The Hawks' Serious Corruption Investigation Unit in East London seized documents at the Nxuba Yethemba Local Municipality in Cradock during an operation on Tuesday.
"The purpose of the operation was to secure documents that were linked to allegations of fraud and corruption valued at approximately R26 million," its spokesperson, Lieutenant-Colonel Philani Nkwalase, said in a statement.
"The investigation stems from the alleged flouting of procurement processes."
This after several companies were awarded tenders for road construction, maintenance projects and designing a community hall.
"All these projects were allegedly paid in full to all service providers during the 2017/2018 financial year, yet the work on all projects was partially rendered.
"It indicates that the projects were allegedly used to siphon municipal funds," Nkwalase added.
According to the Hawks, preliminary investigation have shown probable cause and a search warrant was granted.
"No arrests were made today as people of interest and implicated companies are yet to be charged, pending the ongoing investigation," he said.