Water Affairs Minister Edna Molewa allegedly intervened to prevent action against mining companies linked to businessman Cyril Ramaphosa over water licences, it was reported on Friday.
More than five companies owned or partly owned by Ramaphosa's Shanduka Group were listed by the department as having operated without water licences, the Mail&Guardian reported.
Two senior departmental officials had confirmed to the M&G that the department had taken Shanduka to court.
Molewa's intervention reportedly ensured an out-of-court settlement.
"She instructed officials in the department to find a way of settling out of court," an unnamed government official told the newspaper.
Molewa reportedly said: "I never knew that Cyril had something to do with those companies until the deputy minister [Rejoice Mabudafhasi] in the department issued instructions that they [Shanduka companies] must stop operation," said Molewa.
Nigel Adams, director of compliance, monitoring and enforcement in the department, confirmed that it went to court to stop Shanduka from operating, but denied intervention by Molewa.
Shanduka Coal's chief operating officer Zirk van der Bank said it had been applying for licences since 2006, but there was a backlog.
The company had planned an urgent application against the department for failing to issue licences on time when the settlement was reached.
Licences were subsequently issued.