The iRB is running the show, not the wacky SA Govt...
As mentioned by Ash, under the iRB regulations, you're allowed to represent a foreign country if you have parents or grandparents who were born in that said country OR under the residency rule, if you have lived in said country for 3 or more years, then you're ELIGIBLE to play for that country.
What the SA Govt is querying is Beast's citizenship, which should have no bearings on his eligibilty to play for the Boks because last I checked, he is definitely eligible (I hope I'm right).
It's the Govt's prerogative to award him a SA passport or not...but not to question his eligibilty.