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Cape Town hits WBHO for R428m damages

An interior view of the Green Point Stadium in Cape Town. File photo: Sam Clark

An interior view of the Green Point Stadium in Cape Town. File photo: Sam Clark

Published Feb 24, 2015


A R428.75 million civil damages claim has been lodged by the City of Cape Town against listed Wilson Bayly Holmes-Ovcon (WBHO) for collusion on the tender for the construction of the Green Point Stadium for the 2010 World Cup.

But Louwtjie Nel, WBHO’s chief executive, said yesterday the firm believed the City of Cape Town did not suffer any damage and had given notice of its intention to defend the claim.

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He said a court date had not yet been set to hear the claim and declined to elaborate on the claim or the quantum of the claim. “Obviously it’s very sensitive but we’re confident of our case. We don’t think shareholders should be concerned about it and that is why we have not made any provision for it.”

Ian Neilson, the City of Cape Town’s mayoral committee member for finance, confirmed summons had been issued but indicated the amount was subject to amendment.

This is believed to be the first civil damages claim lodged following the conclusion of the construction fast-track settlement process launched by the Competition Commission in 2009 after an investigation uncovered widespread collusion in the industry.

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It resulted in 15 firms agreeing to pay penalties totalling R1.46 billion for contraventions of the Competition Act.

WBHO admitted in its settlement it agreed in December 2006 with Group Five to provide it with a cover price so Group Five would not win the tender.

The tender was awarded to the WBHO and Murray & Roberts (M&R) joint venture.

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WBHO paid a R311.28m fine in terms of a consent agreement signed with the commission for 11 contraventions but refused to settle five alleged prohibited practices it believed were not contraventions of the act.

The group said the commission had subsequently confirmed the non-referral of two of these alleged practices.

The commission in November referred a case of collusive tendering by WBHO, Group Five, M&R, Stefanutti Stocks and Basil Read related to the construction of the 2010 World Cup stadiums to the tribunal for prosecution.

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WBHO said: “On considered legal advice, WBHO has refused to settle this matter as part of the fast-track settlement process as WBHO is firmly of the opinion that this meeting was not collusive in nature.”

It reported a significant decline in earnings, predominantly caused three loss-making contracts in its Australian civil businesses. Headline earnings a share declined by 18.4 percent to 529.9c from 649.8c.

Revenue rose by 11 percent to R14.67bn from R13.2bn.

WBHO shares fell 3.68 percent to close at R120.40 yesterday.

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