Fin24

Building bigwigs in bid-rigging probe

2012-07-06 10:22

Johannesburg - Construction companies found guilty of collusion and bid-rigging by the Competition Commission could be banned for up to 10 years from doing public sector work, said the Business Report.

The industry's top listed companies, Aveng [JSE:AEG], Group Five [JSE:GBF], Murray & Roberts Holdings [JSE:MUR], Wilson Bayley Holmes-Ovcon [JSE:WBO] and Basil Read Holdings [JSE:BSR] could be left out of the government's R844.5bn infrastructure expenditure programme, it was reported.

Once the commission pronounces the outcome of its investigation, the Construction Industry Development Board (CIDB) has an obligation in terms of its code of conduct to remove guilty companies from its grading database, Ursula Ntsububane, the chief executive of the CIDB was quoted as saying.

Construction companies need a CIDB grading to bid for public sector work.

Treasury spokesperson Phumza Macanda confirmed that contractors could be restricted from doing business with government for a maximum period of 10 years if they failed to comply with procurement processes, it was reported.

The commission confirmed last year that all the top five listed construction companies had been implicated in anti-competitive practices during its probe into 65 bid-rigging cases in the sector involving more than 70 projects valued at R29bn, the paper said.

Llewellyn Lewis, the principal consultant at BMI-Building Research Strategy Consulting, said it would be impossible to deliver on the infrastructure programme without using the top five construction groups.

He said if the CIDB had such a ruling, it would be a double punishment to preclude them from public sector work.

“Is the objective to put these companies out of business? The CIDB will have to change its rules.

"It will not only have serious implications for employment but for the economy. It could be a fatal blow to the industry,” he told the paper.

Group Five chief executive Mike Upton said if this happened, it would “take out most of the industry” and would be a case of “double jeopardy”.

Upton said that some form of charter was needed that required firms to sign a commitment for each tender that would be embedded in the contract.

Basil Read CEO Marius Heyns said it would be “a bit unrealistic” to preclude the top construction companies from all public sector work.

Recovery in the construction sector has been gaining momentum but still remains fragile, according to the June FNB/BER construction confidence index.

During the second quarter, construction activity jumped at a higher rate than in previous quarters as capital expenditure from provincial governments remained robust, the index found.

Private sector construction activity contributed less and mining production slowed as firms held back on expansion plans.

The construction companies' share prices traded largely mixed on the JSE in early trade.

Murray & Roberts was down 0.28%, Wilson Bayley Holmes-Ovcon rose 1.54%, Group Five fell 0.98%, Aveng gained 0.49% and Basil Read traded flat.

 - Business Report






Comments
  • faizieishlah.shabalala - 2012-07-06 10:47

    Not all thieves in the ANC !!!!!!!!!!!!!!!. Good work

  • erick.mamba - 2012-07-06 11:18

    "It would be unrealistic to preclude the top five construction companies from public works" said Basil Read CEO. So they were aware of the possible consequences right frm the start n they were prepared to face the music once caught... They should be fined 50% of the profit made from the collusion..Mxm

  • scouter.fourone - 2012-07-06 11:36

    This has been going on for years - the biggest victim has always been the sub-contractor, getting screwed at every turn by these common thieves. I am just not quite sure the present government is capable of providing a competent alternative, however. Please, let us not go down the route of nominating Chinese construction companies 'a la' Zim & most of the rest of Africa, though! Better the devil you know, in this instance.

  • peter.mansfield.395 - 2012-07-06 11:37

    Quite a good way to grind infrastructure development to a halt and move skills offshore. Zoomanomics at work!

      fussed.anderson - 2012-07-06 12:02

      Whats going to happen when all the new buildings start to crumble and collaps due to poor work and skills from too many backhands. I dont want to be there when that happens

  • patterson.graeme - 2012-07-06 11:37

    Wake up morons! This is once again an ANC driven objective to get their 'construction companies' in on the big deals. Also, could you imagine the number of workers that would lose jobs if it were to happen? Brilliant strategy by the marxists to win votes hey? And a nice idea to be able to blame majority of white owned companies again....

      jowza1 - 2012-07-06 11:44

      it is morons like you that stick your heads in the sand,when facts are presented to you

      paul.john.790256 - 2012-07-06 11:53

      You are an idiot. Most of the work done a construction site is complete by subcontractors. The impact on labour would thus be minimal. The only people that would really be affected is line management (who dont add value anyway) and greedy board members.The construction companies are not disputing the fact that they commited fraud, but rather, that they are too big to be held accountable. This is unacceptable.

      aj.coetzee.9 - 2012-07-06 14:41

      i think you are missing the point completely mr patterson

  • paul.john.790256 - 2012-07-06 11:50

    How arrogant..."it would be “a bit unrealistic” to preclude the top construction companies from all public sector work." So the top construction companies commited fraud and now claim they are too big to be held accountable. Rubbish. The construction budgets will still be in place. The subcontractors will still be around to do the work. It is about time the construction industry is audited since they cost taxpayers so much more money than actually required. I just hope that they will also ban the "fronting" BEE companies of these companies as well.

  • hermann.hanekom - 2012-07-06 11:51

    What a joke. Put them out of business and let BEE collect the money and not do the work. Sounds familiar. But, it will be interesting to see which companies will fill the void.

  • patterson.graeme - 2012-07-06 12:05

    On the contrary! I am in that construction industry at the management level. Mr A comes along to you and say - I will make sure you get the contract, as long as I get my cut. Mr N comes along and say the same, as long as I get my cut. Then Mr C comes along and does the same. So, whoever pays the biggest kickback gets the contract. But, what happens if all the main players refuse to budge on any kickbacks - wouldnt that be a spanner in the works?

      alansmartSnr - 2012-07-13 23:11

      ..If that happens..Not budging on these offered bribes, the Government would just shelf them until some "worthwhile comes with a favourable bribe. It seems to have become procedural now.

  • aj.coetzee.9 - 2012-07-06 14:40

    So, you call it double jeopardy if excluded when you collude to steal millions from the state? The problem here is monopolising the market and claiming to be invulnerable because of the size of your company? Ask Lloyds of London how that worked out for them. Or Lehman Brothers. Stop stealing our money !!!!!

  • Arthur Salvado - 2012-07-08 08:01

    Here we go again. Is there no clean industry? SA has really gone to pot. Great pity

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