Demands are intensifying for the construction firms involved in collusive tendering and bid-rigging to identify and act against executives and senior managers responsible for anti-competitive behaviour.
Shareholder activist Theo Botha called on companies to “name and blame” them, claw back all the bonuses paid from 2006 and for new management in these companies.
“The whole industry is colluding and nobody is held responsible. No names are mentioned. How can that be? They must tell shareholders who left the company and were fired. Companies need to be transparent on this,” he said.
Botha said it defied logic to suggest that not a single line manager had gone to their chief executive and told them the company needed to hold back on a specific contract and push forward with another because of collusive tendering.
David Lewis, the executive director of Corruption Watch, said price-fixing, particularly in public sector contracts, was a clear example of corruption by private-sector firms.
Lewis said those responsible should be identified, which would happen when there was a trial and evidence was led.
“There is a very strong proclivity to pass the buck to a junior. I’m never convinced of the truth of that,” he said.
Their comments follows the Competition Commission last week reporting that 15 firms, including almost all of the major listed companies in the sector, had agreed to penalties collectively totalling R1.46 billion for collusive tendering and bid-rigging.
This included meetings by firms to divide up markets among themselves, agree on profit margins and collude to create the illusion of competition by submitting sham tenders to enable a fellow conspirator to win a tender.
Major projects involved included the Gauteng Freeway Improvement Project and stadiums for the 2010 soccer World Cup.
Murray & Roberts (M&R) was the only company that indicated it was considering taking action against executives or senior managers.
M&R said five staff, whom it did not name, were implicated and left the group between 2004 and 2010 but stressed they had left of their own accord and not directly because of their involvement in collusion.
M&R said it had not yet taken action against them because it wanted to first conclude the fast-track settlement process.
It was “taking legal advice on what options are available to the group”.
The SA Institution of Civil Engineering denounced the collusion, anti-competitive and unethical behaviour by the construction firms, which it called corruption by another name.
It stressed that only the people in a company, and not the company, could collude.
Trade union federation Cosatu last week called for the directors and chief executives of the companies to be arrested and jailed for treason.
Botha labelled the commission’s fast-track settlement process an “absolute farce” because the commission and the guilty firms had “colluded” on the penalties to be imposed.
He said the commission had become an organ for collecting revenue for the state.
Nothing had been done to right the wrongs that had been done to the man in the street through the companies having inflated prices, he added.
Botha said that the commission did not provide all the information gathered to civil damages claimants and questioned why shareholders should “take a knock”.
He said shareholders should sue the companies to recover their loss and expressed amazement that the state-owned Public Investment Corporation (PIC) had remained silent.
The PIC is one of the largest investors in the local stock market and its largest client is the Government Employees Pension Fund (GEPF).
The GEPF owns 15.44 percent of Aveng, 6.08 percent of Basil Read, 9.63 percent of Group Five, 13.29 percent of Murray & Roberts, 7.8 percent of Raubex, 2.14 percent of Stefanutti Stocks and 10.68 percent of Wilson Bayly Holmes-Ovcon.
The PIC did not respond to a request for comment.
Trudi Makhaya, the deputy commissioner at the Competition Commission, said it would reveal all non-confidential information contained in the settlement agreements once the matter had been heard at the Competition Tribunal, which was likely to occur within the next three months.
Makhaya said the role of the commission was to uncover anti-competitive behaviour in the economy and, in doing so, it brought to light contraventions that would have otherwise remained secret.
The commission had therefore made it possible for those parties that had been harmed by such conduct to institute damages claims, making the commission an important enabler of such subsequent action, she said.