The government’s planned R4 trillion infrastructure programme presented an opportunity for the transformation of the construction industry, Roger Jardine, the former chief executive at Aveng, said on Tuesday.
He was speaking during a public lecture at Wits Business School, entitled: “Rejecting Collusion and Corruption: Where to for the government and the private sector?”
Jardine, who quit as chief executive in August after five years at the helm of Aveng, reflected on his role when it emerged that there had been rampant collusion in the construction sector.
He said the R4 trillion infrastructure programme should be leveraged to target the empowerment of emerging contractors. “Let us not repeat the same mistakes. Our government and our industry must plan the future together.”
The government plans to improve infrastructure over the next 15 years, as part of its broad plan to boost economic development and growth. About R845 billion will be pumped into such projects over the next three years.
“In the infrastructure build programme, policymakers have to take appropriate steps to include black suppliers.”
During a question and answer session, an audience member expressed concern about future cost overruns and bid rigging.
Jardine suggested that the government could award the tenders to develop the country’s next large coal-fired power station, dubbed Coal 3, to foreign businesses to prevent further complicity.
Following an investigation by the Competition Commission into collusion among construction companies, 15 firms were fined a total R1.46bn in more than 300 cases.
David Lewis, the executive director at Corruption Watch, told Business Report yesterday that the likelihood of being caught and the hefty penalties to pay were about the only mechanisms in place to deter bid rigging.
Lewis, who chaired the Competition Commission for 10 years after its formation in 1999, added: “Most companies recognise that the likelihood of getting caught is strong. Also, the public outrage will be enough to guarantee that cartel activity will not be repeated.”
In his speech, Jardine said the introduction of reforms to the bidding process would not be enough to deter corruption.
He also called for agreements between the government and all bidders for a public sector contract that they would abstain from bribery both during the selection process and the project implementation.
“Bidders must agree to disclose all commissions and similar expenses paid by them to anyone in connection with the contract, with penalties being imposed when violations occur.
“Such penalties can include: loss or denial of contract, forfeiture of the bid or performance bond, liability for damages, blacklisting of bidders for future contracts and criminal or disciplinary action against government employees.”
Lewis reinforced the call made for authorities to pursue civil claims against companies involved in the cartels.
Individuals can also be sued for bid rigging and it has been proposed that steps against those individuals should include clawing back bonuses of present and past directors.
Jardine stressed the need for the construction sector to make serious efforts to bring new people onto their teams, including black professionals and women, who did not “carry the baggage of this cultural history” of collusion.