The sweeping high-profile arrests follow a marathon investigation.
Five suspects, including South Africa's former chief financial officer for prisons, were arrested on Wednesday in the latest move against alleged government corruption under former president Jacob Zuma.
Patrick Gillingham, former chief financial officer at the correctional services department, appeared in court alongside Angelo Agrizzi, who worked for the Bosasa contracting company and recently gave damning testimony to an inquiry into fraud.
"The sweeping high-profile arrests follow a marathon investigation," the Hawks police investigative unit said in a statement.
It said the equivalent of $120 million was allegedly stolen in tender deals between the department of correctional services, which oversees the country's prisons, and Bosasa.
Officials are accused of taking bribes in cash and receiving help to buy properties, cars and overseas travel trips.
The five suspects were bailed until March 27 after a brief court appearance in Johannesburg.
Agrizzi, ex-chief operating officer of Bosasa, recently told the commission probing government graft that Bosasa made monthly payments of about $2,200 to the Jacob Zuma foundation.
The money, hidden in a luxury bag, was received through foundation president Dudu Myeni, Agrizzi alleged.
Zuma resigned on February 14 2018 after multiple corruption scandals.
He is fighting 16 charges of fraud, corruption, and racketeering related to a 1990s arms deal struck when he was deputy president. He denies any wrongdoing.