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)
HELD VIRTUALLY
CASE NO: GP21/2024
In the matter between:
THE SPECIAL INVESTIGATING UNIT Applicant
and
(1) REPORTABLE: NO
(2) OF INTEREST TO OTHER JUDGES: YES
(3) REVISED: YES
28/04/2026
_______________ ____________
SIGNATURE DATE
STEELWOOD INTERNATIONAL t/a MADENA (PTY) LTD First
Respondent
MEC: GAUTENG DEPARTMENT OF HEALTH Second Respondent
DEPARTMENT OF HEALTH: GAUTENG Third Respondent
Summary
Administrative Law — Legality Review — Locus Standi — Undue Delay — Condonation —
Material Non-Joinder — Hearsay Evidence — Just and Equitable Remedy.
JUDGMENT
MASHILE J
Introduction
[1] The Applicant (“the SIU” ) seeks to review and set aside a decision of Ms
Lehloenya, the Chief Financial Officer of the Gauteng Department of Health (“the
Department”) dated 20/21 April 2020. In terms of the decision, the Department procured
personal protective equipment (“PPE’s ”) from the First Respondent (“Steelwood”). The
SIU further seeks to have this Tribunal declare unlawful and invalid all resulting
commitment letters, contracts, and purchase orders issued by the Department to
Steelwood.
[2] The application is founded on th e Department’s failure to observe legally
prescribed procurement processes when awarding the bid and thereafter entering into the
contract with Steelwood. These processes stem from Section 217 of the Constitution of
the Republic of South Africa 1996 (“the Constitution”) and from other legal prescripts
through which it finds expression. These are the National Treasury Instructions Notes and
the applicable provisions of the PFMA, with the associated Regulations, germane to
emergency procurement processes.
[3] Steelwood opposes the application. It has raised various preliminary points on
which it contends the review application should be dismissed. The remaining respondents
(“the MEC”) and the Department are not challenging the application, perhaps suggesting
that they will abide by the outcome. I deem it important to address these preliminary
points before merits, as each could be dispositive of the application. The following are
the bases on which Steelwood maintains that the application should be dismissed:
3.1 The SIU lacks locus standi;
3.2 The entire application is premised on inadmissible hearsay evidence;
3.3 There is a material non-joinder of persons who have a direct and substantial
legal interest in the matter;
3.4 There is material dispute of fact which is incompatible with seeking final
relief in motion proceedings;
3.5 The SIU has unreasonably delayed bringing the review application; and
3.6 The facts on which the application is premised do not support disgorgeme nt
of profits or are against Steelwood.
[4] Steelwood has also brought a counterclaim against the Department for payment of
the amount of R43 057 925.35. The SIU opposes the counterclaim on the basis that the
Department, and not the SIU, is the proper party against whom such a claim ought to be
instituted. In addition, the SIU contends that the Department is entitled to raise a defence
of prescription, insofar as Steelwood may have failed to deliver the mandatory notice in
terms of Section 3 of the Institution of Legal Proceedings against Certain Organs of State
Act 40 of 2000, should it be found that such notice ought to have b een given prior to 6
November 2023.
Preliminary Points
The Siu’s Lack of Locus Standi
[5] Before dealing with the merits of this matter, the main issue of which I have
outlined above, I deem it opportune to evaluate the points raised by Steelwood.
Steelwood contends that the SIU lacks locus standi because, in support of the relief it
seeks, it has attached the incorrect proclamation to its founding affidavit. Instead of
annexing Proclamation R.23/2020 , it attached notice Proclamation 74/2022. This
incorrect proclamation concerns the period from 1 January 2013 to 11 April 2022. It
concerns unlawful or improper conduct by claimants or Applicants or their agents in the
institution of civil action or civil application proceedings for relief against the institutions
in respect of medical negligence claims in a manner that was fraudulent or conducted by
or facilitated through the improper or unlawful conduct of employees or officials of the
institutions or any other person or entity to corruptly or unduly benefit themselves or any
other person and any related losses or irregular or fruitless and wasteful expenditure
incurred by institutions or the State as a result thereof.
[6] According to Steelwood, this administrative error deprives the SIU of the authority
to pursue the relief sought against it. Steelwood contends that, although the SIU has
subsequently annexed the correct proclamation to its replying affidavit after realising its
error, it has failed to make out a proper case in its founding affidavit. On this basis,
Steelwood submits that the application falls to be dismissed, as it is trite that an applicant
must stand or fall by the averments contained its founding affidavit, whi ch must be
self‑contained. The SIU, for its part, attributes the error to an administrative oversight on
the part of its attorneys and seeks to remedy it by the annexure of the correct
proclamation in reply.
[7] While the SIU has corrected the mistake, sa ys Steelwood, it has not attached any
confirmatory affidavit from its attorneys in support of this. Additionally, the SIU has not
made any attempt to supplement the founding affidavit. In this regard, Steelwood has
referred this Tribunal to several cases a s authority for their assertion, among which is
ACSA (SOC) Ltd v Tswelokgotso Trading Enterprise CC1, where the Court held:
“Consequently, the applicant must set out sufficient facts in the founding affidavit to
disclose a cause of action ; that is, the founding affidavit must be self -contained. The
replying affidavit (and in this instance the supplementary affidavit) cannot be u sed to
augment the applicant's case.”
[8] To cite the ACSA case supra in support of the SIU’s lack of locus standi is
somewhat disingenuous because the facts are obviously distinguishable from this matter.
I say this because the ACSA matter did not involve a situation in which the averments in
the affidavit were correct , but the annexure was not. In this case, all the necessary
averments in the founding affidavit are accurate , including the reference to the
Proclamation. The only sin is that the SIU attached the wrong proclamation. For
Steelwood to succeed with this point, a demonstration of prejudice is necessary.
[9] Steelwood cannot seriously contend that it was unable to respond to the allegations
contained in the founding affidavit merely becau se an incorrect attachment was furnished. As
correctly observed, the most straightforward course available to Steelwood would have been to
request the correct attachment. Moreover, if Steelwood contends that it suffered prejudice as a
result of the error, it has failed to demonstrate such prejudice to the satisfaction of this Tribunal.
In these circumstances, the omission cannot be elevated to a fatal defect. This approach is
consistent with the position adopted by the Court in Trans-African Insurance Co Ltd v Maluleka2
conveying when it stated:
conveying when it stated:
1 ACSA (SOC) Ltd v Tswelokgotso Trading Enterprise CC [2022] ZAGPJHC 410 at para 9.
2 Trans-African Insurance Co Ltd v Maluleka 1956 (2) SA 273 (A) at 278F-G.
“Technical objections to less than perfect procedural steps should not be permitted, in the
absence of prejudice, to interfere with the expeditious and, if possible, inexpensive
decision of cases on their real merits.”
[10] Other than the above, this Tribu nal held in SIU v Fikile Mpofana (Pty) Ltd and
Others3 That Section 5(5) read with Section 4(1)(c) of the SIU Act empowers the SIU to
bring civil proceedings in its own name, seeking the relief to which the Department is
entitled. The review application falls within the rubric of civil proceedings as envisaged
in Section 5(5). It emanates from an investigation conducted by the SIU within its
investigative mandate as set out in Section 2(2) of the Act. The impugned decision relates
to an alleged unlawful and irregular acquisitive act or transaction as envisaged in Section
2(2)(d) of the SIU Act.
[11] The Court in Ledla Structural Development (Pty) Ltd and Others v Special
Investigating Unit4 held that:
“[14] It further held that the review and setting aside of improper or unlawful conduct by
employees of any state institution arising out of an investigation in section 2(2) of the
Act is competent relief that may be sought within the meaning of civil proceedin gs in
the SIU Regulations.
[15] It held that the SIU has the necessary locus standi to institute proceedings in the
Special Tribunal.”
In the result, this point is bereft of any merit and is dismissed.
Material non-joinder
[12] Steelwood contends that the SIU makes serious allegations against Ms Lehloenya
and states that it could not find deviations made by Professor Lukhele. These allegations,
3 SIU v Fikile Mpofana (Pty) Ltd and Others (GP13/2021) [2022] ZAST 4 (10 February 2022) at para 26.
4 Ledla Structural Development (Pty) Ltd and Others v Special Investigating Unit [2023] ZACC 8 at paras 14-15.
says Steelwood, are inadmissible in the absence of primary facts and proper evidence .
Having regard to the allegations made, Ms Lehloenya and Professor Lukhele have a
direct and substantial legal interest in this matter. As such, continues Steelwood, they
should have been joined as parties to the proceedings or at least afforded a fair
opportunity to respond to the allegations against them. Had either of these happened, they
could have shed light on the bald averments made by the SIU.
