Special Tribunal Orders Payback on R1.6 Billion Unlawful Contracts by IDT

In a landmark ruling, the Special Tribunal has directed five companies to repay profits garnered from irregular contracts valued at R1.6 billion, originally awarded by the Independent Development Trust (IDT) for projects within the Department of Correctional Services. This decision, pronounced on July 29, 2024, stemmed from an intensive probe by the Special Investigating Unit (SIU) into claims of mismanagement within the Department.

The contracts, which date back to a period between 2011-2012, involved substantial infrastructure work at South African correctional facilities. The Tribunal found that IDT, which had been mandated by the Department to oversee these projects, consistently bypassed the guidelines outlined in South Africa's procurement framework as specified by the Constitution.

Key infractions included exorbitant budget overruns and non-compliance with National Treasury stipulations. A noteworthy case saw the initial tender, assigned to Secelec Consulting Engineers (Pty) Ltd and its associates, swell by an unwarranted 81%. The Tribunal determined that such contractual awards were not only unearned but premeditated.

Scrutiny by the SIU revealed that the IDT's decisions and consequential agreements failed to adhere to essential procurement protocols, thereby inciting the Office of the Auditor-General to classify the ventures as irregular expenditures.

In its decision, the Tribunal has obligated the involved companies to disclose detailed financial activities associated with the contracts in question, ensuring all transactions are substantiated with adequate documentation. The organizations are now required to refund any profits received, in addition to shouldering the legal expenses initiated by the SIU's review.

The SIU lauds the Tribunal's resolution as a pivotal step toward reinforcing accountability and salvaging funds wrongfully lost by the State. The organizations implicated in the investigation operated as advisory entities tasked with key infrastructure construction, including security systems and fence installations at correctional facilities.

Pursuant to Proclamation R28 of 2017, the SIU wields the authority to pursue allegations of corruption and mismanagement within the Department of Correctional Services. Supported by the Special Investigating Units and Special Tribunals Act of 1996, the SIU holds the prerogative to escalate substantiated instances of criminal conduct to the National Prosecuting Authority (NPA) for prosecutorial consideration.

This ruling underscores the SIU's ongoing commitment to rooting out corruption and implementing remedial actions to protect the State's financial interests. Continual oversight remains vital to uphold integrity within South Africa's public procurement sector.