Border fence contractors lose appeal to retain profits

The Special Investigating Unit (SIU) welcomed last week's judgment by the High Court of South Africa: Gauteng Division in Johannesburg. The court dismissed an application by Caledon River Properties Pty Ltd and Profteam CC to appeal a decision of the Special Tribunal that stripped them of profits earned from constructing a border mesh fence during the Covid-19 pandemic.

The two contractors were jointly paid R21.8 million out of the R40.4 million in advance by the Department of Public Works and Infrastructure (DPWI) for constructing the razor-mesh fence. This fence spanned approximately 40km east and west of the Beitbridge Border Post, serving to protect South African citizens - one of the South African government’s initial responses to the global Covid-19 pandemic.

Shortly after its erection in March 2020, the fence began to deteriorate. In July 2020, President Cyril Ramaphosa authorised the SIU, through Proclamation No. R. 23 of 2020, to investigate State institutions' affairs regarding procurement or contracting for goods, works, and services during the National State of Disaster. This prompted the SIU to probe the contracts awarded to Caledon River Properties Pty Ltd and Profteam CC.

In March 2022, the Special Tribunal reviewed and annulled two contracts awarded by the DPWI, amounting to R40.4 million, for the construction of the razor mesh fence between South Africa and Zimbabwe. The tribunal also directed the service providers to relinquish the profits earned from these multimillion-rand contracts.

Though the two service providers accepted the contracts' invalidity because of procurement irregularities, they appealed to the full bench of the High Court, challenging the Special Tribunal’s decision to strip them of the profits from the contracts in question.

The appeal proved unsuccessful, and last week, the High Court ruled to dismiss the appeal application with costs. The court additionally mandated that the service providers must, within 30 days, submit audited statements and detailed accounts of their income and expenditure in relation to the contracts. The SIU and the public works department were directed, within the subsequent 30 days, to appoint qualified expert(s) to compile a report assessing the reasonableness of the service providers’ expenses and submit relevant documentation. Furthermore, the service providers were instructed to repay the public works department, within 30 days, the profits earned from the contracts as determined by the experts, following the Tribunal’s order.

In response to the High Court’s ruling, the SIU welcomed the court order, asserting that it reinforced the implementation of the unit’s investigation outcomes and the application of consequential measures.

Date:20 December 2023

By:

Read: 4364