Murray & Roberts (M&R) has reached a financial settlement with one of its six former executives implicated in anti-competitive behaviour.
Henry Laas, M&R’s group chief executive, declined to give details yesterday but was confident settlements would soon be reached with the rest of the implicated former executives. Four of them are in South Africa, one is in Ireland and one in Australia.
“They would like to put it behind them. You can imagine the tension they have been under because there is a strong possibility of criminal action against them,” Laas said.
Only one settlement had been reached so far because the construction and engineering group “had to start somewhere”. He stressed that a settlement was no protection against criminal prosecution.
The settlement follows M&R chairwoman Mahlape Sello telling the annual general meeting in November last year that the group was committed to pursuing legal action against former executives and employees implicated in anti-competitive behaviour and recouping damages from them.
M&R agreed last year to pay a fine of R309 million in respect of 17 prohibited practices or contraventions of the Competition Act. Laas confirmed in February that M&R had reported six former executives to the SAPS in terms of the Prevention and Combating of Corrupt Activities Act.
Laas said yesterday that the disclosure of anti-competitive behaviour by the industry and M&R had caused “catastrophic damage” to the image and reputation of both.
A Gauteng MEC had told him M&R was a source of derision in the government. Laas attributed this to the public apology he issued on behalf of the group, which meant people could now put a face to the problem, while the chief executives of other construction groups remained “faceless”.
The government believed it had been defrauded of “millions and millions” of rand because of collusion but this perception was wrong. Laas stressed M&R, and probably the entire industry, had operated on narrow single-digit margins for the past decade.
He said “just under 1 percent” of the projects tendered on by the construction industry in this 10-year period were classified as collusive tenders.
Unlike cartel behaviour involving consumer goods such as bread, which resulted in the total revenue stream being inflated, construction industry collusion affected only specific projects. In addition, Laas said, there were two or three bidders that were not involved in collusion, which meant there was “an element of competition”.