The National Treasury is said to have failed to blacklist controversial African Global Operations (previously Bosasa) despite a recommendation from the department of correctional services.
Sources in the department said there was frustration at the lack of action by the Treasury after it was advised months ago to remove Bosasa directors from the government's central supplier database so that they could no longer do business with the state.
The company earned about R12bn in questionable state contracts over 15 years, mainly from correctional services.
It ran prison kitchens and supplied fencing for jails. It also won lucrative contracts from other national and provincial departments, mainly because its major shareholder, the late Gavin Watson, had close ties with ANC politicians.
Testifying before the Zondo commission of inquiry into state capture, former Bosasa COO Angelo Agrizzi said the company had bribed top officials to win many of the contracts.
Correctional services told the Sunday Times on Friday that it "advised the Treasury to consider blacklisting" Bosasa, but was not sure if this had been done. Questions sent by the Sunday Times to the Treasury were not answered.
Correctional services spokesperson Singabakho Nxumalo said the department no longer had dealings with African Global Operations.
"Provision of nutritional services contract by [the company] at seven correctional facilities was terminated in March 2019 following an announcement by two major banks, FNB and Absa, indicating that they would be closing down the company's banking accounts," he said.
According to Nxumalo, provision of food to these prisons has been insourced and is being done by inmates under the supervision of correctional officers.
The department said it was considering more than 10 reports produced by the Special Investigating Unit (SIU) on corruption, fraud and maladministration at a number of prisons.
It said it is ready to act on the recommendations made by the SIU and will either lay criminal charges against officials found to have committed fraud involving millions of rands, or discipline others internally.
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