M&R claims all collusive behaviour is snuffed out

Roy Cokayne

MURRAY & Roberts (M&R) believes it has rooted out all anti-competitive and collusive behaviour within the group.

However, the listed construction and engineering company anticipates civil damages claims in terms of the Companies Act will be on made on principle by some private and public sector clients for past transgressions.

Chief executive Henry Laas said yesterday that this would not be an “easy entitlement” for these clients to prove but it would keep the group busy.

“Those clients are going to come forward and ask companies to explain. So, we will have to deal with them on a case by case basis,” he said.

The group has returned to profitability after two consecutive years of losses and stressed it would not abandon its significant claims worth more than R2 billion on three major projects: the Gautrain rapid rail project, the Gorgon Pioneer material offloading facility in Australia and the Dubai International Airport.

It also confirmed that the disposal of non-core assets that form part of its construction products Africa division had commenced. Union Carriage & Wagon was sold in January to a consortium including CTE Investments and the Industrial Development Corporation.

Laas said M&R was co-operating with the Competition Commission in terms of the fast-track settlement process launched in 2011 for collusion in the construction sector.

He said M&R had received conditional leniency from the commission for some matters but there might be incidents it had not identified that others knew about. The group believed the provision it had made for any potential penalties was adequate.

Laas said, the involvement of the Hawks in the transgressions of the Competition Act by the construction sector was “counterproductive”, and the Competition Commission procedure was “a sufficient process to deal with these issues”.

He said the underlying principle of the commission’s process was to give firms an opportunity to disclose and through this disclosure process they rooted out collusive behaviour.

“If there is now a threat of criminal prosecution, and if there are still pockets of this anywhere else in the industry, I don’t think anybody is going to put up their hand and want to deal with it because there is this fear of criminal prosecution.”

M&R had not had any interaction with the Hawks, he said.

Company executives and senior management now have to sign declarations annually that they had not acted nor were aware of any contraventions of the Competition Act.

M&R reported yesterday that diluted headline earnings a share improved to 69c in the six months to last December from a diluted loss a share of R1.90 in the previous corresponding period.

Group revenue grew to R16.3bn from R15.0bn, and attributable earnings improved to R262m from a loss of R528m.

At the end of December, it had net cash of R1.1bn compared with R21m net debt previously, while the order book had grown to R48.3bn from R45.3bn in June last year.

M&R stock rose 1.5 percent to close at R25.01 yesterday.