THE CITY of Cape Town has reached an out-of-court settlement with the three construction companies that were accused of collusion and bid-rigging on the Cape Town Green Point Stadium built for the 2010 Fifa World Cup.
In terms of the joint settlement agreement outlined yesterday by the parties, construction companies Stefanutti Stocks, WBHO and Aveng Africa agreed to pay the city council R10.5 million annually, for three years, bringing the total to R94.5m. WBHO and Stefanutti Stocks also committed to corporate social investment projects in the city.
The settlement would bring to an end a dispute dating back to 2014, when the companies were involved in the R4.5 billion construction of the stadium in 2007, in anticipation of South Africa hosting the 2010 World Soccer Cup.
The City of Cape Town in 2014 brought a damages case of R430m against the three contractors.
The stadium was one of several built by the construction groups. Following a Competition Commission investigation, 15 construction companies agreed to pay penalties totalling R1.46bn for collusion and bid-rigging for their work on the stadiums - WBHO, for instance, paid R311.2m for 11 contraventions of the Competition Act.
The Competition Commission had found that, in December 2006, Group Five colluded with WBHO to submit a “cover price” on the Green Point Stadium that would ensure it would not be accepted. The tender was awarded to a Murray & Roberts/WBHO joint venture, with the project completed in December 2009.
“With respect to the civil claim received from the City of Cape Town, the parties to the civil claim being the City of Cape Town and WBHO Construction, Aveng Africa and Stefanutti Stocks remain confident of their respective legal positions.
“However, the parties have mutually agreed that it is in the best interests of all to amicably settle the matter rather than prolong an extended and costly arbitration and court process. This will allow for future positive engagements between the City of Cape Town and the contractors,” the City Council said in a statement.
The City said that since 2010 the South African construction sector had contracted in scale and capacity, with limited infrastructure spend by the government over the past decade, compounded by the lacklustre economy and the Covid pandemic.
These challenges had seen several industry failures, while others, including Aveng, have divested of their South African construction businesses.
“The construction industry has felt the impact of the last decade of weak economic growth, and the recovery of this sector is crucial to growth and jobs,” said Cape Town mayor Geordin Hill-Lewis.
He said Cape Town was the only metro to succeed in bringing a claim to the point of settlement arising from the Fifa World Cup construction collusion.
Attorneys acting for the City had advised acceptance of the latest settlement proposal by construction firms, ahead of the arbitration hearings, and following earlier rounds of talks.
Hill-Lewis said apart from the cash payments, there would be a minimum R42.5m of social investment in solar energy systems guaranteed to the City for sites of its choosing. The settlement would dissuade collusion of this type in the future, and had prevented what would otherwise have been a protracted arbitration, he said..
Aveng spokesperson Itumeleng Lepere said this matter dated back a number of years and related to a business that the group no longer owned.
“While Aveng remains of the view that it does not have liability, we took a business decision to settle and avoid the ongoing distraction to our core business and the associated legal costs,” he said.
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