
72. In the submitted bid, ISF and Shula presented that they were a JV and as such would use the
combined skill and expertise to carry out the tender. A proper reading of Shula's answering
affidavit , however, states the following:
a) Shula was part of the !SF Shula JV for the border wall project in name only as Shula never
intended to cond uct any work or otherwise participate in the project for which the tender
was awarded.
b) ISF and Shula formed the JV in order to increase their CIDB rating, which allowed them
to tender for projects of higher value. They only tendered as a JV to meet the mandatory
bid requirement of an 8 CE, CIDB grade. Not meeting this requirement , would have
rendered their bid as individual companies non-responsive .
c) ISF and Shula tendered for two projects as the JV, with the intention that they would then
divide the projects between the two com panies, and work on them separately.
73. In my view, it is therefo re safe to assume that this accordin gly gave Shula and ISF access to
projects that they would not otherwise have qualified for as individual companies. The JV was
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therefore a sham. The two companies planned to, after winning the tende r, split back into
individual companies and work on their respective projects.
74. This is further evidenced by the fact that the new JV agreement was entered into on 9 April
20 19, i.e. after the award of the tender. To illustrate this further, I quote certain clauses in this
agreement.
'2.1 Establishment and purpo se
The joint venture is established for the specific pwpose qf qualifying the parties to tender for
contracts that would otherwise be in excess of the amount legally permissible as a 7CEPE and to
enable them to legally tender for upgraded contacts. This agreement is to govern and regulate the
rights and obligations of each party, which contracts and in what respects they will be responsible,
and how the costs and profit will be divided ....
2. 4 Participation of Parties and Management
2. 4.1 As to the joint venture in respect qf the Bergville Sewer Reticulation contract, !SF shall
attend to all the work as a subcontractor of the joint venture, and any prqfits or losses that !SF may
derive or incur from discharging the works in respect of this subcontract will ensure to the sole
benefit of /SF.
2. 4.2 !SF shall not be obliged to share any profits or loss within joint venture, as pertains to
this project;
2.4.3 As to the joint venture in respect qf the Construction of Concrete Barrier Wall between
uMkhanyakude and Mozambique Border Phase}, Shula undertakes to attend to all the work as a
subcontractor o.f the joint venture. and any profits or lo.~·ses 1h01 if derives or incurs.from dis charging
the works in respect of this contract will ensure to the sole benefit of Shula;
23
2. 4. 4 Shula shalt not be obliged to share any profits or loss with the joint venture, as pertains to
the project .... '
ii. FIRST RESPONDENT'S VERSION
75. No submissions were made by the first respondent in respect of this ground of review.
ii. SECOND RESPONDENT'S VERSION
76. No submissions were made by the second respondent in respect of this ground of review.
77. I have considered the objection by the first and second respondents about this ground ofreview
being raised by the applicant in its Heads of Argument for the first time. It is trite that a party
should be given an opportunity to answer all allegations on which an applicant will rely.
Moreover , the purpose of pleadings is to define the issues for the other parties and the court.
78. In my view, this issue goes to the heart of the content and intention of section 2 I 7 of the
Constitution. In the interest of justice, I discussed the submission by the applicant in this regard
above.
79. As stated earlier though, and even in the absence of the fourth ground review, one or more of
the remaining three grounds of review wou ld amount to an unlawful contract to be reviewed
and set aside.
80. Bearing in mind these trite principles , I therefore make no finding in respect of the fourth
ground of review.
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H. REMEDY
81 . The applicant seeks an order reviewing and setting aside the award of the tender to the JV. In
addition, the SIU seeks that the JV pay the total amount received from the KZN DoT pursuant
to the award.
82. In the alternative, the SIU seeks a direction that the JV should repay the profits made by the
JV or the individual partners pursuant to the award and the implementation of the tender.
Shou ld this relief be granted, the SIU seeks ancillary relief that sets out the process by which
the JV's profits will be determined.
83. It is trite that this Special Tribunal has broad remedial powers.
84. In the event that the Tribunal finds that the impugned contracts fall to be reviewed , the SIU
seeks a just and equitable remedy or appropriate consequential relief in terms of Section 4( I)( c)
read with section 8(2) of the SJ U Act.