[13] The legal position on joinder is succinctly captured in the case of Cuducap (Pty)
Ltd v De Bruyn5 where the Court per Meyer JA stated:
“[9] It was not competent for the full court to make that order. It granted relief that
was not sought by Mr de Bruyn. Furthermore, the full court made findings adverse to
Standard Bank’ s interests, without it being a party to the proceedings before the full
court and the high court. The law on joinder is well settled. A court would not deal with
matters where a third party who may have a direct and substantial interest in the
litigation was not joined in the suit or where adequate steps could not be taken to ensure
that its judgment will not prejudicially affect the party’s interests, nor would it make
findings adverse to any person’s interests, without that person first being a party to the
proceedings before it.”
[14] As early as 1949 and well before Cuducap supra , the Court in Amalgamated
Engineering Union v Minister of Labou r6 held that the que stion as to whether all
necessary parties had been joined does not depend upon the nature of the subject matter
of the litigation, but upon the manner in which, and the extent to which, the Court's order
may affect the interests of third parties. In Judicial Service Commission v Cape Bar
Council7 the Court said that the mere fact that a party may have an interest in the
outcome of the litigation does not warrant a non -joinder plea. Thus, the question is
outcome of the litigation does not warrant a non -joinder plea. Thus, the question is
whether Ms Lehloenya and Professor Lukhele will have a direct and substantial interest
5 Cuducap (Pty) Ltd v De Bruyn 2024 JDR 1708 (SCA) at para 9.
6 Amalgamated Engineering Union v Minister of Labour 1949 (3) SA 637 (A) at 657
7 Judicial Service Commission v Cape Bar Council 2013 (1) SA 170 (SCA) at 176I–177A.
in the order this Tribunal will make, or whether the order made will not be sustained or
carried into effect without prejudicing them.8
[15] The SIU is unwavering in its view that there is no need to join Profess or Lukhele,
Ms Lehloenya, or any other official of the Department . I agree with that submission
because, as in the Judicial Service Commission case supra, Ms Lehloenya and Professor
Lukhele may have an interest in the outcome, but that interest may not be sufficient to
constitute a direct and substantial one triggering non -joinder. Their interest in the order is
no more than the possibility of criticisms of lapses in compliance with Section 217 of the
Constitution and other legal prescripts governing the procurement process of Organs of
State, such as the current one.
[16] Accordingly, their interest in the proceedings is, in the main, administrative in
nature and does not constitute a direct and substantial legal interest in the outcome of this
review as contemplated in our case law. On the facts of this matter, no basis exists upon
which their joinder could be justified, save for a scenario in which the S IU were to seek
substantive relief directly against them. Indeed, their non -joinder operates to their
advantage, as any decision by the Department to pursue a claim for damages against them
would have to be founded upon the statutory contract and would, in all likelihood, be met
with a defence of prescription. Properly characterised, their rights are not affected by the
subject matter of this litigation, and they accordingly lack a direct and substantial interest
in its outcome. It follows that the point in limine based on non-joinder cannot succeed.
The entire application is premised on inadmissible hearsay evidence.
[17] Steelwood argues that the SIU’s application is wholly founded on inadmissible
hearsay evidence. Additionally, the SIU has made no attempt to address the provisions of
hearsay evidence. Additionally, the SIU has made no attempt to address the provisions of
Section 3 of the Law of Evidence Amendment Act in its founding affidavit. Ms Olivier’s
8 Kethel v Kethel’s Estate 1949 (3) SA 598 (A) at 610.
statement that the contents of her founding affidavit fall withi n her personal knowledge
and are true and correct is objectively false. As such, says Steelwood, the SIU is
precluded from relying on facts which do not fall within Ms Olivier’s personal
knowledge. As an example, Steelwood points out that Ms Olivier was no t directly
involved in the procurement of the masks and gowns mentioned above. Instead of
attaching confirmatory affidavits from officials involved in the procurement of the gowns
and masks, she has attached affidavits from officials who signed those affidavits before
her founding affidavit.
[18] I am at a loss as to why Steelwood regards the affidavit s of the Department ’s
officials as hearsay evidence requiring confirmation. Ms Olivier, the deponent to the
founding affidavit, conducted the interviews with those officials and reduced their
evidence to sworn statements. Given that background, how can such evidence be
inadmissible hearsay when Ms Olivier conducted the interviews personally ? The
affidavits may not be confirmatory, but they are certainly admissible as evidence relevant
to this application. As such, she has first -hand knowledge of what the individuals she
interviewed stated. There is no place in those statements where an appeal to the
credibility of a third party is necessary. I n the Mpofana case mentioned supra, this
Tribunal held that such affidavits obtained under similar circumstances were admissible.
[19] The relevant statutory provision, insofar as hearsay evidence is concerned, is
Section 3(1)(c) of the Law of Evidence Amendme nt Act 45 of 1988, which lays down
that:
“Subject to the provisions of any other law, hearsay evidence shall not be
admitted as evidence at criminal or civil proceedings, unless-
(c) the court, having regard to-
(i) the nature of the proceedings.
(ii) the nature of the evidence.
(iii) the purpose for which the evidence is tendered.
(iv) the probative value of the evidence.
(v) the reason why the evidence is not given by the person upon
whose credibility the probat ive value of such evidence
depends.
(vi) any prejudice to a party which the admission of such
evidence might entail; and
(vii) any other factor which should , in the opinion of the court,
be taken into account, believes that such evidence should be
admitted in the interest of justice.”
[20] The Supreme Court of Appeal in S v Ndhlovu defined “probative value” in the
following terms:
“Probative value’ mea ns value for purposes of proof. This means not only, ‘what
will the hearsay evidence prove if admitted?’, but ‘will it do so reliably?’ In the
present case, the reliability guarantees are high. The most compelling justification
for admitting the hearsay in the present case is the numerous pointers to its
truthfulness.”9
[21] The Constitutional Court in the matter of Kapa v S 10, held that admission of
hearsay evidence is only allowed if it is in the interest of justice to do so, together with
the factors in S ection 3(1)(c) of the Law of Evidence Amendment Act, as I have set out
above.
“In determining whether the evidence is reliable, the court must consider (i) any
interest in the outcome of the proceedings by the witness (ii) the degree to which
it is corroborated or contradicted by other evidence (iii) the contemporaneity and
spontaneity of the hearsay statement and (iv) the degree of hearsay.”
9 Ndhlovu and others v S [2002] 3 All SA 760 (SCA) at 45.
10Kapa v S 2023 (4) BCLR 370 (CC) at para 77.
[22] The significance of the evidence placed before this Tribunal lies in its
corroborative value in relation to the SIU report. The report details the circumstances
under which Ms Lehloenya selected a nd appointed Steelwood, including her decision to
depart from a competitive procurement process. The evidence further confirms
Steelwood’s submission of a quotation and the various steps undertaken prior to the
conclusion of the contract. Notably, Steelwoo d does not dispute the veracity of the
affidavits deposed to by the officials concerned. In these circumstances, Steelwood
cannot persuasively contend that it has suffered any prejudice. Moreover, no application
has been brought to strike out the impugned hearsay evidence. To the extent that any such
evidence relates to alleged non -compliance by departmental officials with the prescribed
procurement processes, its admission is, in any event, in the interests of justice,
particularly where its purpose is to establish the constitutional invalidity of the contract
concluded between the Department and Steelwood.
[23] Additionally, the impact of refusing to a dmit the evidence should not be
downplayed or forgotten. In short, it will defeat the objective of the whole investigation
intended to detect irregularities, unlawful conduct and malfeasance, which had caused
loss to the fiscus. A further purpose of the ev idence is to set aside an unlawful contract
and obtain a just and equitable remedy. If there is any prejudice of the amount to be paid
by Steelwood, it will be addressed by an order of just and equitable relief. Its admission
will therefore serve the interests of justice.
[24] I should add that rule 28(2) empowers the Special Tribunal, in the exercise of its
powers and the performance of its functions, to take such steps in relation to the hearing
of a matter as may include the relaxation or abandonment o f the strict application of the
rules of evidence, where this is necessary to give effect to the objects of the Act. In light
rules of evidence, where this is necessary to give effect to the objects of the Act. In light
of this provision, I would in any event be prepared to invoke the rule for purposes of
admitting the affidavits which Steelwood co ntends constitute inadmissible hearsay. It is,
however, unnecessary to do so, as the affidavits do not constitute hearsay evidence. To
the extent that any such invocation may nevertheless be required, rule 28(2) is applicable.
