Bid-rigging probe at advanced stage: Hawks

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The high-level probe of the construction industry was at an advanced stage, the Hawks said on Sunday. File picture: Timothy Bernard

Durban - The high-level probe of the construction industry was at an advanced stage, the Hawks said on Sunday.

Captain Paul Ramaloko, spokesman for the elite crime-fighting unit, said a team of specialist investigators was probing various construction deals across the country – including projects in Durban.

While he would not say which contracts were being probed in KwaZulu-Natal, Durban residents were reportedly overcharged for the R3.4 billion Moses Mabhida Stadium, the R2.9bn widening of Durban harbour and the Inkosi Albert Luthuli International Convention Centre.

At the centre of the two-pronged probe – conducted by the police and the Competition Commission – are five of the country’s top construction companies, which allegedly carved out state and other contracts among themselves at hugely inflated prices.

It comes two years after the Competition Commission launched a “fast-track settlement” for firms in the construction sector that had been party to collusive practices in bidding for projects in the private and public sector.

The commission said at the time that it was investigating the five major listed construction firms that had been implicated in anti-competitive practices during its probe of 65 bid-rigging cases in the sector, involving more than 70 projects valued at R29bn.

The commission’s investigation of the construction industry has uncovered widespread anti-competitive conduct through various arrangements.

It said major firms in the sector, for example, have held meetings to allocate tenders, and police each other’s behaviour through a structure referred to as “The Party”.

The major construction firms cited confidentiality agreements with the Competition Commission when approached for comment by the media last week.

In recent weeks, at least 11 affidavits were made by executives from Stefanutti Stocks – one of the country’s biggest construction firms – to the Hawks’ serious economic offences investigator and the National Prosecuting Authority alleging a decades-long formal kickback and price-fixing racket that involved prominent names in the industry.

Ramaloko said investigations were continuing.

“It is a wide investigation and we do not want to say yet which contracts we are investigating and for how much they were worth,” he said.

“Let’s give the investigators the space they need until the time comes that they take the case to court.”

Trudi Makhaya, manager for advocacy and stakeholder relations at the commission, said the criminal investigation was separate to their investigation.

She said that since the commission launched the fast-track settlement on February 1, 2011, they have had received applications from 21 firms in the construction industry.

“After the first-phase assessment of all the applications, the commission identified 301 different projects and tenders that were subject to bid-rigging.

“These projects and tenders included some of the major infrastructure developments in South Africa, including some of the soccer World Cup stadiums,” she said.

“During the evaluation process, 24 firms that did not apply for settlement were also implicated in bid-rigging conduct. This conduct is being investigated.”

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