The Special Tribunal on Tuesday ordered that the two companies the public works department appointed to build the Beitbridge border fence in 2020 should forfeit their profits.

The tribunal dismissed an application by the Special Investigating Unit (SIU) that Caledon River and Profteam repay the amounts of R21.8m and R1.8m respectively that the department had prepaid to them four days after the contracts were concluded.

These amounts constituted partial payments in respect of the respective contract amounts of R37.1m for Caledon River and R3.2m for Profteam.

In terms of its contract with the department, Profteam would construct a 40km borderline fence along the SA and Zimbabwe Beitbridge border post, to secure the border in the wake of the national disaster occasioned by the Covid-19 pandemic.

Caledon River was contracted to provide professional services related to the project.

Soon after the fence was constructed, it started to fall apart, prompting the SIU to investigate the contracts.

The SIU found various irregularities in the awarding of the contracts and approached the tribunal to declare the contracts invalid. The contracts were set aside by agreement between the parties, and the tribunal in July last year declared the agreement an order of the court.

The tribunal then had to formulate a just and equitable remedy after the invalidation of the contracts.

The SIU sought the repayment of the amounts already paid to the companies. In the alternative, the SIU sought an order divesting the companies of the profits they derived from the contracts. The companies wanted the tribunal to order that the department make the remaining balances due to them.

Special Tribunal judge Lebogang Modiba ruled it was just and equitable to apply the “no profit and no loss” principle.

“In the present circumstances, this relief is fair to all the parties [and] vindicates the values of fairness, equity, transparency, competitiveness and cost-effectiveness that were disturbed when the [two companies] were awarded the contracts unlawfully.

“It also entrenches the rule of law by ensuring that while [Caledon River and Profteam] are not left worse off as a result of the invalidation of the contracts, they also do not benefit from unlawful contracts,” Modiba said.

She said further corrective measures lie in holding accountable the officials who designed, approved and implemented the project and its related procurement process, and those who failed to take the appropriate steps to enhance the integrity of the fence.

“Such corrective measures are beyond the scope of the case presented before this tribunal,” she said.

In terms of the order, after setting off from the prepaid amounts the reasonable expenses the companies incurred to meet their obligations in terms of the contracts, they will pay the department the amount standing to their debit.

“If the defendants’ reasonable expenses exceed the prepaid amounts, public works shall make payment to the defendants in respect of the amounts standing to their credit.”

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