85. This Tribunal's jurisdiction to conduct legality reviews and its wide remedial powers in terms
of the Specia l Invest igating Units and Specia l Tribunals Act Act No. 74 of 1996 ("SIU Act"),
were recogni sed in Ledla 6 where it was inter alia held as follows:
'[66] Secondly. the preamble of the SIU Act and section -I make it abundant(v clear that the Au
has us ifs ohjec1ive . amongst others, /he establishm ent £Jj.,•1r11ctures, including the .',pecia l Tribunal.
6 Supra note 1 at paras 66-67.
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to address the rampunl corruption in al/fo rms ofma!feasance in our counlly. The preamble qf 1he
SIU Act outlines its pwpose as to-
"provide for the establishme111 of Special Investigating Units for the purpose qf' investigating
serious malpractices or maladministrati on in connection with the administration qf State
institutions. State assets and public money as well as any conduct which may serious~11 harm the
interests of the public and of imtit uting and conducting civil proceedings in any court ()flaw or a
Special Tribunal in its own name or on belw(fof Slate institutions: to provide for the revenue and
expendin,re of'Special Investigating Uni ls; to pmvidefryr the establish111ent of Special Tribunals so
as to adjudicate upon civil mailers emanatingfi ·om investigations b,v Special Investigating Units,
and to provide.for mallers incidental thereto. "
[67] The funct ions of the SIU are set out in section 4( 1 )(c) of the SIU Act as follows :
..... to institute and conduct civil proceedings in a Special Tribunal or any court r?f'lawfor-
(i) any relief to ll'hich the Swte institution concerned is entitled. including the recovery of any
damaJ.:e.,· or losses and the prevention of potential damages or losses which may be s,~[fered hy
such a State i11stitutio11; (my emphasi.\)
(ii) any relielrelevant to any investigation; or
iii) any relief relevant /0 the inlerests of a Special Investigating Unit. ··
86. This Special Tribunal 's remedial powers include the power to:
a) grant an order to review and set aside an unlawful procurement contract; and
b) g runt uny appropriate order tu g ive effect LO the Tribum11·s rulin g that th e
procurement contract was unlawful.
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87. The powers included in the Tribun al's arsenal are contained in section 8(2) of the SIU Act.
They include the powers to:
a) Issue suspension orders. interlocutory orders or interdict s on application by such
Unit or party;
b) Make any order, which it deems appropriate so as 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.
88. The issue ofremedy in the review of administrative actions has been at the centre of numerous
judgments in our courts recently. The Allpay II matter had laid down the guidi ng principles
since 20 I 4. The proper interpretation of the Allpay II judgment had, however, recently been
discussed in the matter of Mafoko Security Patrols (Pty) Ltd 7.
89. The issues that were grappled with in Allpay Consolidated Investment Holdings (Pty) Ltd
and Others v Chief Executive Officer of the South African Social Security Agency and
Others8 ("Allpay II" ) was that the company who was awarded with a contract could walk
away and leave welfare recipients without a way of getting their grants. In that matter the
payments continued until a new servic e provider was appointed. This is unlike the facts before
me where a different service provider was in fact appointed to complete the construction of the
barrier wall. A new tender was issued for this purpose. Whether the wall was subsequently
compl eted is not an issue current ly before this tribunal.
7 Mafoko Secur ity Patro ls (Pty) Ltd and Others v Mjaye li Security (Pty) Ltd and Others [2025) ZASC A 179.
8 20 14 (4) SA 179 (CC).
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90. The issue of an innocent tenderer is in my view at the center of the remedy sought by the SIU
in this matter. It is useful to discuss , as was done in Mafoko , the developments of the law on
this issue as discussed by our courts since Allpay II was decided.
91. In Special Investigating Unit v Phomella Investments (Pty) Ltd and Another9, the mean ing
of Allpay II was discussed . It was held that the award of a tender that is subseq uently found
to be unlawful and inval id does not give rise to a right to benefit from such an unlawful
contract. The follow ing was stated in Mafoko citing Allpay II:
'[67] It is true that any invalidation of the existing contract as a result of the invalid tender
should not result in any loss to Cash Paymaster. The converse, however, is also true. It has
no right to benefit from an unlawful contract. And any benefit that it may derive should not
be beyond public scrutiny". I shall,for convenience, call this the two-truths dictum. '10
92. The SCA in Mafoko , supra, therefo re approved this interpretatio n of Allpay II by the SCA in
Phomella.
