We are being misled – Competition Tribunal’s Madima on Hochtief settlement

2013-08-15 11:54

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The Competition Tribunal took a stand this week against the lack of transparency in the construction cartel settlement process.

Yesterday it rebuffed a settlement agreement between German company Hochtief Construction AG and the Competition Commission.

The settlement agreement related to the construction of an undersea tunnel for the eThekwini metro.

The tunnel was to carry sewage generated by Durban to wastewater treatment works on the Bluff.

The first sign that all was not going according to plan for Hochtief at the tribunal hearing was when the tribunal’s Takalani Madima raised concerns about the level of transparency on offer from Hochtief.

“I cannot support this order,” said Madima.

“I believe full disclosure has not been made. We are being misled,” Madima continued. “This is not acceptable.”

Madima said the fact that Hochtief claims the collusion was the act of one employee, and he has retired, does not mean he can’t be contacted and asked to explain what happened.

“That person is still alive and is on pension from the company, you can’t tell me you can’t find him,” said Madima.

According to the commission, in February 2005, Stefanutti Stocks, Grinaker and Hochtief Construction agreed to add a margin of R3 million to the respective bid prices they were set to submit to eThekwini.

They also agreed that whoever won the tender would pay R1 million to the losing bidders.

At the time, Stefanutti Stocks was in a joint venture with Nishimatsu, Dura Soletanche-Bachy and Group Five, who joined the venture later and Hochtief was in a joint venture with Concor.

The commission initiated the investigations after receiving applications for corporate leniency from Grinaker, which is a subsidiary of construction group Aveng.

Stefanutti Stocks maintained at the hearing that, although the agreement was reached, it was never paid a losers’ fee, as its international partner Nishimatsu refused to be part of the collusion.

Hochtief, which won the tender, said it could not trace any payments of losers’ fees, but the commission says Grinaker has provided proof it was paid R1 million.

The tribunal confirmed the Stefanutti consent order agreement yesterday but refused to confirm the Hochtief one.

Instead it issued a list of demands via letter informing Hotchtief what needed to be done to satisfy the tribunal that it was being fully transparent.

These included a “proper search” to trace the payment of losers’ fees to fellow colluders and the consultation of current and past employees regarding the above.

The tribunal said that a senior employee of Hochtief must, on affidavit, explain how the search was conducted, who was consulted and the findings of the search.

It should also be determined whether construction companies implicated in the project had received any loser fee payments. If so, the amount paid and the date of the payment must be provided.

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