Construction giant Group Five was placed under business rescue this week, while Standard Bank announced it would close 91 branches and retrench about 1200 workers.
Sub-contractors in Durban who have worked with Group Five fear they will not get paid for work done around the province.
A sub-contractor installing and refurbishing pipes at the southern waste water treatment plant said their businesses were now at risk.
“We started hearing rumours about the financial challenges at Group Five, but when we approached the company for a formal meeting, we were turned away. They could not give us any guarantees”.
The businessman said Group Five owed him R1.5million and other sub-contractors were owed amounts ranging from R1m to R5m.
“If I don’t get paid at the end of the month, I will be bankrupt. A lot of emerging businesses are in the same predicament.”
The sub-contractor said this would result in job losses. “I have already worked and spent a lot of money on the project, and I fear the worst.
“Other sub-contractors and I have engaged eThekwini Municipality, who is the client, and asked the municipality to pay us directly, but they refused. We have served Group Five with a notice and stopped working. This will have an environmental impact on the Durban South community because some tanks are leaking and cannot be used.”
Another sub-contractor said if Group Five was not bailed out, his business would collapse.
“I don’t know if I will be paid for the two projects I am doing for Group Five. They said I would be told within 10 days of the business rescue proceedings taking effect.
“My business has grown because of the support I received from Group Five. I do not want the company to collapse. It would also be the end for other smaller businesses that depend on them,” he said.
Robert Ndlela, secretary-general for the Federation for Radical Economic Transformation (Fret) said Group Five’s financial challenges had led to the delay of major construction projects.
“Our members are sub-contractors on many projects, but they are not working at the moment,” he said.
Ndlela said the federation wanted to buy shares with the aim of rescuing the construction giant.
“We don’t support or celebrate a business rescue for any company. When we call for radical economic transformation, we don’t mean bigger businesses must collapse, but they must continue to work with smaller businesses owned by black people.
At Standard Bank, employees were counting their days following the announcement of the closure of 91 branches across the country.
One of many of the workers who received a retrenchment letter from the bank said the sector’s future was bleak.
A front desk employee who helps with inquiries said she received a retrenchment letter two weeks ago.
“We are sad and worried, but there is nothing we can do. We have been praying for a different outcome since we heard rumours in July, but now we’ve realised our worst nightmares are about to become a reality,” said the employee at a Durban branch.
Standard Bank spokesperson Ross Linstrom was unable to disclose which branches would be affected as they were still consulting staff.
“It would be unfair to staff to speak to the media before we have spoken to everyone,” he said.
Linstrom added that some employees could be incorporated in other areas of the business.
Group Five said it was important to note this was not a liquidation, but business rescue.
Economist Dawie Roodt said banking was contracting in the face of technology-driven businesses.