93. Following this reasoning, it is necessary for this tribun al in exercising its discretion to craft a
just and equitab le remedy to assess the blameworthiness of the first and second respondents
and whether they sho uld be entitled to the profits from the undisputed serv ices it rendered to
74% of the building.
9 2023 (5) SA 60 I (SCA).
10 Mafoko supra note 7 at para 11; Allpay II supra note 8 at para 67.
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94. From the respon dents' submissions, it seems as if they consider these basic principles which
are the cornerstones of our democratic state as opt iona l. It seems as if they consider that finding
loopholes in the system, even if there are none, is the way in which private individuals and/or
companies should be contracting with the state. In my view, allowin g this would be to carve
away at these cornerstones of our democracy.
95. Followi ng proper procurement procedures is not a cho ice. It is a const itutional obligation.
Disrega rding these principles laid down in section 2 17 and in particular section 21 7( I )(b) of
the Constitut ion, is accordingly a violation of a basic constitu tional principle.
96. Finally, in respect of the remedy sought by the SIU and considering the develop ments in our
constitu tional jurispru dence, in my view, the Act is c lear that the recovery of damages that a
state institution may suffer is one of the purposes of the SIU Act. The setting up of this Tribunal
would be a futile exercise if it did not resu lt in the recovery of damages to the state where the
review of contract ual agreements is successfu l and set aside.
97. In considering the factors present in th is matter, I am of the view that the more than R62 million
which the KZN DoT had to spend on a second tender to complete the construction of the wall,
is a relevant consideration as this was an additiona l costs incurred by the tax payer and the
pub lic purse.
98 . More important ly though , state officials shou ld be held responsible where they are found to be
implicated in the financial loss suffered by the state where unlawful contracts are ente red into.
29
See in this regard the judgment by this tribunal in Spec ial Investigating Unit v Hawulethu
and 2 others 11 .
99. Section 4(1)(c) of the SIU Act states that a state institution is entitled to the 'prevention of
potential damages or losses ... '. The Procurement Act 28 of 2024 gives effect to this section
while at the same time ensuring procedural fairness to the affected party(s).
I 00. This tribunal is obliged to prevent future damages to the State. This Act would be a great
tool in the arsenal of weapons in the fight against corruption. As the Procurement Act is not in
force yet, it cannot yet be used to prevent the possib ility of the same contractors being awarded
a tender to provide services to a state institutio n after a finding of a contravention of section
217 of the Constitution. This is regrettable. This Tribunal is, however, empowe red in terms of
the purpose of the SIU ACT to make any order which gives effect to its mandate.
I. COSTS
10 I. lt is trite that costs should follow the cause. The applicant was forced to use public funds
to pursue this matter. It bears noting that the first and second respondents did not serious ly
dispute the fact that the B-BBEE certificate was false and that they at no stage took any
respons ibility.
102. Therefore , I can find no reason to divert from this trite princ iple in respect of costs .
11 (KN0S/2024) [2025] ZAST 21.
30
J. CONCLUSION
I 03. Considering the first ground ofreview in respect of the false and or fraudulently issued B
BB EE certificate, I first took into account the fact that the responde nts does not seriously
dispute this ground. More important ly though, this is a flagrant disregard of a basic
requirement. An invalid B-BBEE certificate amounts to no certificate being submitted.
Consequently , I find that the award of the tender to the ISF Shula JV was unlawfu l because a
falsified and invalid B-BBEE certificate was provided. Moreo ver, as discussed above , no
responsibility for this falsified certificate is taken by the first and second respondents.
I 04. I am in agreement with the applicant in this matter that the merits of this review could
succeed on this basis alone. This requirement answers to the constitutional imperative in
sect ion 217 (2)(b ). Any attempt to bypass this constitutional section which is aimed at ensuring
'the .. . advancement of persons, or categories of persons, disadvantaged by unfair
discrimination . ... ' should be conside red by our courts with the necessary seriousness. Despite
this failure though , and in the interest of justice , the merits were traversed.
