Pressure mounts on construction cartel

Pressure mounts on construction cartel

2013-07-05 19:03

Pretoria - The SA Local Government Association (Salga) filed papers on Friday to join the tribunal process of the Competition Commission’s settlement with major construction companies implicated in collusion.

Shortly after meeting several municipality representatives, Salga chief operations officer Lance Joel said it had received "overwhelming support" to intervene in the settlement discussions.

"The main reason is that there may be information that will become available during the proceedings that will be of benefit to our members," he said.

"Secondly, an opportunity may be granted to our members to try and engage, through Salga, with the construction firms with the view to settle some of the claims."

He said Salga hoped to be allowed to make presentations at the tribunal’s hearings on July 17 and 18.

Joel said there were shortcomings in the commission's processes.

"We want to be able to raise certain aspects that we think the Competition Commission may not have considered during its considerations for settlement negotiations with the construction firms," he said.

"The commission allowed companies to come forward and say I did X, Y, and Z. That indicates that the commission wholly relied on the companies coming forward. There may have been a need to test if those [companies] were the only ones and ascertain if there were some projects not included [divulged]."

Salga believed there was leniency in chastising the companies, he said.

Last month, the commission said 15 construction companies had agreed to pay fines totalling R1.46 billion for collusive tendering.

The settlements were reached in terms of the "construction fast-track settlement process" started in February 2011.

This process encouraged firms to make full and truthful disclosure of bid rigging, in return for penalties lower than what the commission would have sought if the cases were prosecuted.

Twenty-one firms responded to the offer, and 300 instances of bid rigging were revealed. According to Salga, the projects were estimated at R47bn.

Settlement fines

The settlements related to projects concluded after 2006. Projects before that were beyond the prosecutorial reach of the act.

The firms fined were: Aveng R306,576,143; Basil Read R94,936,248; Esorfranki R155,850; G Liviero R2,011,078; Giuricich R3,552,568; Haw & Inglis R45,314,041; Hochtief R1,315,719; Murray & Roberts R309,046,455; Norvo R714,897; Raubex R58,826,626; Rumdel R17,127,465; Stefanutti R306,892,664; Tubular R2,634,667; Vlaming R3,421,662; and WBHO R311,288,311.

At the time, the commission said the companies colluded to create the illusion of competition by submitting "sham tenders" or "cover pricing", to allow an alleged conspirator to win a tender.

Projects involved in the commission's probe included the building of major stadiums for the 2010 Fifa World Cup, the upgrading of airports, highway improvement projects, hospitals, dams, and bridges.

In other instances, firms agreed that whoever won a tender would pay the losing bidders a "losing fee" to cover the costs of bidding.

Sub-contracting was also used to compensate losing bidders, the commission said.

The three firms which did not accept the settlement offer were: Group 5, Construction ID, and Power Construction.

"Construction firms that have not used the opportunity [to] disclose or settle contraventions will be investigated and prosecuted," the commission said.

  • Lynda Pitcher - 2013-07-05 19:47

    Is there no end to the corruption and skulduggery in this country

      Rajesh Sukha - 2013-07-08 10:20

      What King Dev- don't like my comment- I will say it again-EE and AA and BEE were not around 30 years ago, when these construction companies were already stop trying to link black to this lily white garbage pile....

  • Elizabeth Bothma - 2013-07-05 20:31

    Just wondering who'll benefit from all these fines? Another upgrade to a house, a car for a wife or a child? A lekker holiday overseas? Also still wondering who benefited from the bread fines? certainly not us the consumer who paid all that extra money!

      Amdyn - 2013-07-06 07:02

      It's just another tax. If there was real corruption the fines would be much bigger and people would be charged. Just look at the amounts some of the companies are fined with - I've seen bigger speeding fines.

      Rajesh Sukha - 2013-07-08 10:08

      Amdyn- you have seen bigger speeding fines??? What do you smoke. The idea is not to cripple the company- there must be a balance- but when a company losses R500m to tax from the top line it does impact...and the reputational damage...and the knock on the share think before you type...PLEASE

  • Rob Martin - 2013-07-06 16:27

    Fire the Directors.

  • Retha Roos - 2013-07-06 22:00

    Do not think any of these companies did it because of greed. Construction is a difficult industry where tenders are done at a time not knowing what future economic times are going to bring. But not one of you are complaining that there were no seriouswages trouble with any of these contracts. Locals are allways the first people to be employed when a new contract start by construction firms, not foreigners, helping our unemployment situation tremendously. Are any of these fines going to be helping to relieve a real need in somebodies life or is it just going to cost loads of people their jobs?

      Robert Aitken - 2013-07-07 16:07

      Retha, you are making pathetic excuses. They coluded, they stole therefore they need to go to jail. "Us" the public gave the money for the jobs."Us" the public gave you guys the oppurtunity to do an honest days work. Obviously we were wrong to trust you thieving pigs. The lot of you should be blacklisted from doing goverment contracts

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