Tribunal Cancels R25 Million North West Municipality Contract

The investigation began after the Auditor-General of South Africa (AGSA) referred the matter to the SIU for further examination.

The Special Investigating Unit (SIU) has welcomed a ruling by the Special Tribunal that has declared unlawful and cancelled a R25 million contract awarded by the Ngaka Modiri Molema District Municipality in the North West. The judgment follows an investigation that uncovered serious procurement irregularities in the appointment of Rensh Close Corporation to carry out wastewater treatment and pump station refurbishment work in the Ditsobotla Local Municipality.

The contract, valued at more than R25.8 million, was awarded during the COVID-19 period after municipal officials bypassed an existing tender process. The Tribunal found that the procurement process did not comply with constitutional and legal requirements and ruled that the agreement was invalid from the outset. The decision forms part of ongoing efforts to recover public funds lost through unlawful procurement and strengthen accountability in local government.

SIU investigation uncovers procurement irregularities

The investigation began after the Auditor-General of South Africa (AGSA) referred the matter to the SIU for further examination. Investigators found that the Ngaka Modiri Molema District Municipality had originally advertised a public tender on 27 November 2019 through the National Treasury for the emergency refurbishment of dysfunctional pump stations and related infrastructure. The tender attracted 17 bidders, creating a competitive procurement process for the project. Rensh Close Corporation, owned by Rashida Cader, did not submit a bid during this process and was therefore not among the companies considered for the contract.

According to the SIU, the situation changed several months later when, on 7 March 2020, the municipality's technical director allegedly contacted Cader directly and requested a quotation for repairs and maintenance work. The request relied on an existing bill of quantities prepared by Themak Consulting Civil Engineering Consultancy, which had already completed the technical specifications for the project.

Rensh later submitted a quotation amounting to R25,884,435.75, despite not having participated in the original tender process. The SIU found that municipal officials abandoned the lawful procurement procedure and instead relied on COVID-19 emergency procurement measures to appoint the company. Investigators also concluded that Rensh had not demonstrated that it possessed the necessary expertise required to perform the specialised infrastructure work before receiving the contract.

Tribunal rules contract invalid and holds company owner liable

After reviewing the findings presented by the SIU, the Special Tribunal ruled that the municipality's decision to award the contract was unlawful. The court declared the agreement constitutionally invalid and void from the beginning, effectively cancelling the contract in its entirety.

The Tribunal also found Rashida Cader personally liable for the financial losses suffered by the municipality as a result of the unlawful appointment. This aspect of the ruling extends responsibility beyond the company itself and places direct accountability on its owner for the consequences arising from the irregular procurement process.

The SIU welcomed the judgment, describing it as an important step in protecting public funds and reinforcing the principle that procurement rules must be followed even during emergency situations. Authorities have repeatedly warned that emergency procurement measures introduced during the COVID-19 pandemic could not be used to bypass transparency and fairness in awarding government contracts.

The ruling sends a clear message that public institutions remain accountable for procurement decisions and that companies benefiting from irregular contracts may be required to return public money received through unlawful agreements.

Companies ordered to repay funds to the municipality

As part of the judgment, Rensh Close Corporation and Rashida Cader have been ordered to repay all money found to be due to the Ngaka Modiri Molema District Municipality, including any profits earned from the contract.

Before the final repayment amount is determined, the Tribunal instructed both parties to complete a debatement exercise within 30 days after submitting audited financial statements. This process will establish the total amount received from the municipality under the unlawful contract while also assessing any legitimate and reasonable out-of-pocket expenses that Rensh can prove it incurred while carrying out the work.

The Tribunal's order ensures that only verifiable and lawful expenses will be considered before calculating the final amount that must be repaid to the municipality. The judgment also affects other parties involved in the project. Themak Consulting Civil Engineering Consultancy and Makola have been directed to repay R3,882,665.37 received under the contract, together with interest calculated from the date of the Tribunal's order until full payment is made.

The SIU said the outcome reflects its continued commitment to investigating corruption, recovering public funds and holding individuals and companies accountable for unlawful procurement practices. The ruling also reinforces broader efforts to improve governance and financial accountability within municipalities while ensuring that public resources are used for their intended purpose.