The TRC's amnesty committee heard that Kondile double-crossed the police and was killed.
High ranking former security policemen told the committee in Cape Town that Kondile was a key figure in the African National Congress' Lesotho operation and had close links with Hani.
The committtee heard that Kondile was driving Hani's car when he was arrested crossing the border from Lesotho into the Free State in June 1981.
Former police generals Nic van Rensburg and Gerrit Erasmus, along with Colonel Hermanus du Plessis, are applying for amnesty for arranging Kondile's murder in July 1981.
Erasmus and Du Plessis told the committee Kondile was killed when he failed to co-operate with police by infiltrating the ANC in Lesotho.
Du Plessis said he persuaded Kondile to become a police informer and supply information about Hani's planned operations. Du Plessis said after giving Kondile the name of the principal police agent in Lesotho, the cadre reneged on his word and remained loyal to the ANC.
Du Plessis said he found a note by Kondile to the ANC expressing his loyalty to the organisation and realised the cadre had double-crossed him.
Du Plessis discussed his dilemma with Van Rensburg, who agreed the only option was to eliminate Kondile. The policemen contacted self-confessed hitsquad commander Dirk Coetzee, who made the arrangements for Kondile to be shot and burnt to a cinder on the Mozambique border.
Du Plessis and Van Rensburg both denied testimony given to the amnesty committee by Coetzee that Kondile was killed because he suffered brain damage during violent interrogation.
Coetzee told the committee in earlier evidence that Van Rensburg told him the police did not want another Biko scandal on their hands.
Black consciousness leader Steve Biko died while in police detention.
Both Du Plessis and Van Rensburg said the decision to kill Kondile was taken to prevent the information given to him from falling into the hands of the ANC.
Coetzee is to appear before the committee this week to explain his version of the events leading to Kondile's death.
It also emerged during Tuesday's hearings that a bomb blast occurred in Port Elizabeth while Kondile was in detention. Du Plessis admitted under cross examination by Imrann Moosa, appearing for Kondile's mother, Charity Kondile, that Kondile was released from detention two days after the blast and was killed soon afterwards.
Du Plessis denied that Kondile was interrogated about the bomb blast and claimed that Kondile knew nothing about it. He said later it was established who planted the bomb and they were not connected to Kondile.
Van Rensburg told the committee he accompanied Du Plessis when Kondile was taken to Komatipoort near the Mozambique border to meet Coetzee. He said Kondile did not speak throughout the journey. He was handcuffed and had a balaclava over his head.
Van Rensburg said he could not explain why Kondile did not ask where he was being taken and why he was being handcuffed. When Moosa put it to Van Rensburg that he took part in the "brutal killing of a young man... in a picnic atmsophere", Van Rensburg replied that he did not expect to be forgiven but could only apologise.
Erasmus began his testimony on Tuesday with a lengthy account of his service in the police force. He told the committee he spent more than 20 years of his career dealing with violence and intimidation amongst the black population.
He said he witnessed scenes of bomb blasts which made a lasting impression on him.
He will continue his testimony on Wednesday.