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VRP agreement has been thrown into doubt

By Roy Cokayne Time of article published Feb 15, 2018

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JOHANNESBURG - The Black Business Council for the Built Environment (BBCBE) has thrown a potential spanner in the works of the government’s Voluntary Rebuilding Programme (VRP) agreement with seven listed construction companies that aims to significantly transform the construction sector.

Gregory Mofokeng, the chief executive of the BBCBE, told a Competition Tribunal hearing yesterday that the mentorship option of the VRP would only empower a few emerging black contractors rather than the entire industry.

Mofokeng said the BBCBE would not have engaged in this process if it knew it would only empower a few rather than the overall construction industry.

He said there should be consequences if beneficiaries of the VRP did not procure from black suppliers and manufacturers, adding that the BBCBE had tried unsuccessfully to engage the government on this issue but the government had “gone awol" (absent without leave).

Mofokeng told Business Report after the hearing that the BBCBE had been trying without success for several months to get an appointment with the Department of Economic Development on this issue.

He stressed that if the BBCBE had not engaged the seven companies about a settlement agreement that led to the VRP agreement with the government, the companies would have faced civil litigation, been blacklisted by the National Treasury from doing business with the government and been deregistered by the Construction Industry Development Board and their licence to trade taken away.

“The process we are busy with is a very critical step in the implementation of the settlement agreement,” he said.

The transformation commitments of the companies in terms of the VRP agreement involved each of them either mentoring up to three emerging black-owned contractors so they were able to sustain a cumulative annual revenue equal to at least 25percent of the mentor companies’ annual revenue from civil engineering and building works delivered in South Africa by 2024 or disposing of at least a 40percent of their South African civil engineering and general building construction businesses to an enterprise that was more than 51percent black-owned, managed and controlled.

The tribunal yesterday was considering three mergers by Raubex, Stefanutti Stocks and WBHO Construction with black-owned emerging contractors.

The other four signatories to the VRP agreement - Murray & Roberts, Aveng, Group Five and Basil Read - have elected to sell at least 40percent of their equity to a black-owned company.

Paul Coetser, the legal representative for WBHO, Stefanutti Stocks and Raubex, stressed they were not applying to the tribunal for the approval of the settlement agreement and trust fund.

“Those documents have been long in existence and implemented and it's not in the ambit of the tribunal to try and amend them,” he said.

The commission and merging parties agreed to provide the tribunal with a document by today of the redrafted conditions.


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