A South African corruption investigator has called for action against the police chief and a minister for "unlawful" property deals.
Thuli Madonsela ruled that police buildings were leased from a company at inflated prices.
Police chief Gen Bheki Cele and Public Works Minister Gwen Mahlangu-Nkabinde were ultimately responsible for the "fatally flawed" deals, she said.
Gen Cen Cele and the minister have not commented on the allegations.
Analysts say it is the worst crisis to hit President Jacob Zuma's government since it took power in 2009.
Gen Cele is a powerful ally of Mr Zuma and campaigned strongly for him during the presidential race.
Ms Madonsela - who is South Africa's public protector, a role similar to that of an ombudsman - investigated leases for buildings intended to serve as police headquarters in the capital, Pretoria, and the eastern city of Durban.
The 10-year leases were signed with Roux Property Fund, owned by Roux Shabangu, a businessman who is well connected in government circles.
Ms Madonsela ruled that the government paid the company inflated prices.
She did not find evidence of criminality, but the deals were "illegitimate" and unlawful", she said.
"The failure of the national [police] commissioner [Cele] to ensure that the procurement process complied with the said legal requirements... resulted in the invalid conclusion of the lease agreement to the detriment of the state and therefore constituted maladministration," she said, according to the AFP news agency.
In the Durban deal, the government offered to pay $169m (£104m) - three times the market rate for the building, Ms Madonsela is quoted by AFP as saying
In the Pretoria deal, it rejected a lower price from a previous owner of the building, costing the taxpayer an extra $1,7m in the first year of the lease, AFP reports.
Ms Madonsela said Gen Cele should face disciplinary action.
Ms Mahlangu-Nkabinde, whose department signed the leases, did not co-operate with her probe, she said.
"I expect President Zuma to do the right thing," Ms Madonsela is quoted by South Africa's Mail & Guardian newspaper as saying.
During the probe, she said she had been visited by police intelligence officers and the computer of one of her investigators had been hacked into.
She said her investigation had turned her into the target of a "dirty tricks" campaign.
Last year, Gen Cele's predecessor, Jackie Selebi, was convicted of taking $156,000 in bribes from a drug dealer, Glenn Agliotti.
In 2009, Mr Zuma was cleared of corruption chages after being accused of taking bribes from his financial adviser, Schabir Shaik.
Mr Shaik was, however, convicted of corruption.
Analysts say Ms Madonsela's findings will raise fresh concerns about the cosy relationship between the South African government and business tycoons.
The main opposition party, the Democratic Alliance, said Mr Zuma should dismiss Gen Cele and anyone else implicated by Ms Madonsela.
"Should the president refuse this request, we believe he would be in breach of his sworn duty to uphold law and order," the DA said, the Bloomberg news agency reports.