Construction cartel probe ‘exceptional’

THE INVESTIGATION by the Hawks into cartels, bid-rigging and collusion in the construction sector is “something exceptional”, according to the Competition Commission.

Trudi Makhaya, the commission’s advocacy and stakeholder relations manager, also stressed yesterday that the Hawks investigation was separate and “quite independent” of the commission’s investigation and fast-track settlement process involving the construction sector announced in 2011.

Makhaya emphasised that there was “no arrangement” between the commission and the Hawks to pass on information and the commission was not at this stage co-operating with the unit. But he was unable to comment on whether the commission was aware of the Hawks investigation before newspaper reports about it were published at the weekend.

“In this case, something exceptional happened and a case was opened at the Hawks, and they have their powers. It appears some respondents approached the Hawks but we’re not involved in that process.”

City Press reported at the weekend that the Hawks were investigating a cartel in the building industry. It said evidence in a major fraud and racketeering probe showed top construction industry leaders illegally rigged state and other contracts, including two Fifa World Cup stadium deals, worth billions of rand.

The information about the Hawks investigation is new but the cartel and collusive activity surrounding these contracts has been public knowledge for more than two years.

Deputy competition commissioner Tembinkosi Bonakele said in February 2011 that all five 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.

Speaking at the same briefing on the launch of a “fast-track settlement” process for construction firms that had been party to collusive practices in bidding for projects, competition commissioner Shan Ramburuth said the bid-rigging involved a number of projects. He said some were related to the construction of the 2010 World Cup soccer stadiums, and the Gautrain and road construction projects.

The commission had some information related to the Cape Town Stadium and a pilings contract related to a sub-contractor on the Moses Mabhida Stadium in Durban, he said.

Makhaya said yesterday that the criminal prosecution of cartel activity was not part of competition policy Leniency referred to the financial penalties and had “nothing to do with criminal penalties at this stage”. But “pending amendments to the Competition Act would make cartel activity a criminal offence”.

However, the commission’s corporate leniency policy specifically states: “The immunity granted pursuant to the corporate leniency policy does not protect the applicant from criminal or civil liability resulting from its participation in a cartel infringing the act.”

Makhaya said the commission’s investigation was still ongoing although it was in the final stages of drafting settlement agreements.

Wilson Bayly Holmes-Ovcon said yesterday that it strongly rejected suggestions of criminal conduct but confirmed it was engaged in confidential discussions with the commission about a small number of projects.

Aveng said yesterday that it would not be appropriate to comment on pending investigations by the commission “or other authorities” until the fast-track settlement investigation was complete.