The Special Investigating Unit (SIU) has hailed the arrests of Kwane Capital's director, Mcebisi Mlonzi, and the municipal manager of the Amahlathi Local Municipality, Balisa King Socikwa, as a "great milestone".
They were arrested over the weekend and charged with fraud, money laundering and contravention of the Municipal Finance Management Act.
According to the Hawks, Mlozi and Socikwa appeared in the Stutterheim Magistrate's Court on Monday on charges of fraud to the tune of R92m.
"The Eastern Cape Hawks-led multidisciplinary task team pounced on the two in the early hours of Sunday morning in Qumbu and Sandton. Crime intelligence and detectives formed part of the task team which is tasked with investigating fraud and corruption in the Eastern Cape," Hawks spokesperson Brigadier Hangwani Mulaudzi said in a statement on Monday.
He added Kwane Capital had allegedly received a R31m contract from the Port St Johns Local Municipality to supply yellow plant machinery.
"However, the Amahlathi Local Municipality initiated a regulation 32 appointment and the appointment saw, in April 2014, Socikwa allegedly signing, on behalf of the municipality, a lease agreement with Mlozi for the purchase of yellow plant machinery valued at R92m.
"Investigations revealed that the terms of the contract were flouted," Mulaudzi said.
According to the SIU, the arrests were a step forward in the fight against corruption.
"This is a great milestone in the fight against corruption in our country. It is also a show of force and collaboration between members of the Anti-Corruption Task Team," SUI spokesperson Kaizer Kganyago said in a statement on Monday.
He added the SUI had been investigating the case since 2016.
"The collaboration between the corruption-busting agencies is continuing to bear fruit. The SIU has been investigating alleged corruption associated with Kwane Capital for a while now in different municipalities.
"Our investigation has contributed a great deal in getting to the bottom of this case that has culminated in these arrests," Kganyago said.
A range of contracts within Eastern Cape municipalities and the City of Johannesburg are being investigated.
According to Mulaudzi, Mlanzo and Socikwa was released on bail of R50 000 and R30 000, respectively.