Johannesburg - The Construction Industry Development Board (CIDB) appears to be dragging its heels in starting its investigation into transgressions of its regulations and code of conduct by the 15 firms that reached settlement agreements with the Competition Commission and collectively agreed to pay R1.46bn in fines for collusion and bid-rigging.
CIDB spokeswoman Kotli Molise said last week that the CIDB had advanced to a stage where it was “completing the preliminary phase of preparations, including appointment of the investigating team”.
However, in July then acting CIDB chief executive Hlengiwe Khumalo told Business Report that the board was in the process of appointing the investigating team in terms of the CIDB regulatory framework.
“The investigating officer will commence with the investigation as soon as the Competition Commission report is made available after the Competition Tribunal grants the order. It is expected this will happen before the end of July 2013.
“The investigation will extend to all those companies found by the Competition Commission to have participated in anti-competitive behaviour, in line with the code of conduct for all parties engaged in the construction industry,” Khumalo said at the time.
Molise denied the CIDB had made any undertaking to start the investigation before the end of July “precisely because of our understanding of the preparation work prior to commencement of the investigation”.
The CIDB failed to respond to requests for further comment on what it had done since July to get its investigation started.
The commission in June ended the fast-track settlement process it launched in 2011 to deal with anti-competitive practices in the construction industry and reached settlement agreements with most of the construction firms that participated in the process.
The tribunal in July confirmed the provisional consent settlement agreements reached between the commission and Wilson Bayly Holmes-Ovcon (R311.28 million), Murray & Roberts (R309m), Stefanutti Stocks (R306.89m), Aveng (R306.57m), Basil Read (R94.9m), Raubex (R58.8m), Haw & Inglis (R45.3m), Rumdel Construction Cape (R17m), Giuricich Bros Construction (R3.55m), Vlaming (R3.4m), Tubular Technical Construction (R2.6m), G Liviero & Son Building (R2m), Hochtief Construction (R1.3m), Norvo Construction (R714 897) and Esorfranki (R155 850).
Sanctions the CIDB can impose on firms found guilty of contravening its code include deregistering them from its grading system database for up to 10 years, which would effectively prevent these companies from obtaining public sector work because companies require a CIDB grading to bid for public sector work.
Francois Viruly, a property consultant and professor at the School of Construction Economics and Management at UCT, said South Africa had an economy where infrastructure, such as power stations, roads and other facilities, would be critical to sustain economic growth, and delayed expenditure created uncertainty.
Viruly said there were signs of a revival in the construction sector and it was important to put the collusion “behind us and have very clear rules of the game going forward”.
Shareholder activist Theo Botha said the CIDB needed to do its investigation quickly and questioned how construction companies could accept public sector tenders while they were still under investigation.
A criminal case was opened with the National Prosecuting Authority earlier this year when Stefanutti Stocks handed over affidavits by executives at the company, leading to the Hawks initiating an investigation into fraud and racketeering charges against top construction industry leaders for illegally rigging contracts. - Business Report