A statement from the public protector says the department had submitted an implementation plan cancelling the earlier contracts and outlining a new procurement process.
Public Protector Thuli Madonsela had said in the report that the department needed to cancel the contracts and begin a new procurement process.
The report published last December was titled Poisoned Processes.
The report had found that the 2012 tender process was unlawful, and characterised by gross irregularities and maladministration.
This included a bid specification committee that did not have the requisite 60% quorum.
No due diligence was done to assess the functionality and sustainability of businesses considered for the leases, and suspected fraud was found in a letter of appointment for a bid that was favourably considered on the understanding that the rent offer was R19,100, when in fact only R10,416 was offered.
Johnny Reinders, chairman of the local business chamber and manager of a restaurant in town, said that 56% of all the businesses in the heritage town would be closed once the new shop leases were cancelled.
Many of the new business owners who were successful in the unlawful tender process had not opened their shops. Only 14 of about 30 businesses were operational, Reinders said.
He was optimistic about the future of the town, but business had been battling because of the difficult economic climate, the lack of entertainment and accommodation, which had slowed down the flow of visitors. The similarity of shops - with at least 35 stalls selling the same products of Asian origin - did not help.
But local businesses were in discussions with the government to find common solutions to sustain the town.
The department of public works in Mpumalanga said yesterday that it had already started implementing the plan.
"It would therefore not be advisable to make further comments as some parties are affected directly or indirectly, and it would not be in their interest to get information from the media."
There could be legal implications, it added. The department would, however, comment further when all the processes and the action plan had been implemented.
The business rights watchdog AfriSake yesterday welcomed the department's plan.
AfriSake CEO Cornelius Jansen van Rensburg said it was ready to assist the community of Pilgrim's Rest with legal counsel when the allegations of maladministration surfaced.
Madonsela commended the "decisive and timely leadership" of MEC Dikeledi Mahlangu in the matter.
Jansen van Rensburg said if the new process was flawed, AfriSake would not hesitate to take the matter up on behalf of the business community.
Source: Business Day
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