Material Disputes of Fact
[25] Steelwood claims that the SIU has come to this Tribunal seeking final relief on
motion proceedings concerning issues which it must have foreseen, or ought reasonably
to have foreseen, are replete with disputes of fact. Steelwood adds that this relates n ot
only to the review relief, but also to the relief it seeks concerning the amount it alleges
Steelwood should pay, totalling R11 393 825.94, according to Ms Le Roux . Steelwood
contests the amount calculated as due and owing by Steelwood. Instead, Steelwo od
maintains that the Department owes it R43 057 925.35 for which it has launched a
counterclaim against the Department.
[26] Essentially, disputes of fact arise because Steelwood maintains that it challenges
the whole basis of the SIU’s application. Furt hermore, it disputes the contents of Ms Le
Roux's affidavit. Her affidavit, argues Steelwood, cannot be correct where the SIU seeks
relevant information as part of th e court order to determine income, expenditure and
profit. Steelwood concludes that this constitutes a genuine dispute of fact and a
contradiction of facts on the SIU’s version.
[27] Steelwood further argues that it has dealt with the SIU’s non -meritorious defences
to the counterapplication. I agree with the SIU that there is no substantiation for the relief
Steelwood seeks. However, this does not mean that I have disregarded Steelwood’s entire
answering affidavit. On the contrary, I have carefully perused the answering affidavit. At
paragraph 75 of the answering affidavit, Steelwood refers to Annexure “AA10”, which is
supposed to be a breakdown of the amount claimed by Steelwood in the
counterapplication. On perusal, I could not find the breakdown of the a mount nor could I
counterapplication. On perusal, I could not find the breakdown of the a mount nor could I
find Annexure “AA10”. All there is are invoices strewn about, and they are not marked.
Needless to state that I could not trawl through them to determine their relevance to the
amount Steelwood is claiming in the counterapplication.
[28] In the circumstances, I discern no disputes of fact arising from Ms Le Roux’s
computation of the amount of R11 393 825.94 allegedly due by Steelwood to the
Department. While the evidence explaining the manner in which this amount was
calculated is clear and unambiguous, it is of no relevance to the determination of whether
a factual dispute exists for purposes of these proceedings. This is so because the relief
sought in the notice of motion is directed at requiring Steelwood, by reference to its
financial statements and invoices, to determine the profit it earned from the Department.
Accordingly, the fact that Steelwood has launched a counterapplication claiming payment
in the amount of R43 057 925.35 does not give rise to a dispute of fact in the mat ter
between Steelwood and the SIU.
[29] The main obstacle to the Tribunal’s jurisdiction over disputes of fact is that it lacks
jurisdiction to adjudicate contractual disputes between the Department and Steelwood.
The matter with which this Tribunal is co ncerned emanates from the Department and
Steelwood undermining Section 217 of the Constitution and other legal prescripts
governing the procurement processes of Organs of State. To the extent that Steelwood
may argue that the SIU has brought this review on behalf of the Department, I need to
state that the SIU is doing so as a separate and independent entity, not on behalf of the
Department. This is notwithstanding that the SIU, were it not for Section 4(1) (c) of the
SIU Act, would not have had jurisdiction to sue Steelwood.
[30] Quite apart from the fact that the disputes raised by Steelwood are not bona fide,
they do not arise o n the facts of this matter, as the amount of R43 057 925.35 claimed in
its counterapplication is not capable of determination in these proceedings. This
its counterapplication is not capable of determination in these proceedings. This
Tribunal’s mandate is circumscribed by the provisions of the SIU Act, and it does not
extend to adjudicating contractual claims for payment advanced by Steelwood against the
Department. Steelwood’s failure to draw a distinction between the SIU and the
Department is thus misplaced. In the result, there is no basis for a referral to oral
evidence, and the point raised in respect of disputes of fact must be rejected.
Undue Delay
[31] Steelwood contends that the delay in the institution of these proceedings is so
unreasonable that the SIU ought not to be granted condonation for the late launch of the
application. The factual background explaining why the SIU instituted the proceedings
approximately one year and ten months after the conclusion of its investigation is not in
dispute. The parties are, however, sharply divided on whether the delay is unreasonable
and, if so, whether, having regard to all the relevant circumstances, condonation ought
nonetheless to be granted.
[32] The approach to be adopted in condonation under the principle of legality is now
settled, as is borne out by decisions of the Constitutio nal Court, the Supreme Court of
Appeal and various Divisions of the High Courts. In Buffalo City Metropolitan
Municipality v Asla Construction (Pty) Limited11, the Court held:
“[48] Legality review, on the other hand, has no similar fixed period. This
Court, i n Khumalo, endorsed the test enunciated by the Supreme Court of
Appeal in Gqwetha for assessing undue delay in bringing a legality review
application (the Khumalo test). Firstly, 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 circumstances of the matter. Secondly, if the delay
is unreasonable, the question becomes whether the Court’s discretion should
nevertheless be exercised to overlook the delay to entertain the application …”
[33] It was further held in the Buffalo City Metropolitan Municipality case that , in
assessing the undue delay, the clock starts running from the date the applicant became
assessing the undue delay, the clock starts running from the date the applicant became
11Buffalo City Metropolitan Municipality v Asla Construction (Pty) Limited 2019 (6) BCLR 661 (CC); 2019 (4) SA
331 (CC) at paras 48 to 63.
aware, or reasonably ought to have become aware, of the action taken. In opposition to
Urban Tolling Alliance v South African National Roads Agency Ltd 12, it was explained
that in legality principle matters, unlike in PAJA cases, there is no statutory presumption
that after the expiry of the hundred and eighty days, mentioned in the Promotion of
Administrative Justice Act …the delay will automatically become inordinate, requiring a
party to apply for condonation. All that is required is the application of the two -stage
Khumalo Test, as I have set out above.
[34] The reasonableness of the delay in legality principle matters under the first leg of
the Khumalo test is that it ought to be evaluated on, among others, the explanation
offered. Where the assessment reveals that the delay is elucidated and excusable, it will
be reasonable , and a consideration of the merits will be necessary. The explanation
required for the delay must cover the whole period of the delay. 13
Was The Delay Reasonable or Unreasonable
[35] The impugned decisions were taken on 20 and 21 April 2020 , respectively. The
Proclamation entrusting the SIU with the investigation was promulgated on 23 July 2020.
Given that background, it can be inferred that the SIU received formal instructions to
investigate from the President shortly after the Proclamation. The investig ation
commenced then and concluded on 29 August 2022 , after which Ms Olivier submitted
her findings to the SIU Management Team. Following the finalisation of the
investigation, the SIU issued the founding papers in this application during June 2024.
The question is whether the period taken to issue the founding papers in this application
was unreasonable, given the context in which it occurred.
12 Opposition Urban Tolling Alliance v South African National Roads Agency Ltd [2013] 4 All SA 639 (SCA) at
para 26.
13Tasima (Pty) Ltd v Department of Transport and Others 2017 (2) SA 622 (CC) at para 153. Where there is no
explanation, the delay will necessarily be unreasonable. See also State Information Technology Agency SOC Ltd v
Gijima Holdings (Pty) Ltd 2018 (2) SA 23 (CC).
[36] The delay spans the period 23 July 2020, when the SIU became aware of the
impugned decisions, to 11 June 2024, being the date on which this application was
launched. The delay is therefore approximately four years. The explanation advanced for
this period, particularly the phase between the receipt of the mandate to investigate and
the conclusion of the investigation, is couched in broad and general terms. The SIU avers,
for example, that it became inundated with matters requiring investigation and was
compelled to prioritise those involving substantial amounts of public funds. However, it
fails to provide any meaningful detail, such as the dates on which those matters were
referred to it or when they were finalised by the courts. In my view, this explanation falls
short of the standard requi red, as articulated in Tasima (Pty) Ltd v Department of
Transport and Others, namely that an explanation for delay must cover the entire period
thereof.
[37] The explanation that this matter delayed in the hands of the Office of the State
Attorney, that t he Auditor General challenged the validity of the panel of attorneys and
that there were many back and forth of files between these various institutions is not
sufficient. I say this because there have been instances where the SIU had successfully
applied to use private attorneys i.e. those not on its panel. Why did it not do this when it
realised that some of these matters were not moving due to compliance with formalities?
When the matter ultimately landed on the table of its Counsel in November 2023, a
further consultation with its Counsel was postponed to 6 March 2024. Apart from stating
that the recess period intervened after its first consultation in November 2023, it is
completely silent on why it did not do so at the end of the period, which is usual ly during
the second half of January. Against that backdrop, I am constrained to find that the delay
was indeed unreasonable, which triggers the second leg of the Khumalo test.
was indeed unreasonable, which triggers the second leg of the Khumalo test.
