WBHO grilled on 23 violations of Competition Act

2013-11-13 16:40

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WBHO chairperson Mike Wylie said the construction industry was being “unfairly treated” and explained away some of the collusion in the construction cartel, arguing that the bids were still at market-related prices and the clients were not adversely affected.

The construction cartel practised “cover pricing”, which was used when a construction company needed to appear as if it was interested in bidding on a contract, but had no interest in winning the contract.

In this situation a construction firm reached an arrangement with a competitor, where the firm would provide a cover price, basically a price higher than the bid from the company that was interested in winning the tender.

This happened with numerous roads projects built for the South African National Roads Agency Limited (Sanral), as City Press reported in July this year.

Roads affected included national routes such as the N1, N2, N5, N12 and N17, as well as major provincial routes including the R61, R51 and R40, among others.

Speaking about the Sanral collusion today at the WBHO AGM Wylie said he had met with the Sanral board and explained what had happened with the allocation of roads among the construction firms.

“The people involved genuinely felt the best way to respond to this was some form of allocation,” said Wylie, arguing that the prices were competitive.

Wylie called on the media, shareholders and other stakeholders to put the whole issue “behind us”, while facing interrogation from shareholder activist Theo Botha.

Botha grilled Wylie over WBHO’s lack of transparency regarding the collusion, arguing that WBHO should come clean on 23 violations of the Competition Act, which occurred too long ago for the Competition Commission to take action.

Wylie said the company would not be releasing the details of these 23 projects, as it was not in the shareholders’ interests.

Wylie said collusion was “entrenched” in the construction industry in the past, but now that the companies had come clean, “we should be allowed to move on”.

“It’s time to put this to bed,” said Wylie.

He told shareholders at the AGM that a “large portion” of the R311.3 million fine imposed by the competition authorities was paid using the pool of money set aside for bonuses in the 2013/2014 financial year and details about how directors’ remuneration would be affected would be included in next year’s annual results.

However, he said there would be no “claw-back” against staff that have since left WBHO.

When questioned about being personally fingered as a ringleader of the cartel in affidavits from current construction executives currently in the possession of the National Prosecuting Authority, Wylie said this related to activity that took place in the 90s and was not what was to be discussed at the meeting.

Wylie said that seven WBHO staff were implicated in collusion, “three or four” had left and the remaining “three or four” had been dealt with, but were still employed by WBHO.

Wylie assured shareholders the company had done a thorough investigation and there was no more collusion in WBHO.

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