Special Tribunal Orders Principal Agent to Repay R147.2m Over Procurement and Contract Breaches

Posted 27 August 2026 Written by Acts Online
Category Public Procurement & Construction Law

Brought to you by SAnews: The Special Tribunal has ruled that the appointment and conduct of the principal agent for the Nkandla security upgrade project were unlawful, ordering the recovery of R147,269,444.06 in public funds under the Special Investigating Units and Special Tribunals Act, No. 74 of 1996.

Acting pursuant to terms set out in Proclamation R59 of 2013, the Special Investigating Unit (SIU) sought civil recovery of losses sustained by the National Department of Public Works and Infrastructure (DPWI). The Tribunal declared the original appointment contract between DPWI and architect Minenhle Makhanya invalid ab initio due to non-compliance with section 217 of the Constitution, as the appointment bypassed mandatory competitive bidding processes without lawful justification or emergency status, and the service provider was not an active registered supplier on the DPWI database.

Key Findings and Regulatory Breaches

The Tribunal determined that the principal agent breached statutory, professional, and contractual duties, including obligations under architectural profession codes of conduct, the DPWI Manual for Architects, and the Joint Building Contracts Committee (JBCC) agreement. The key violations identified include:

  • Scope escalation: Authorising and certifying expenditure that expanded the project from an approved maintenance allocation of R27.89 million to R216.01 million, which included R68.5 million in non-security-related structures.
  • Unauthorised variations: Failing to secure requisite written departmental approvals for structural over-designs and variations.
  • Defective certification: Certifying interim payments above market-related rates, including R54.83 million to contractors Moneymine Investments 310 CC and Bonelena Construction and Projects (Pty) Ltd, without proper accounting or performance verification.
  • Fiduciary and professional standards: Failing to protect the state organ against fruitless and wasteful expenditure as required by public finance legislation.

The Tribunal dismissed defences based on prescription and reliance on state security directives, holding that professionals acting as principal agents maintain independent duties of compliance and cost control. The total judgment debt of R147.27 million is subject to a R7.8 million credit previously repaid by former President Jacob Zuma, and the respondent was ordered to pay legal costs including two counsel. The SIU confirmed that evidence of criminal conduct will be referred to the National Prosecuting Authority (NPA).

What this means for you, your business, or your clients

  • For yourself: Built environment and legal professionals serving as principal agents or contract administrators cannot rely on client instructions or political directives to escape personal liability for certifying non-compliant, unapproved, or inflated expenditure.
  • For your business: Built environment practices and consulting firms engaged in public sector procurement must ensure strict alignment with section 217 constitutional procurement rules and the Public Finance Management Act, No. 1 of 1999 (PFMA); irregular appointments remain subject to declaration of invalidity and total fee/cost recovery without limitation by prescription.
  • For your clients: Contractors and sub-contractors on state infrastructure projects face severe risk of clawback and contract nullification if payment certifications are issued outside formal variation approvals or through uncompetitive appointments.

Originally published at https://www.sanews.gov.za/south-africa/former-nkandla-project-architect-ordered-repay-r1472-million

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