The Special Investigating Unit (SIU) has welcomed a Special Tribunal judgment declaring unlawful and unconstitutional the arrangements used to appoint three companies to develop low-cost housing in Phoenix, eThekwini, KwaZulu-Natal.
The judgment concerns Woodglaze Trading (Pty) Ltd, Madupha Business Enterprise CC and Ready Homes CC, whose appointments formed part of a low-cost housing programme in the area.
The SIU brought the matter before the Special Tribunal following an investigation into the procurement and development arrangements. The Tribunal found that the appointments could not stand because they were inconsistent with constitutional and legal requirements governing public procurement.
SIU welcomes judgment
The SIU said the ruling reinforces the importance of lawful, transparent and accountable procurement when public resources are used to provide essential services such as housing.
“The Special Investigating Unit welcomes the judgment handed down by the Special Tribunal declaring unlawful and unconstitutional the arrangements under which Woodglaze Trading (Pty) Ltd, Madupha Business Enterprise CC and Ready Homes CC were appointed to develop low-cost housing in Phoenix, eThekwini, KwaZulu-Natal,” the SIU said.
The judgment forms part of the SIU’s broader work to challenge procurement processes that it believes have failed to comply with constitutional requirements and to protect state resources.
The Constitution requires organs of state to procure goods and services through systems that are fair, equitable, transparent, competitive and cost-effective.
Housing projects under scrutiny
Low-cost housing programmes are particularly sensitive because they are intended to benefit communities that depend on government intervention to access adequate housing.
The SIU has previously investigated irregularities involving South Africa’s low-cost housing schemes, including allegations of financial mismanagement, fraudulent housing applications, payments for work or services not rendered, defective construction and contracts awarded outside prescribed tender processes.
The Phoenix matter therefore comes against a wider backdrop of investigations into the use of public funds for housing and other public infrastructure.
The SIU is empowered to institute civil proceedings before the Special Tribunal or High Court to set aside unlawful transactions and recover financial losses suffered by the state.
“The matter stems from a 2000 resolution by the eThekwini Metropolitan Municipality to use vacant sites in Phoenix for affordable housing for first-time homebuyers in lower- and middle-income groups under its Human Settlements Infill Housing Programme (MHSIHP),” the SIU stated.
“The municipality intended to sell vacant serviced land to service providers for R30,000 and bulk sites without municipal services for R100,000, excluding VAT. The service providers would develop the sites into residential dwellings and sell them to beneficiaries approved by the Municipal Housing Department.On 5 September 2002, the municipality advertised for service providers to take over and develop 130 sites within two years.”
However, the SIU’s investigation found that Madupha Business Enterprise and Ready Homes were appointed and continued participating in the programme without prior public advertisement, consideration and recommendation by a Bid Evaluation Committee (BEC), or Bid Adjudication Committee (BAC).
Another procurement victory for SIU
The Special Tribunal has become an important avenue through which the SIU seeks to challenge allegedly unlawful government contracts. The Constitutional Court confirmed in 2023 that although the Special Tribunal is not a court, it has jurisdiction and powers to adjudicate civil proceedings brought by the SIU, including applications to set aside unlawful procurement contracts.
The latest ruling adds to a growing body of Tribunal decisions dealing with procurement irregularities and the use of public resources.
For communities in Phoenix, the case also highlights the importance of ensuring that housing programmes are administered through lawful processes so that public money intended for desperately needed homes is protected.
The SIU said its work remains focused on addressing corruption, maladministration and other forms of wrongdoing involving state resources.