I 05. In respect of the second ground of review, i.e. the expired Letter of Good Standing , as
discussed above , this resulted in the award of the tender to the JV being unlawful and falls
to be set aside under the principle of legality.
106. The third grou nd of review, as discussed above , in relation to the non-compliance with
financial capacity requirements , I am of the view that the tender to the ISF Shula JV was
31
unlawful and falls to be set aside under the legality princ iple. This ground , on its own, would
simi larly be sufficient for the review and setting aside of this contract.
I 07. It is trite that it is impermi ssib le for parties to bid for and win a tender as a joint venture
without even intending to operate as a joint venture. As stated above however, no finding is
made on this ground of review.
108. In my view, ISF and Shula's misrepresentation rendered the award of the tender reviewable
on the following grounds:
a. A mandatory and material condition of the empowering provision was not complied with
because the JV failed to correctly set out who the true bidder was.
b. The tender award was based on a materia l mistake and/or misrepresentation of facts.
c. The decision to award the tender to the ISF Shula JV was taken because releva nt
considerations were not taken into account.
d. The decision was taken infraudem legis.
K. ORDER
I 09. In the circ umstances , l make the following order:
a. The decision of the third respondent to award the tender and subsequent contract to the ISF
Shula Joint Venture (compris ing the first and second respondents) for the construction of a
conc rete barr ier wall between Umkhanyakude and Mozambique - phase l under tender
number ZNT4 128/16T in terms of Proclamation RI6 of 2021, is reviewed and set aside .
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b. The first and second respondents are ordered to disgorge the profits made by ISF Shu la JV
(comprising the first and second respondent) pursuant to the award and implementation of
the tender. The follow ing process should be followed :
1. Within 30 days of the Tribuna l's order, the first and second respo ndents must submit a
statement setting out the !SF Shula JV's income, expend iture and profits made in the
executio n of the tender award (the statement) , together with supporting documents
substant iating the amounts set out in the statement.
11. Within 30 days of the subm issions of the stateme nt, the applicant may indicate whether
it accepts or disputes the statement.
111. If the SIU accepts the statement , the first and second respondents shou ld make
payment of the total amount of profits into an account nominated by the app licant (the
details of which must be provided by the applicant).
iv. If the applicant disputes the accou nt and/or sum of profits claimed in the statement,
the matter should be refer red back to the spec ial tribun al (in terms of section 8(2)(b)
of the SIU act) for an expedited debatement of the state ment and determination of the
amount of profits earned by the ISF Shula JV as a conseque nce of the award of the
tender and the subsequent contract.
v. In the case of such a dispute , once the issue is resolved and upon the return demand by
the app licant to pay the sum of the profits so determi ned, the first and second
respondents shall be liable to pay the determ ined sum (jointly and severa lly) within 60
days of the demand, together with interest a temporae mora as prescribed from time
to time , from the date of d eterminati o n of the payab le su m until the date of payment.
33
c. The first and second respondents are ordered to pay the costs of this application (including
the costs of two counsel, one being senior counsel on a joint and several basis , the one paying
the other to be absolved) .
d. The third and fourth respondents are ordered to, within 30 days of the granting of this order,
start disciplinary procedures against those officials who served on the Bid Evaluation
Committee , who , at the time of the granting of this order, had not been disciplined for their
involvement in the awarding of this contract.
UDGE FORTUIN
MEMBER OF THE SPECIAL TRIBUNAL
Appearances:
For the applicant: Adv. ZZ Matebese SC assisted by Adv E Webber
Instructed by: State Attorney Pretoria.
For the first respondent: Adv. J Moraka
Instructed by: Maduna PJ Attorneys
For the Second respondent: Adv I Pillay SC
Instructed by: MB Pederson & Associates
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For third and fourth respondent: Adv. D Mtswen i
Instructed by: Mbili Attorn eys
Date of hearing: 10-11 July 2025
Date of judgment: 31March 2026
Mode of delivery
This judgment is handed down by email transmission to the parties' legal representatives.
uploading on Case lines and release to SAFLU and AFRI CANLil. The time of deliveLy is
deemed to be 31 March 2026
35