The two companies involved in tender collusion and bid rigging for Cape Town Stadium, WBHO and Group Five, will know this week whether penalties totalling R620 million imposed by the Competition Commission will be confirmed or changed.
In its disclosures to the Competition Commission, WBHO described how it won the bid for the R4.5 billion stadium by colluding with Group Five.
According to documents submitted to the commission, WBHO reached an agreement with Group Five on or about December 13, 2006, “in that WBHO provided a cover price to Group Five, on the basis that Group Five would not win the tender”.
This is in contravention of the Competition Act.
WBHO then went into a joint venture with Murray & Roberts to build the 2010 World Cup stadium which had been marred by controversy from the onset.
Last month the Competition Commission reached settlement agreements with 15 construction firms which had been involved in collusion and bid-rigging in order to win lucrative government and private contracts between 2006 and 2010 including Cape Town Stadium, the FNB Stadium, the Nelson Mandela Bridge in Joburg and the Gautrain.
The commission probed contracts worth at least R30bn.
The commission imposed fines of R1.5bn after the companies involved had been invited by the commission to
provide full disclosure in exchange for leniency. Fines of between 1 percent and 7.1 percent of annual turnover were imposed instead of the maximum of 10 percent.
In its disclosed projects, WBHO said it reached an agreement with Group Five in December 2006 for Cape Town Stadium, in that WBHO would provide a cover price to Group Five, on the basis that Group Five would not win the tender.
The commission started investigating construction firms in 2009 at a time when speculation over stadium pricing was rife.
Trudi Makhaya, deputy commissioner, said the commission’s study of prices had uncovered “problematic behaviour” and that had triggered the investigation.
A total of 300 rigged projects were disclosed.
At a Competition Tribunal hearings this week, the 15 companies will hear whether their fines will remain the same or be changed.
Makhaya said the tribunal would probe how the commission arrived at the penalty amounts and decide whether any changes should be made to the fines.
Meanwhile the city’s team of experts appointed for a total of R4m is still trying to determine by how much the municipality was overcharged in the stadium’s construction.
Mayco member for finance Ian Neilson would not speculate on a figure as the city’s appointed legal team is still probing the extent of damages to be claimed back from the companies involved in stadium’s construction.
“We have absolutely no figure at this stage and I don’t want to speculate. It would be a significant figure because we would not be spending this amount of money on a team to establish what we are owed if we did not think it was a substantial amount,” Neilson said.
Neilson said apart from lodging a civil damages claim, the city would also assess the merits of blacklisting the companies involved in tender collusion and bid rigging for the stadium.
Firms would be given an opportunity to state their case and the city would decide whether to blacklist them and for what period. - The Cape Times