Should The Court Exercise Its Discretion and Condone the Unreasonable Delay
[38] In the Constitutional Court case of Grootboom v National Prosecuting Authority
& another ,14 the C ourt, admitting that the concept of the ‘interest of justice’ was
nebulous, stated:
“[22] I read the judgment by my colleague Zondo J. I agree with him that, based
on Brum mer and Van Wyk, the standard for considering an application for
condonation is the interests of justice. However, the concept 'interests of justice'
is so elastic that it is not capable of precise definition. As the two cases
demonstrate, it includes: the nature of the relief sought; the extent and cause of
the delay; the effect of the delay on the administration of justice and other
litigants; the reasonableness of the explanation for the delay; the importance of
the issue to be those mentioned above. The particular circumstances of each case
will determine which of these factors are relevant.”
[39] In the same vein, Victor JP in SIU v Kwasa Food Suppliers (Pty) Ltd and Others,15
stated that the second stage of the Khumalo case inquiry entail a consideration of the
following factors:
39.1 The nature of the decision to be reviewed;
39.2 The duty to review in terms of the relevant empowering legislation;
39.3 The consequences of setting aside the decision to be reviewed;
39.4 The potential prejudice to the affected parties;
39.5 The court’s ability to grant a just and equitable relief;
39.6 The interests of justice.
[40] Turning to the nature of the decisions sought to be reviewed, Ms Lehloenya took
the first impugned decision on 20 April 2020, in terms of which the Department procured
1 500 three‑ply surgical masks from Steelwood at a unit price of R16.50 (VAT inclusive),
for a total consideration of R24 753 750.00. The second decision followed on
21 April 2020, pursuant to which the Department procured 500 disposable theatre gowns
14 Grootboom v National Prosecuting Authority and Another 2014 (1) BCLR 65 (CC) at para 22.
15 SIU v Kwasa Food Suppliers (Pty) Ltd and Others case no: EC02/2024 at para 31.
from Steelwood at a unit price of R175.00, resulting in a total contract value of
R87 500 000.00. The SIU seeks an order declaring the contract concluded between the
Department and Steelwood, together with all purchase orders issued pursuant thereto,
unlawful and constitutionally invalid. In addition, the SIU seeks the disgorgement and
divestiture of any profits earned by Steelwood from the supply of personal protective
equipment under the impugned contract.
[41] It is not disputed that Ms Lehloenya did not have authority to make the decis ions
she did. Her power was limited to R500 000.00. Any procurement of goods or services
above that amount had to be made by the accounting officer, Professor Lukhele in this
instance. In any event, by the time Professor Lukhele issued the PO Ms Lehloenya had
already cancelled the letter of commitment. Besides, Professor Lukhele did not report this
to the Provincial Treasury within 10 days from the date of the decision . The contract was
as such, irregular, constitutionally invalid and destined to be set aside.
[42] The SIU has a duty to review under the SIU Act. The Act authorises the SIU to
launch civil proceedings to review and set aside unlawful decisions, and to seek damages
where appropriate. While Ms Le Roux has computed the amount representing the
Department's overpayment, the SIU is not specifically pursuing payment of that amount.
It seeks relief to review and set aside the award of the tender, not for damages. Paragraph
3.3 of the notice of motion reads that if a dispute arises on the amount to b e paid back by
Steelwood, the matter be re-enrolled for determination by this Tribunal.
[43] If the application is successful, the consequence of setting aside the decisions of
Ms Lehloenya will be that Steelwood will be directed to repay the amount by which it has
been overpaid from the irregular and unlawful transaction concluded between it and the
Department. According to Ms Mbeki of Supply Chain Management, notwithstanding the
Department. According to Ms Mbeki of Supply Chain Management, notwithstanding the
irregularities identified in the procurement process, the Department continu ed to enter
into the contract with Steelwood and to make payments thereunder. This occurred despite
internal concerns having been raised regarding compliance with applicable procurement
prescripts and the absence of proper authority for the decisions taken . The Department’s
continued performance under the contract cannot, however, serve to validate an
agreement that was unlawful from inception, nor can it shield Steelwood from the
consequences of having benefited from an invalid administrative act.
[44] Steelwood contends that the absence of evidence does not necessarily mean that
the evidence was inaccessible. However, this argument overlooks a critical point. The
SIU investigator specifically requested several documents, including proof of
authorisation for the deviation in accordance with applicable procurement prescripts.
Although the Department provided some of the requested documents, it failed to produce
others, including the authorised deviation. In these circumstances, it is reasonable to infer
that the Department did not possess the information it failed to furnish.
[45] The absence of proof of authorised deviation constitutes a clear contravention of
Section 217 of the Constitution , as the process was neither fair, equitable, transparent,
competitive, nor cost-effective. Setting the contract aside can only restore confidence in
the rule of law.
[46] It must be emphasised that Steelwood will suffer no prejudice, as the claim
concerns the return of amounts paid in excess of what was lawfully due to it. Whether
Steelwood should ultimately be deprived of the profit derived from the transaction
depends on whether the Department benefited from Steelwood’s performance and
whether Steelwood’s participation contributed to the constitutional invalidity of the
contract. The return of any amount overpaid by the Department will not prejudice either
party. Conversely, if an overpayment occurred and condonation is refused, the fiscus will
be impoverished by the amount of the overpayment.
[47] The relief sought by the SIU is the review and setting aside of the contract,
followed by the granting of just and equitable relief by this Tribunal. An assessment of
the circumstances under which the parties concluded the contract indicates irregularity
and unlawfulness. If this is established, it would be just and equitable to review and set
aside the contract and to fashion an appropriate remedy in terms of Section 172(1)(b) of
the Constitution. It bears emphasis that, in crafting such a remedy, this Tribunal is not
confined to the relief set out in the SIU’s notice of motion.
[48] A clear contravention of the constitution undermines the rule of law. Where this
occurs, it will always be in the interest of justice that the situation be corrected -
reviewing and setting as ide the contract in this instance. Besides, the contract with
Steelwood deprived many other potential service providers of the opportunity to bid,
thereby disadvantaging the Department’s ability to compare prices . For this reason too,
the interest of justice dictates that condonation be granted.
[49] Other factors for consideration when deciding whether to grant condonation for
undue delay are:
49.1 The nature of the relief sought;
49.2 The extent and the cause of the delay;
49.3 The effect of the delay on the administration of justice;
49.4 The reasonableness of the explanation for the delay;
49.5 The importance of the issue raised.
[50] According to Ms Mbeki, the SCM Management Team un equivocally informed Ms
Lehloenya that Steelwood’s appointment, and the subsequent conclusion of the contract,
contravened the Constitution and the procurement prescripts governing the acquisition of
goods and services by organs of state. The SCM Managemen t Team further advised her
to reverse the appointment and recommence the procurement process in compliance with
Section 217 of the Constitution. Ms Lehloenya disregarded this advice and proceeded
with the appointment. For this reason alone, there are good prospects of success.
[51] The reasons given for the undue delay in launching the review are valid. Most of
the limitations were caused by factors outside the SIU’s power. Mindful that I have stated
that they could have applied for to use private attorney s instead of the Office of the State
Attorney, the process of doing so itself could have protracted and the SIU could have
found itself in the same position. It is also evident that the Office of the State Attorney
was overwhelmed by a sudden influx of cases. I do accept that those matters had to be
prioritised to ensure that those involving large amounts were addressed first, lest the
funds be dissipated.
[52] The back-and-forth of the matters from the SIU to the Office of the State Attorney,
to the panel of attorneys, the Auditor General challenging the validity of the panel of
attorneys, and then back to the Office of the State Attorney had its own fair share of the
delay. I am aware that the consultation with the SI U’s counsel in Mar ch 2024 was rather
delayed and that the SIU does not give a proper account for it. That said, and given that
by then the case had been delayed already, no difference would have been made by
consulting on the first available opportunity following the recess period. In any event, the
magnitude and significance of this case warrant that condonation be granted.
[53] Undue delays in these matters, especially those involving the contravention of the
Constitution, cannot be decided independently of public policy, which is an important
consideration for certainty and finality of matters. 16 The use of State funds for public
benefit must be executed in a manner consistent wit h applicable legislation. No party can
be given an advantage over others, as did the Department for Steelwood by not
advertising the tender. Officials in office, such as Ms Lehloenya and Professor Lukhele,
have a duty to comply fully with the procurement l aws. Accordingly, public policy
have a duty to comply fully with the procurement l aws. Accordingly, public policy
determines that the unlawful conduct in awarding the contract be authorised. Like in
16 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.
many other cases of this kind, Ms Lehloenya defied the advice she received from the
SCM Management Team when she unlawfully appointed Steelwood.
