Cartel firms get off 'scot-free'

Pretoria - "Can you imagine what the violations have cost the country?" asked David Lewis, chairperson of the Competition Tribunal, when bemoaning South Africa's latest cartel scandal.

The violations came to light when two subsidiaries of the country's major construction companies, Murray & Roberts and Aveng, were exposed as having been involved in a 34-year long cartel.

Lewis was unhappy that Rocla, a Murray & Roberts subsidiary, received exemption from prosecution.

"It's a pity that a company like Murray & Roberts gets off absolutely scot-free." It even escaped public exposure. Lewis said that the Competition Commission should consider publishing these scandals in newspapers so the public gets to know about them.

"Murray & Roberts is a household name in South Africa and something needs to be done to show who exactly has been involved in these activities over 34 years."

Rocla, a leader in the precast concrete cartel, received, inter alia, a 5% commission in exchange for its "influence" in winning a profitable Gautrain contract for concrete sleepers.

The contract was awarded to the Rocla and Infraset (Aveng) joint venture, despite the fact that Rocla does not manufacture sleepers.

The shocking facts about tender graft for massive contracts in projects like Gautrain and Portnet surfaced when the tribunal ratified Aveng's R46m fine last week.

The commission conducted a comprehensive investigation after Rocla requested corporate exemption for its involvement in the cartel. Aveng agreed to pay the R46m fine.

The cartel's activities began in 1973 when Roger Jardine, Aveng's chief executive, was nine years old. It apparently consisted of Rocla, Infraset, Cape Concrete, Cobro Concrete Balls, Clay Concrete, D&D and Southern Pipes Contactors, among others.

Lewis says the cartel is guilty of every possible practice described in any handbook on cartels. Cartel members colluded to split clients, contractors and tenders in Gauteng, KwaZulu-Natal and Western Cape, between themselves.

Rocla and Infraset, however, extended their collusive activities into Swaziland, Botswana, Namibia, Zimbabwe, Zambia, Mozambique and Tanzania. It was apparently customary to compile a list of available tenders each month and decide between themselves who would get which contract.

Lewis ratified the settlement and added that half of the companies' managers could be dismissed because they were occupied more in managing the cartel than producing concrete products.

According to legal firm Deneys Reitz, companies have paid more than R350m in fines over the past year, which emphasises the need for thorough compliance programmes.

- Sake24

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