Wow, that's a lot of people hanging out underground! I certainly don't know enough to haven any sort of informed opinion about it, but from what you've described it sounds like the police are doing the right thing. It seems like it's the only way to get them to stop that dangerous and illegal activity that is putting themselves and others at risk.
This is putting so many at risk especially with the sinkholes they create which can happen anywhere. Most of Johannesburg has mine shafts underneath the surface.