[54] Turning to the issue whether the decision, although unlawful, was made in good
faith.17 When Ms Lehloenya, on behalf of the Department, appointed Steelwood, it was in
complete defiance of the advice the SCM Management Team had given her. The question
arises: why was she so eager to proceed to the point of disregarding the officials involved
in the process ? The feeling that there was something for her in it if the transaction
materialised is not easy to shake -off. Professor Lukhele , too, knew that he had not
obtained approval for the emergency deviation. By overlooking compliance with these
peremptory steps , they excluded other potential service providers who could not only
have legitimised the process but would also have assured a fairer and equitable outcome.
Thus, the decisions were not made in good faith.
[55] The issue is whether, in light of the facts relating to the SIU’s delay in instituting
this application, this Tribunal should exercise its discretion to condone the undue delay. It
is trite that the Tribunal’s discretion to condone an unreasonable delay is broad.
However, as this Tribunal stated in Kwasa supra at paragraph 13, there must be a factual
basis upon which that discretion is exercised in each case. Having regard to the evidence
advanced in explanation of the delay, it would be in the interests of justice to exercise the
discretion in favour of condonation. Accordingly, this preliminary point must fail.
Factual Matrix
[56] Attendant upon the advent of COVID -19 and the subsequent declaration of the
National State of Disaster in March 2020 were several tender irregularity complaints.
These complaints pertained to the procurement procedures to which Organs of State had
to adhere when acquiring PPS during the National State of Disaster. When the disorders
to adhere when acquiring PPS during the National State of Disaster. When the disorders
17 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.
bedevilled the procurement processes, rendering the awards of various bids vulnerable to
compromise, the President of the Republic of South Africa issued and published
Proclamation R.23 of 2020 (“the Proclamation”).
[57] The Proclamation directed the SIU to investigate the matters referred to in the
Schedule to the Proclamation. The investigation covered the period from 19 April
2020 to 23 July 2020 , within dates of publication of the Proclamation, although it also
authorised investigations into matters that took place prior to 19 April 2020 or after
23 July 2020, if they we re relevant to, connected with, incidental or ancillary to the
matters mentioned in the Schedule to the relevant Proclamation or involve the same
persons, entities or contracts investigated under the authority of the Proclamation.
[58] The SIU investigation laid bare that the procurement of the PPEs in the
Department involving Steelwood was flawed with grave irregularities. To understand the
different defences raised by Steelwood, it is important to set out a full background of the
facts.
[59] In March 2020, Ms Trinity Ncala (“Ms Ncala” ), an entrepreneur, seized
opportunity to assist Government and the private sector to source and supply PPE
(“PPE”). Ms Ncala grew a network of suppliers and buyers of PPE in order to supply
PPE to Government and the private sector. One of the companies Ms Ncala contacted
was Steelwood. Steelwood thereafter engaged Ms Ncala as an independent business
development consultant who would find opportunities in the public sector to grow the
business. Through the efforts of Ms Ncala, Steelwood became an accredited vendor with
Government on 26 March 2020. Following placing calls to various departments in
different provinces, Ms Ncala ultimately secured the Department, which invited
Steelwood to submit quotations.
[60] On 19 April 2020, the Managing Director of Steel wood, Mr Quentin McNamara
(“Mr McNamara”) sent a written quotation to Ms Lehloenya regarding the sale of large
quantities of various PPEs by Steelwood. The PPEs comprised of 3 -Ply Surgical Masks
and Disposable Theatre gowns. On 24 April 2020, in her capaci ty as CFO, Ms Lehloenya
issued commitment letters to procure 1 500,000 of 3 -Ply Surgical Masks at R 16,50 each,
and 500 000 of disposable theatre gowns at R 175.00 each on behalf of the Department
from Steelwood. All these prices were VAT inclusive. The co mbined cost of items was
R112 253 750.00.
[61] It is not disputed that Ms Lehloenya did not have the delegation to sign contracts
worth more than R500 000.00. On 29 April 2020, Professor Lukhele, the HOD, signed
and issued Purchase Order (“PO”) Number 4250900261 for the supply of gowns in the
total value of R87 500 000.00. The SIU alleges firstly, that Professor Lukhele did not
approve the deviation from the normal procurement procedures when contracting with
Steelwood. Secondly, the procurement incident w as never reported to the Gauteng
Provincial Treasury for the condonation of the deviation.
[62] On 03 May 2020, Ms Lehloenya sent an email to Steelwood attaching a
cancellation letter for the commitment letter issued on 21 April 2020 for the delivery of
the disposable theatre gowns. The reason for the cancellation of the letter was
Steelwood’s failure to deliver the gowns within 7 days of receipt of the commitment
letter. Although the commitment letter of 21 April 2020 was cancelled due to non -
delivery, the PO of 29 April 2020 with PO number 4250900261 was not cancelled. On 24
April 2020, Ms Ntombiputhi Pooe (“Ms Pooe”) co mpleted a RLS01 – Purchase Request
Form (“RLS01”). Ms Pino subsequently signed this for the 500 000 gowns at R175.00
each.
[63] On 05 May 2020, a RLS01 was completed by Ms Pooe and signed by Ms Pino for
the supply and delivery of 1 500 000 3 -ply Surgical Masks at R16.50 each. An
uncompleted RLS02 - Good & Services Receipt Note (“RLS02”) was uplifted from the
Department for the delivery of the 3-ply Surgical Masks.
[64] In an affidavit obtained from Ms Nombulelo Mbeki (“Ms Mbeki” ), Deputy
Director General: Supply Chain Management, Gauteng Department of Treasury, she
confirms that she was nominated as an advisor to the Department: SCM. She was further
elected to be the Chairperson during the COVID-19 period. Ms Mbeki was elected to be
the Chairperson of the SCM Stream. The purpose of the SCM Stream was to provide
advice on SCM processes and to conduct oversight of the processes followed in the
Procurement of PPE by the Department.
[65] In the aforesaid affidavit, Ms Mbeki further deposed to the fact that:
65.1 During one of the SCM Stream meetings in May 2020 Ms Lehloenya was
requested to give a break down on what processes of procurement was
followed and how much stock was available. Ms Lehloenya did not attend
the next meeting. When she eventually did, she stated that she did not
have enough staff and she used to phone the suppliers herself to request
PPE and to issue commitment letters to every service provider personally.
Ms Lehloenya was informed that her process of appointin g service
providers was not transparent and was contrary to the provisions of
Section 217 of the Constitution;
65.2 Ms Lehloenya was instructed to cancel the commitment letters which were
issued irregularly and without following a procurement process.
[66] In an affidavit obtained from Mr Lesiba Arnold Malotana (“Mr Malotana”), Chief
Operations Officer (“COO”), the Department, Mr Malotana stated that he was delegated
to co-ordinate the Department’s response to the Covid pandemic during the first week in
March 2020. He stated and confirmed that:
66.1 He was appointed on 16 April 2020 as the Deputy Chairperson of the
Covid-19 Bid Adjudication Committee (“BAC” ). According to him this
BAC only dealt with PPE in response to the pandemic. BAC was not
constituted at the time the Department first started to formulate a response
to the pandemic, but months after;
66.2 During the initial period , there was no process t o assist with the
procurement of PPE. The Department did not have an approved tender
process for the procurement of PPE. There was no established Bid
Specification Committee (“BSC”), Bid Evaluation Committee (“BEC”) and
BAC. According to Mr Malotana, Ms Lehloenya had taken over the SCM
process for the procurement of PPE;
66.3 On 06 May 2020, Mr Malotana had a meeting with Professor Lukhele
during which he complain ed that they w ere set up for failure as the BAC
were completely ignored as procurement continued;
66.4 He explained that during a normal procurement process, the procurement is
completed with the Department issuing a purchase order to the supplier
before delivery of the products. The explanation that was given to him for
the issuing of the commitment letters was that the Department was buying
in an emergency situation, and because the Department was replenishing
stock, the Department had to allow the supplier to source the products while
SCM was checking the minimum governance requirements for issuing the
PO.
[67] On 6 July 2020, the SIU (represented by the Project Manager, Ms Lorinda Adlam
and the Senior Forensic Lawyer, Mr Robert Walser) interviewed Professor Lukhele. The
SIU subsequently compiled a draft affidavit, which Professor Lukhele reviewed.
However, the SIU did not finalise the affidavit ; consequently, Professor Lukhele could
not sign it. It is common cause that the head office of the Department received variou s
allegations of irregularities and maladministration in respect of the procurement of PPEs
by the Department during the National State of Disaster, resulting from the COVID-19
pandemic.
