Government will significantly strengthen the control mechanisms of all of its privatisation deals in the wake of the decision to cancel the Komatiland forestry deal due to a tainted process.

The move is aimed at bolstering investor confidence in SA's restructuring and privatisation programme amid fears that the controversy raging around the forestry deal has raised the risk profile of the initiative.

Public Enterprises Minister Jeff Radebe said existing control mechanisms for transactions had been re-examined. This followed allegations of misconduct and corruption surrounding the R335m Komatiland deal.

"I will personally assume more critical control through the strengthening of internal audit procedures and ongoing checks and balances to reduce the likelihood of this type of situation recurring in the future," he said.

Radebe was speaking after a cabinet decision was taken to cancel the entire deal and to reopen the bidding process, effectively stripping Zama Resources of its preferred bidder status.

The decision was made because bid rules were broken due to members of the bid evaluation committee meeting bidders.

This followed allegations that Andile Nkuhlu, chairman of the committee and former public enterprises chief director, received R55 000 from Mcebisi Mlonzi, CEO of Zama Resources, shortly before the company won the bid.

Zama and the reserve bidder, the Indian firm Paharpur, have indicated that they are seeking legal opinions on the way forward.

Zama acting CEO Mlungisi Kwini said the bidding process had been expensive. The legal and financial ramifications of a "unilateral revoking of Zama's status as preferred bidder" had to be studied by the board.

"We need cool heads to examine these issues. We will be meeting in the coming days to decide on the way forward," he said.

Paharpur was also considering the way forward at the weekend, having earlier threatened to seek damages should it as reserve bidder not be awarded the bid if the initial bidding process was found to be flawed.

Paharpur, which is in a bidding consortium with empowerment player Sefateng, said the R340m offered by its consortium was higher than Zama's and it had proposed R250m in additional investments. It had spent R7m on its bid.

Radebe said the new bidding process, which was due to start soon, would be transparent and carried out within a system of stringent checks and balances.

With acknowledgements to Robyn Chalmers and Business Day.