Dual probes not fair – Group FiveComment on this story
Pursuing criminal charges against individuals or organisations for anti-competitive behaviour would be illogical and undermine the Competition Commission’s ability to extract information in its corporate leniency programme, Group Five chief executive Mike Upton said yesterday.
Upton said there could not be “double jeopardy”, which is a second prosecution for the same offence after acquittal or conviction, or multiple punishments for the same offence.
He was responding to questions about a Hawks investigation into a cartel in the building industry that allegedly involved construction industry leaders illegally fixing state and other contracts worth billions of rand.
Upton said reports about the Hawks investigation were “speculative”, had raised the profile of the commission’s investigation into the construction sector and “confused the markets’ understanding of the commission’s mandated process”.
There was a lot of misinformation and misinterpretation about the investigation, he said, stressing that the investigations by the Hawks and the Competition Commission were separate and not parallel processes.
The commission defined its processes in terms of anti-competitive behaviour, he said.
“That is how they are being dealt with. They are not yet criminal. Should there, outside of that, be people who have not made full disclosure or perjured themselves or reported criminal behaviour, that is when the National Prosecuting Authority will be involved.
In 2009 Group Five was the first major construction firm to approach the commission and apply for leniency. It was granted conditional leniency pending the conclusion of the full industry investigation.
The commission said in 2011 that all the major listed construction firms 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 R29 billion.
The commission’s corporate leniency policy specifically states that immunity granted under its terms does not protect applicants from criminal or civil liability resulting from its participation in a cartel that infringed the Competition Act.
Upton said Group Five had not interacted with the Hawks in terms of making affidavits but it had gauged the process through its senior counsel.
Group Five reported yesterday that local construction market conditions remained tough, with thin margins in the six months to last December. However, demand increased for mining, power and transport infrastructure in other African markets in which it operated.
Fully diluted headline earnings a share increased by 62.4 percent to R1.51 from 93c.
Increased activity in all of the group’s construction businesses and its engineering and construction cluster resulted in group revenue from continuing operations rising by almost 16 percent to R5.1bn.
Core operating profit grew 18.4 percent to R260 million.
Group cash and cash equivalents on hand at the end of the period increased to R2.6bn from R2.3bn. A dividend of 32c a share was declared, 45 percent higher than previously.
It had an order book of R18.1bn in December, representing 190 percent of group revenue in its 2012 financial year.
The stock soared 9.29 percent to close at R32 yesterday.