[68] Among the concerns raised involved an allegation that Ms Lehloenya was
procuring PPEs and related goods and services without involving any, or all the other role
players, especially the Clinicians and End Users of such PPEs and related good s and
services. Another main disquiet was that Ms Lehloenya was not sharing the scenarios and
statistics compiled by the Scenario Makers and Actuaries with the other role players,
which made it impossible for such role players, the Clinicians and End Users to know and
understand:
68.1 The need and the estimated quantities that could be required at different
times during the national disaster;
68.2 What was being procured in what quantities, and when such goods or
services could be expected;
68.3 Goods were procured from suppliers who are not listed on National
Treasury’s Central Supplier Database;
68.4 Suppliers without verifiable banking details were appointed;
68.5 Orders were placed without the necessary Purchase Orders being issued on
SAP;
68.6 Suppliers did not have valid tax clearance certificates;
68.7 Suppliers were paid without proof of delivery;
68.8 There appeared to be duplicate payments made to suppliers;
68.9 Prices of PPEs may have been inflated as they did not accord with Covid -
19 PPE price thresholds set by the National Treasury;
68.10 Suppliers were paid from the Sundry Account of the Department which
avoids certain checks and balances in the safeguarding of the procurement
and payment processes;
68.11 Ms Lehloenya carried out the abovement ioned or it occurred with her
knowledge, or she ought to have been aware of its occurrence. Ms
Lehloenya did not have any authority empowering her in respect of
anything done by her and had not been given any new, additional or further
Delegations of Autho rity during the national state of disaster to act for and
on behalf of the Department.
[69] The D epartment could not furnish the SIU with the original or copy of the
deviation signed by any person required to do so in accordance with applicable
procurement regulations. In the absence of evidence for the approval of the deviation, the
SIU asks this Tri bunal to infer that Professor Lukhele has never signed or approved the
deviation.
[70] The SIU investigator declares that she has neither at any stage sighted any report
to the Gauteng Provincial Treasury from Professor Lukhele regarding this procurement
occurrence nor submission of any report to the Office of the Auditor General from him
within 10 days from the date of issuance of the Purchase Order regarding the impugned
procurement decision as per paragraph 3.4.3 of National Treasury Practice Note 8 of
2007/8. The Department could not produce such evidence to her or the investigation
team.
[71] Between 20 April and 4 August 2020, Steelwood delivered 1 500 000 (580 boxes
of three -ply surgical masks and 32 995 disposable gowns to Ms Lizelle Van Rooyen
(“Ms Van Rooyen”) at 3G Warehouse, 1 […] K[...] Avenue, Lyttleton Manor, Centurion.
On 05 August 2020, Ms Thandi Pino (“Ms Pino”), Department SCM, sent an email to Ms
Van Rooyen advising her to stop receiving PPE goods at the Warehouse. On 11
December 2020, Ms Van Rooyen enquired from the Department the number of gowns to
be delivered by Steelwood. Ms Van Rooyen stated in her email that the original number
of gowns to be delivered (as per the commitment letter) was 500 000 and the PO
stipulated the value as R87 500 000. Ms Van Rooyen calculated that Steelwood delivered
735 294 gowns which were more than 500 000 gowns required as per the purchase order.
Steelwood delivered 235 462 quantities of extra gowns to the Department.
[72] Mr Dave Selby (“Mr Selby”), of the Department, confirmed this. According to
him, the price of R119.00 per Gown was in line w ith National Treasury Regulations. On
15 December 2020, Ms Van Rooyen emailed Mr Selby to inform him that there were two
suppliers of which Steelwood was one, who had valid PO’s and who could deliver
gowns. Steelwood delivered in total 735 462 disposable theatre gowns to the 3G
Warehouse of which 168 was a donation. Thereafter , the Department flagged Steelwood
as one of several entities that were irregularly appointed for the procurement of PPEs.
Hence, the Department refused to accept further deliveries of the balance of the
remaining procured PPEs from it.
[73] During the same period, Steelwood submitted invoices to the Department for the
PPEs in the amount of R99 823 742.60 and the Department has paid St eelwood R76 307
757.45. A balance of R 26 815 553.60 is outstanding due to the flagging based on
irregularity that marred its appointment. The Department claims that it has not paid the
balance as a result of the irregularity in the appointment of Steelwoo d. On the authority
of the Proclamation, the SIU probed the procurement processes and concluded that
Steelwood was irregularly appointed.
[74] On 29 March 2022, Ms Hesti Le Roux (Ms Le Roux), a Forensic Accountant
appointed by the SIU conducted a financia l analysis between prices on the invoices
issued by Steelwood to the department for the products delivered in comparison to the
regulated prices set by the National Treasury. The analysis has thus far indicated that
Steelwood has potentially overcharged th e Department by R 29 753 372.55 and that if
reduced by the amount payable by the Department of R17 805 877.21, then the net
amount of R11 393 825.94 is repayable by Steelwood to the Department.
[75] The SIU alleges that, apart from the fact that the procurement regulations were not
complied with, Steelwood has overpriced the goods delivered to the Department. The
SIU concludes that the evidence gathered demonstrates that the procurement processes
were compromised when Steelwood was appointed.
Issues
[76] The main issue is to determine whether the Department has, by awarding the bid
and concluding a contract with Steelwood, contravened the various legal procurement
prescripts governing the procurement process of goods and services by Organs of State. If
so, the Municipality has necessarily violated Section 217 of the Constitution that requires
that Organs of State must procure goods and services using a system that is fair,
equitable, transparent, competitive and cost-effective.
Legal Framework and Application
National Treasury Instruction (“NTI”) Note 8 Of 2019/2020
[77] Acting in terms of Section 76(4)(c) and (g) of the Public Finance Management
Act, 1 of 1999 (“ PFMA”) and pursuant to paragraph 9(a) of the Initial Covid -19
Regulations, National Treasury issued Instruction Note 8 of 2019/2020 headed:
“Emergency Procurement in Response to National State of Disaster”. The pertinent
paragraphs of the Instruction Note 8 state the following:
77.1 Its purpose was to facilitate emergency procurement to deal with the
COVID-19 pandemic declared a national disaster on 15 March 2020.
Paragraph 2.2 mentions a circular issued by the Department of Public
Service and Administration (“DPSA”). In that circular the DPSA indicates
that it is mandatory on all departments to “ procure suffic ient hand
sanitisers, soap, gloves, masks, tissues and, where possible, temperature
scanners for use to monitor employees’ possible exposure ” to the COVID-
19 virus;
77.2 Paragraphs 2.3 and 2.4 record that the regulations published under the
Disaster Management Act, 2002 required institutions to continue complying
with the PFMA and the applicable emergency provisions, but institutions
would have to put in place additional measures to prevent the spread of the
COVID-19 virus;
77.3 Paragraphs 2.5, 2.6 and 2.7 note that the nature of the goods were not goods
that were ordinarily procured and the high demand might lead to
uncompetitive and inflated prices and National Treasury had therefore put
in place measures to assist institutions to procure the basic items a nd that
the goods procured “ comply with the specification[s] as determined by the
National Department of Health and at negotiated prices as agreed with
suppliers”;
77.4 To this end, paragraph 2.8 provides that National Treasury has engaged
with Transversal Contract suppliers of these items and has put in place
measures to ensure continuity of supplies, “and to keep the prices in check”.
These items and prices were reflected in an addendum Annexure A: Table 1
to the Instruction Note 8;
77.5 Paragraph 2.9 rec ords that for items not on Transversal Contracts,
quotations had been sought from suppliers, and these were recorded in
Annexure A: Table 2 attached to the Instruction Note;
77.6 Paragraph 3.3.2 notes that institutions that were already participating in
Transversal Contracts “may continue placings orders as usual”;
77.7 In terms of paragraph 3.4, accounting officers “ may place orders with the
suppliers listed on Table 2 for the specific items required”;
77.8 In terms of paragraph 3.5, items that are not listed in Annexure A that are
deemed to be “a specific requirement for the Institution” must make use of
the emergency procurement prescripts in Instruction Note 3. Entities
making use of the emergency procurem ent prescripts “may deviate [from]
inviting competitive bidding in cases of emergency” and accounting officers
and accounting authorities were permitted to expand contracts for goods
and services by up to 15% or R15 million. Anything above that required
treasury approval;
77.9 Paragraph 3.7 stipulated that where more than one supplier per item was
listed on Annexure A, an institution could procure from any suppliers that
had stock available but where an institution or treasury already had a
contract in place, that contract had to be honoured and the institution had to
continue procuring in terms of that contract;
77.10 Paragraph 3.7.6 provided that:
“Institutions may approach any other supplier to obtain quotes and
may procure from such suppliers on condition that-
i. the items are to the specifications as determined by the
National Department of Health;
ii. the prices are equal or lower than the prices in
Annexure A; and
iii. the supplier is registered in the Central Supplier
Database.”
