The Moses Mabhida Stadium.
The Moses Mabhida Stadium.

Premier warns price fixers

By Sipho Khumalo And Bronwyn Gerretsen Time of article published Feb 3, 2011

Share this article:

KwaZulu-Natal Premier Zweli Mkhize on Wednesday vowed to pursue legal action against any company found guilty of bid-rigging in the construction of the R3,1-billion Moses Mabhida Stadium.

Mkhize, who has previously raised concerns with the Treasury about the costs of major construction projects in the province, said such action would be necessary to recover overpayments if price collusion was found.

This was as the Competition Commission of South Africa said it was possible more cases of tender rigging in the Moses Mabhida Stadium construction could come to light.

The commission is investigating 65 bid-rigging cases in the construction sector involving 70 projects valued at R29bn countrywide. These include major projects related to the World Cup, including the Cape Town Stadium, and the Gautrain.

The commission said this week that it had received some information relating to a pilings contract involving a subcontractor on the Moses Mabhida Stadium. The overall contract for the stadium’s piling and earthworks was R50-million.

Oupa Bodibe, the commission’s manager of advocacy and stakeholder relations, said on Wednesday that the pilings collusion case would proceed to the competition tribunal.

Although the commission had more detailed information, he could not release it until it became public in documents before the court. “There might be more rigging than just the pilings with regard to the Moses Mabhida Stadium, but we have not yet received information to say that there is. But we do believe that with many of these big projects there is bid-rigging, so that is why we have called on the industry to come forward with more -information.”

Bodibe was referring to a “fast-track process” for firms alleged to be involved in bid-rigging that had artificially raised the cost of contracts and resulted in the government overpaying for -construction contracts.

Some of the implicated firms have lodged corporate leniency applications and are co-operating with the commission.

Apart from collusion resulting in inflated costs, Bodibe said the commission was also probing the rotation of contracts among companies allegedly involved in collusion.

The Mercury was unable to establish which companies were implicated in KZN, as they might not necessarily have won the main tenders, but could be subcontractors.

Of the major construction firms in the country, only Group Five, M&R and Grinaker-LTA, the locally based multidisciplinary building company within Aveng, have applied for corporate leniency.

Group Five was part of the consortium, which also involved Wilson Bayly Holmes-Ovcon (WBHO) and the Pandev joint venture, which won the building contract for the Moses Mabhida Stadium.

However, Group Five KZN managing director Craig Jessop said none of the company’s cases disclosed to the Competition Commission were related to the stadium.

Speaking at the start of the provincial cabinet’s three-day meeting in Durban yesterday, Mkhize said that should the commission find evidence that construction companies had been involved in price-fixing, the province would take legal action to recover the money.

“We have been concerned for some time about the costs of projects and have raised issues. We are very pleased to learn that the commission has run this investigation. We are now awaiting its final findings and recommendations before considering what action to take.

“If we receive concrete proof that companies (we have done business with) are guilty then we will take them to court and sue them to recover our money. We would be stupid not to.”

Mkhize said the province had been “very concerned” about the costs of major projects in KZN, and had raised these with some people at the National Treasury.

Logie Naidoo, chairman of the city’s economic development committee, said the municipality was concerned about the allegations.

“We condemn it very strongly. The tender process ensures that we get the best price for the contract and that it be awarded to people competent to do the work. But now we don’t know if we got the best value for our money or not.”

He said the municipality had put together a draft policy which could see errant businesses and individuals who did business with it blacklisted for several misdemeanours, of which tender collusion was one. - The Mercury

Share this article: