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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