77.11 Paragraph 3.7.7 provides that where institutions had already procured items
prior to the issue of the Instruction Note using the emergency procurement
procedures of Instruction Note 3, “ such procurement must be reported
within 10 days to the relevant treasury.”
Regulation 16A.6.4 with Section 38(1)(a)(iii) of the PFMA
[78] Regulation 16A.6.4 prescribes:
“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 record ed and approved by the accounting officer or accounting
authority”.
[79] Section 38 of the PFMA is headed: “ General responsibilities of accounting
officer” and provides:
“(1) The accounting officer for a department, trading entity or co nstitutional
institution –
(a) must ensure that that department, trading entity or constitutional
institution has and maintains –
(i) …
(ii) …
(iii) an appropriate procurement and provisioning system which
is fair, equitable, transparent, competitive and cost -
effective.”
[80] Steelwood contends that it cannot be held liable because it did not participate in
the process leading to its appointment or the award of the contract. In essence, it claims to
have been unaware of the procedure followed and to have assumed that the Department
had complied with legally prescribed procurement processes. Without making any
finding on Steelwood’s innocence, this contention is more appropriately considered in the
context of determining a just and equitable remedy. To the extent that the point is raised
to challenge the award of the bid and the conclusion of the contract itself, it is misplaced.
[81] Ms Lehloenya had no authority to make the decision to appoint Steelwood because
of several reasons. When making the award, she failed to comply with NTI 03 of
2020/2021 and NTI 05 of 2020/2021. annexure A of the NTI 03 of 2020/21, which
repealed NTI 05 of 2020/2021 states that Mask , face, aseptic: Fluid resistant, Molded,
Blue (3 Ply), good breathability, internal and external faces should be clearly identified
Type l, with ear loops or tie -on unit price is R10.22 per mask (3 -ply Surgical Patient
Mask) and Mask, face, aseptic: Fluid resistant, Molded, Blue (3 Ply), good breathability,
internal and external faces should be clearly identified Type ll, with ear loops or tie on
unit price is R12.48 per mask (3 Ply-Surgical Mask -Health Care worker Mask).
[82] When Steelwood submitted the quotation, it specified that it would supply and
deliver 3 -ply surgical masks for health workers. The prices for both 3 ply masks, one
being for patients and the other for health workers, and disposable gowns, as charged by
Steelwood, did not accord with the pricing schedules per annexure A of the NTI 03 of
2020/2021. Ms Lehloenya appointed Steelwood on 20 April 2020 for the supply and
delivery of the 3-ply masks at R16.50 instead of R12.48 per mask. On 21 April 2020, she
issued another letter of commitment appointing Steelwood for the supply and delivery of
disposable gowns at R175.00.
[83] Ms Lehloenya made the impugned decisions after NTI 03. of 2020/2021 had come
into effect on 15 April 2020. The pricing structure of 3 ply mask and disposable Gowns,
reflected on Annexure A of NTI 03 of 2020/2021 stayed the same after the repeal of
Instruction Note No. 3 was repealed by National Instruction Note No. 5 of 2021/21.
Paragraph 6 of NTI 03 of 2020/2021 requires state institutions to obtain relevant treasury
approval in case of deviation for emergency procurement of masks and gowns as per
annexure A. Steelwood’s argument that Ms Lehloenya’s failure to comply was due to the
cancellation of NTI 03 of 2020/21 is rejected because the repeal did not change the
pricing structure. Ms Lehloenya was therefore obliged to observe it, which she failed to
do.
[84] On 3 May 2020, Ms Lehloenya cancelled the letter of commitment due to
Steelwood’s failure to deliver disposable gowns within 7 days from the date of
appointment. NTI 05 of 2020/2021 repealed NTI 03 of 2020/2021 , which came into
effect on 28 April 2020. Pro fessor Lukhele issued the purchase order after Instruction
Note 5 had taken effect. The issuing of the purchase order was non -compliant as it was
at variance with Instruction Note 5, which sets out the pricing structure for the
procurement of disposable gowns and masks as per annexure A. Professor Lukhele’s
issue of the purchase order, its cancellation notwithstanding, exacerbated the
unlawfulness of the impugned decision as he did not obtain Treasury approval.
[85] Ms Lehloenya’s failure to request quot ations from multiple potential suppliers
after cancelling the letter of commitment constitutes a direct violation of Section 217 of
the Constitution. The process was neither fair, equitable, transparent, competitive, nor
cost-effective. It lacked transpare ncy because no explanation was provided why
Steelwood was selected as the sole preferred supplier. The appointment could not have
been fair or equitable to other potential service providers who were excluded from the
process. Nor was it competitive or cost -effective, as no other suppliers were invited to
submit quotations—an omission that denied the Department the opportunity to consider
alternative service providers and to secure value for money.
[86] Steelwood accepts that the prices it charged for the i tems exceeded those
stipulated in Annexure “A ” but contends that this was justified by the superior quality of
the products supplied. It further asserts that the Department acknowledged the enhanced
quality. However, the prices charged for the 3 ‑ply masks (for patients and healthcare
workers) fell outside the price parameters prescribed in NTI 03 and 05 of 2020/2021,
irrespective of the quality of the material used. If Steelwood elected to supply
higher‑quality materials at prices that were not negotiated or approved, it was not entitled
to vary the agreed prices unilaterally. Steelwood was aware of the nature and
specifications of the masks required by the Department and, having surveyed the market
at the relevant time, ought to have supplied products that complied with those
specifications.
[87] Turning to the disposable Gowns, Steelwood charged the Department R175.00 per
disposable gown as is evident from the letter of commitment and Purchase order. In terms
disposable gown as is evident from the letter of commitment and Purchase order. In terms
of Annexure A of the NTI 03 2020/2021 and NTI 05 of 2020/2021, the price for
disposable gowns is R135.00 per disposable Gown. I agree that the prices set out in
annexure A of the NTI represent the maximum price for PPEs , having regard to product
specified by Steelwood to supply and deliver to the Department, which was included in
the pricing regime of the instruction note. There is a huge obvious difference between the
R175.00 and the amount set out on Annexure A. It should not be disputable that the
difference is the overpayment to Steelwood.
[88] The parties dispute where the onus lies to establish whether Professor Lukhele did,
or did not, obtain deviation approval from National Treasury . Steelwood maintains that
the absence of proof of such approval cannot be equated with its non ‑existence. However,
when the SIU conducted its investigation, it was provided with the documents necessary
to enable it to do so. Those responsible for furnishing the SIU with relevant material did
not produce any deviation approval; instead, they produced only the purchase order
signed by Professor Lukhele.
[89] The difficulty in matters of this nature is that officials employed by organs of state
at the time an investigation commences are often themselves implicated in wrongdoing.
In an effort to avoid accountability, such officials may withhold information that could
implicate them or otherwise frustrate the investigative process by failing to cooperate
with investigators. I accept that, if Steelwood were aware that the deviation approval
existed, it would be in its own interest to produce it, as doing so would u ndermine the
SIU’s contention that no Treasury approval was obtained for the deviation. In these
circumstances, it is reasonable to infer that Steelwood’s failure to produce the deviation
approval is indicative of its non ‑existence. On the available eviden ce, Professor Lukhele
signed the purchase order without obtaining Treasury approval.
[90] Professor Lukhele failed to comply with Section 38(1)(a)(iii) of the PFMA by
ensuring that the Department maintained a procurement system that was fair, equitable,
ensuring that the Department maintained a procurement system that was fair, equitable,
transparent, competitive and cost -effective when Ms Lehloenya made and communicated
the impugned decisions to Steelwood on 24 and 29 April 2020. In terms of Regulation
16A.6.4, Professor Lukhele should have reported the deviation from the competitive
procurement process to the AGSA. He also failed to comply with NTI 05 of 2020/2021,
which required him to report the deviation from the normal procurement process to the
Provincial Treasury. Thus, the process was flawed and rendered the transaction
constitutionally invalid and unlawful.
Supply Chain Management Policy
[91] By signing and issuing the commitment letters before the completion of the
Purchase Request forms (RLS01), Ms Lehloenya violated SCM Policy 2017. It is not
contested that she completed the RLS01 for Masks on 05 May 2020, and that this was
after the commitment letter was signed and issued to Steelwood. She also completed and
issued the two RLS01 Forms for the gowns on 24 April and 5 May 2020 respectively.
This occurred after the signature of the commitment letter of Steelwood.
[92] Ms Lehloenya also lacked the mandatory delegation to sign any Commitment
Letter on the Department’s behalf, as per SCM Delegation signed on 21 June 2018. Item
number 42 of the SCM Delegation provides that the Accounting Authority has the power
to award contracts above R500 000.00.
[93] In Municipal Manager: Qaukeni Local Municipality and Another v FV General
Trading CC 18, it was held that a tender concluded in breach of the legal provisions
designed to ensure a transparent, cost -effective, and competitive tendering process in the
public interest is invalid . In Allpay Consolidated Investment Holdings (Pty) Ltd v C hief
Executive Officer South African Social Security Agency19, the Court held that: “if the
process leading to the bid's success was compromised, it cannot be known with certainty
what course the process might have taken had the procedural requirements been ‘properly
18 Municipal Manager: Qaukeni Local Municipality and Another v FV General Trading CC [2009] ZASCA 66;
2010 (1) SA 356 (SCA) at para 16.
2010 (1) SA 356 (SCA) at para 16.
19 Allpay Consolidated Investment Holdings (Pty) Ltd and Others v Chief Executive Officer of the South African
Social Security Agency and Others 2014 (1) SA 604 (CC) at paras 24 and 27.
observed’” and “deviations from fair process may themselves all too often be symptoms
of corruption or malfeasance in the process.”
[94] The aforegoing constitutes a clear demonstration of a violation of the legislation
governing the procurement process, rendering the transaction constitutionally invalid and
unlawful. As a result, the impugned decisions are susceptible to review under the
principle of legality, as entrenched in Section 1(c) of the Constitution, pursuant to which
this review is brought. Accordingly, the decisions to appoint Steelwood and to conclude
the contract are declared constitutionally invalid and are reviewed and set aside in terms
of Section 172(1)(a) of the Constitution.
Just and Equitable Remedy
[95] According to the SIU, a just and equitable remedy would be achieved if this
Tribunal directs Steelwood to disgorge the profits derived from the transaction in the
amount of R17 827 252.48, alternatively, such amount as may be determined following a
proper audit. The SIU further submits that such an order would not amount to the
divestment of justly earned profit. Instead, it would secure the return of profits unduly
received as a result of exorbitant pricing, in the total amount of R11 393 825.94.
[96] The essence of Steelwood’s counter ‑argument is that this Tribunal is not a court,
and that Section 172(1)(b) of the Constitution confers remedial powers only on courts.
Steelwood further contends that it played no role in the Department’s decision ‑making
processes and is therefore an innocent party inadvertently caught in the impugned
transaction.
[97] The Constitutional Court has confirmed that, although the Special Tribunal is not a
court as contemplated in Section 166 of the Constitution, it is nevertheless empowered to
perform functions ordinarily exercised by High Courts, incl uding the adjudication of
legality reviews and the granting of appropriate remedial relief. In Ledla Structural
Development (Pty) Ltd and Others v Special Investigating Unit ,20 the Court held that the
Tribunal’s jurisdiction encompasses the review and setting aside of unlawful procurement
decisions under the principle of legality.
[98] Steelwood’s asserted innocence may well be a relevant consider ation when
determining the appropriate remedy following a finding of constitutional invalidity. It is,
however, immaterial to the anterior enquiry —namely, whether the impugned decision is
constitutionally invalid in the first place. The declaration of constitutional invalidity turns
on the objective lawfulness of the exercise of public power, not on the culpability or
otherwise of the beneficiary thereof.
[99] Against that backdrop, it is proper to cite the provisions of Section 172(1)(b) of
the Constitution, which provides:
“When deciding a constitutional matter within its power, a court –
(a) …
(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.”
[100] Steelwood have referred this Tribunal to various cases which warn that the
following ought to be taken into account when crafting a remedy:
100.1 Considerations of pragmatism, including the prejudice that would eventuate
from an order setting aside the impugned decision;
100.2 The extent of complicity or innocence of counterparties to state conduct;
and
20 Ledla Structural Development (Pty) Ltd and Others v Special Investigating Unit [2023] ZACC 8 at paras 23-28.
The extent of the state’s delay in instituting and prosecuting proceedings to
review.
[101] I do not accept that the three considerations referred to above are relevant in this
matter. The relief sought by the SIU is not divestment or disgorgement in the
conventional sense. Put simply, the SIU seeks the return of the amount identified by Ms
Le Roux as having been overcharged by Steelwood.
[102] Apart from a bald denial that it overcharged the Department, and an assertion that
the Department in fact owes it an amount of approximately R43 057 925.35 , Steelwood
has failed to substantiate or amplify its denial. The SIU’s position, as I understand it, is
that although the appointment and award of the contract may have been constitutionally
invalid, Steelwood did perform in terms of the contract, and the Department derived a
benefit therefrom. That benefit, however, cannot extend beyond what Steelwood was
lawfully entitled to receive. In these circumstances, it would be inappropriate to take the
above considerations into account. Any third parties who may have been adversely
affected are not without recourse and may pursue claims against the party or parties
responsible for their loss.
[103] Having reflected on the above, I make the following order:
1. The SIU’s delay in launching this application is condoned.
2. The decision of the D epartment to enter into and award, to Steelwood a
contract as a service provider under Purchase Order No: 4250900261,
including any or all commitment letters, extension s and addenda to such
purchase orders is declared inconsistent with the Constitution and invalid.
3. The decision to enter into the aforementioned contract or any other contract
that resulted from such decision is reviewed and set aside.
4. Steelwood is directed to submit a detailed statement (supported by all
relevant documentation) of all i ncome received and expenditure made in
respect of its appointment, performance and payment as a service provider
by the Department to determine the overpayment by the Department within
30 days of the date of this order.
5. If the accounting and/or the sum of profit determined is disputed by either
the SIU or Steelwood, either party may re -enrol the matter for a
determination by this Tribunal.
6. This Tribunal may issue directives on any issue regarding the orders sought
herein.
7. If the accounting and the sum of profit is not disputed or is agreed between
the SIU and Steelwood, such profit shall be paid to the Department within
15 days of such agreement, together with interest as prescribed in the
Prescribed Rate of Interest Act a ternpore morae. from date which such
agreed sum was paid to the Department until date of payment.
8. Steelwood is liable for the costs of this application, including such costs as
may have been occasioned by the employment of two Counsel.
COUNTERCLAIM
[1] For the sake of clarity, the parties are referred to as they are cited in the claim in
convention. In this counterclaim, the Respondent is the Department, which appears as the
Third Respondent in the claim in convention. Steelwood, cited as the First Respondent in
the claim in convention, is the Applicant in the present counterclaim.
[2] Steelwood has instituted a counterclaim for payment of an amount of
R43 057 925.35. This counterclaim is not directed at the SIU, which is the Applicant in
the claim in convention, but against the Department. Steelwood contends that it is entitled
to pursue a counterclaim in these proceedings because the claim advanced by the SIU
against it is, in substance, a claim brought on behalf of the Department. On this basis,
Steelwood submits that it is permissible to counterclaim against the Department rather
than to institute separate proceedings.
[3] Conversely, the SIU submits that Steelwood may not permissibly utilise these
proceedings to advance a claim against the Department. The claim in convention arises
from the failure of both the Department and Steelwood to comply with section 217 of the
Constitution, which governs procurement by organ s of state, as well as the broader
statutory and regulatory framework through which section 217 is given effect. Moreover,
although the SIU’s authority to pursue this claim is derived solely from section 4(1)(c) of
the SIU Act, the SIU is neither a privy t o the Department nor its alter ego, but a distinct
and independent statutory entity.
[4] The resolution of this counterclaim need not detain the Tribunal for long. This
Tribunal lacks jurisdiction to entertain it. Its jurisdiction is confined to matters
investigated by the SIU and placed before the Tribunal by the SIU for prosecution. The
counterclaim does not implicate the SIU in any respect. It therefore falls outside the
Tribunal’s jurisdiction and does not belong in this forum. In the result, I make t he
following order:
1. The counterclaim is dismissed as this Tribunal lacks jurisdiction to entertain
it.
2. Steelwood is liable for the costs of the SIU, including those for the
employment of two Counsel.
________________________________
JUDGE BA MASHILE
MEMBER OF THE SPECIAL TRIBUNAL
Appearances:
For the Applicant: Adv T Ncongwane SC
Adv MC Setlhako
Instructed by: Office of the State Attorney, Pretoria
For the Respondent: Adv N Maritz SC
Adv T Govender
Instructed by: Victor Nkhwashu Attorneys Inc
Date of Judgment: 28 April 2026
Mode of delivery
This judgment is handed down by email transmission to the parties’ legal representatives,
uploading on Caselines and release to SAFLII and AFRICANLII. The date of delivery is
deemed to be 28 April 2026