Construction cartel is ‘criminal’

Johannesburg - The collusion to rig bids and tenders for the 2010 World Cup stadium build programme was just the tip of a monstrous iceberg of fraud and deceit by construction firms including many prominent JSE-listed companies.

They colluded through meetings to inflate the price of tenders and allocate contracts among themselves, adding billions to the cost of the SA National Roads Agency’s Gauteng freeway improvements, other road schemes, the stadiums and electrical and instrumentation projects.

Economic Development Minister Ebrahim Patel. File photo: Leon Nicholas. Credit: Independent Newspapers

This emerged from the Competition Commission’s probe into bid-rigging on the 300 projects valued at R47 billion, of which R28bn related to public sector contracts and R19bn for private sector work.

It led to the commission reporting this week that 15 firms had agreed to penalties collectively totalling R1.46bn for collusive tendering in contravention of the Competition Act.

Yesterday, the National Union of Metalworkers SA called for executives involved in the collusion to be criminally prosecuted while Cosatu accused them of treason.

A summary of the offences committed by construction firms that had settled with the commission in terms of its fast-track settlement process revealed there was a 2010 World Cup stadium agreement, 2006 road contractors’ meetings and a “Wade list meeting” at which deals were reached on collusion between firms.

The Competition Commission’s fast-track settlement process was launched in February 2011 after it initiated an investigation in February 2009 into alleged prohibited practices relating to collusive conduct in the construction of the World Cup stadiums against Murray & Roberts (M&R), Aveng construction unit Grinaker-LTA, Basil Read, Wilson Bayly Holmes-Ovcon (WBHO), Stefanutti Stocks, Interbeton Abu Dhabi and Bouygues Construction.

In terms of the 2010 World Cup stadium agreement, during or about in 2006 Grinaker-LTA, WBHO, M&R, Group Five, Concor, Basil Read and Stefanutti Stocks met twice and reached a deal for the construction of the stadiums.

The Gautrain projects involved the electrification of Gautrain stations for the Bombela Concession.

The commission said Wade Walker reached agreement with Group Five Energy to share the budget prices for three stations - Pretoria, Midrand and OR Tambo. - Business Report