‘HOW could SA National Roads Agency Limited (Sanral) not know that their projects were overpriced? They must have been in cahoots with the construction firms!” This is the refrain we often hear when the issue of collusion by construction firms in relation to Sanral projects, or the Gauteng Freeway Improvement Project (GFIP) in particular, is discussed. This oft-repeated cry is far removed from the truth.
Sanral’s commitment to clean governance and our zero tolerance approach to collusion and corruption are well-documented.
In spite of allegations of corruption in GFIP implicating the agency, to date no one has come up with such evidence, even though the Constitutional Court has a standing invitation in this regard.
In September 2012, in the matter between the Treasury and Others v Opposition to Urban Tolling and Others, the ConCourt said: “What is more, absent any proof of unlawfulness or fraud or corruption, the power and the prerogative to formulate and implement policy on how to finance public projects reside in the exclusive domain of the national executive subject to budgetary appropriations by Parliament.”
For Sanral, it is absolutely vital that we maintain our credibility as a custodian of the money from taxpayers and corporate investors. They must have complete confidence in our ability to manage our resources, prevent fraud and root out any forms of corruption.
Risk management is a way of life at Sanral. It emanates from the strategic direction given by the board, permeates through the executive management and into an operational approach where every single employee is a risk manager within his or her own work environment.
Sanral is conscious of its responsibility to invest taxpayers’ money allocated by the fiscus in the development and maintenance of the non-toll national road network. We report extensively and regularly to Parliament; our reports and financial statements are public documents and our books are scrutinised in great detail by the auditor-general.
Unqualified audit
We have received an unqualified audit report for the past six years, which confirms Sanral’s reputation that it not only builds and maintains excellent roads but also works within the appropriate legislative prescriptions in all aspects of its work – particularly on the financial side.
A fraud hotline – 0800 204 558 – is in place and is independently monitored by a firm of accountants and serious allegations are probed by external investigators. This internal commitment to transparency and probity is carried over to Sanral’s relationships with contractors and service providers.
We expect our partners in the construction industry to display a similar adherence to ethical business practices and an enhanced awareness that they too are working with public funds.
Sanral’s decision to pursue action against construction companies found guilty of collusion – which is a form of corruption – is proof of the agency’s commitment to good corporate governance. We have an obligation to recover the money on behalf of citizens.
It is not the type of action that any agency would prefer to take. Many of the construction firms implicated have been working closely with Sanral for decades. We have built strong relationships and together we successfully delivered on the projects that brought South Africa its world-class national highway network.
However, the findings of the Competition Commission on collusion in the construction industry were clear-cut and unequivocal. The commission found evidence of widespread irregularities in the construction sector and some 15 major companies acknowledged their guilt and were given collective fines of R1.46 billion.
Thus far, Sanral has been the only state-owned company to pursue the issue further and to take legal steps to recover the money. This should not come as a surprise for participants in, and observers of, the local engineering industry.
Shortly after the findings of the Competition Commission were released – in mid-2013 – Sanral expressed its outrage and signalled its intention to seek restitution.
The first stage in the recovery process was for the Competition Tribunal to issue certificates that will enable Sanral to institute civil claims against the companies that admitted their guilt.
The extent of the damage to the public purse had to be calculated and Sanral appointed independent legal experts and economists to make these determinations. This process has now been concluded and, armed with the facts, Sanral, will pursue the issue through legal processes.
This prudent, but decisive, approach towards good corporate governance has become a characteristic of Sanral, which, through the years, has built a reputation for its strict financial management and progressive codes of conduct.
The collusion between construction companies formed part of a sad chapter in the recent history of the industry.
The Competition Commission played a pivotal role to uncover the facts about the irregularities and most of the companies owned and paid the imposed fines.
Over and above civil action, Sanral will work with the country’s investigative units and the prosecuting authorities to ensure that justice is done on this matter.
Alice Mathew is the company secretary and risk officer at the SA National Roads Agency Limited