Construction collusion

2013-07-13 00:00

CAPE TOWN — Durban’s international convention centre, a dam, soccer stadiums, railway lines, roads and university hostels.

These are among the projects awarded to construction companies who colluded over bids.

Details of the extent of these secret agreements between leading construction firms have emerged from recent settlements between the companies and the Competition Commission.

Documents submitted by the companies show how tenders were shared out between them for projects around the country, including several in KwaZulu-Natal. The collusion over the stadiums built for the 2010 Soccer World Cup has previously been reported.

The Competition Tribunal will now hold hearings on Wednesday and Thursday on the state of the construction industry, at which documents will show that “secret clubs” were formed by the heads of the various firms, who met to “decide” which would get which tender, from stadiums to roads and even the huge Berg River dam project in the Western Cape.

The tribunal has to decide if fines totalling more than R1 billion agreed to between the Competition Commission and the companies are acceptable.

Several companies have agreed to pay fines as follows:

• Aveng (which includes Grinaker-LTA) — R306,5 million;

• Basil Read – R94,9 million;

• Haw&Inglis — R45,3 million;

• Murray&Roberts — R309 million;

• Raubex — R58,8 million;

• Rumdel — R17,1 million;

• Stefanutti — R306 million; and

• WBHO — R311 million.

Other companies mentioned in the admissions have not agreed to be fined and may be prosecuted.

Among the affected projects were:

Durban International Convention Centre

Stefanutti, in a joint venture with Fikile Construction, reached agreement with Grinaker-LTA, WBHO and Group Five in October 2004 n respect of the Durban International Convention Centre.

Group Five and WBHO were in a joint venture known as Masinya JV. Grinaker-LTA and Sivukile Contractors were in a joint venture known as Wozani JV. In terms of the agreement, Grinaker-LTA provided a cover price to Stefanutti, WBHO and Group Five to ensure that the joint venture involving Grinaker-LTA won the tender.

Stefanutti, WBHO, Group Five and Grinaker-LTA also agreed on a loser’s fee arrangement in terms of which a fee of R750 000 would be included in the tender price so that the winner of the tender would pay the losing bidders. The tender was, however, awarded to Masinya JV.

Bayhead Road

Extension, Khangela Bridge in Durban

Stefanutti, in a joint venture with Basil Read, reached an agreement with Group Five in 2006 on a cover price that would ensure the joint venture won the tender. They also agreed to share profits by sub-contracting some of the work to Group Five. The work was completed in 2010.

Extension of Sappi Amakhulu plant at


Stefanutti, in a joint venture with Group Five, agreed a cover price with Grinaker-LTA in 2006 to ensure that the Stefanutti JV would win this tender for the extension of the plant for Sappi-Saicor.

World Cup stadiums

Secret meetings on the contracts for the World Cup stadiums were held in 2006 by Grinaker-LTA, WBHO, Murray&Roberts, Group Five, Concor, Basil Read and Stefanutti. The contractors met twice to decide how the tenders for the Mbombela, Peter Mokaba, Moses Mabhida, Soccer City, Nelson Mandela Bay and Cape Town stadiums would be divided between them, and agreed that they would all try to achieve a 17,5% profit margin on the contracts.

The secret clubs

The heads of the various companies met in secret clubs to divide up tenders in various sectors, including roads. Meetings that included Grinaker-LTA, Basil Read, Concor, WBHO, Raubex and Haw&Inglis were held to discuss road tenders in 2006.

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