Arbitrator Orders Refund in PSiRA Contract Case

The Private Security Industry Regulatory Authority was awarded over R33 million following a failed contract.

Updated on Oct. 28, 2026 in Financial Crime

Arbitrator Orders Refund in PSiRA Contract Case

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An arbitrator ordered Khunjulwa Managed Services to repay R33,841,198.91 to the Private Security Industry Regulatory Authority (PSiRA) on 7 August 2026. This award follows the termination of a contract due to the provider's failure to meet its obligations.

Why it matters

The decision underscores efforts by South African public entities to recover funds lost through contractual failures and improve financial governance. PSiRA has since strengthened its internal controls to link payments directly to verified project deliverables.

The arbitrator awarded a capital sum of R33,841,198.91 alongside an 11.75 percent interest rate. PSiRA has referred the broader matter to the Special Investigating Unit, the AGSA, and the South African Police Service for further action.

The players

Private Security Industry Regulatory Authority

This is a statutory body established in South Africa to regulate the private security industry and ensure professional standards.

Khunjulwa Managed Services

This company is a former service provider that had its contract terminated by PSiRA due to contractual failures.

Special Investigating Unit

This is an independent statutory body in South Africa mandated to investigate serious malpractice or maladministration in state institutions.

South African Police Service

This is the national police force of South Africa responsible for preventing and investigating crime across the country.

The details

Following the termination of the agreement, PSiRA initiated arbitration to recoup public funds linked to incomplete work. The authority also implemented reforms in learner record management and beneficiary verification to prevent future contractual lapses.

7 August 2026: The arbitrator issued the award in favour of PSiRA.
23 September 2026: The formal arbitration award was published.

Legal Context

The recovery of these funds follows a pattern set by the Public Finance Management Act, which mandates state entities to recover lost assets through rigorous financial oversight. This case highlights a broader trend of public bodies in South Africa aggressively pursuing restitution for contractual non-performance.

The involvement of the Special Investigating Unit and police indicates that this matter remains an active investigation for the public sector. Taxpayers and citizens may see further developments as the government attempts to recover the awarded capital.

The takeaway

This case serves as a reminder that public institutions are increasingly using arbitration to recover losses from non-compliant service providers. Organizations that fail to meet strict contractual deliverables may face significant financial penalties and criminal scrutiny.