Eldos building mafia: Community anger amid extortion and ex-cons

Small local businesses that benefit from government building contracts continue to fall victim to extortion at construction sites despite warnings by industry bodies in 2019 already about the rise of a “construction mafia” in South Africa. 

In Eldorado Park, south of Johannesburg, a three-month-long Mail & Guardian investigation into massive public infrastructure projects currently underway has revealed how business owners are intimidated into allegedly paying exorbitant amounts to a “business forum”, according to sources. They say the Sisonke Eldorado Park Business Forum then takes a cut of the 30% of contracts that are reserved for local small and medium enterprises (SMEs), according to legislated government tender provisions.

The Sisonke Eldorado Park Business Forum was represented by alleged former Majimbos gang member and businessman Farouk Meyer. Meyer was shot and killed in a suspected hit on 26 April. He died before a scheduled interview with the M&G could happen.

Meyer, a prison escapee and convicted murderer, was killed alongside associate Marcus Ryan outside Meyer’s business premises. In the weeks leading to his death, Meyer and his alleged henchmen intensified hostile confrontations at the Eldorado Park electricity substation, a project marred by delays over alleged irregularities since 2015. 

In March the M&G visited the site, where tense confrontations were unfolding outside the repeatedly delayed substation upgrade. 

Meyer told the M&G that the main contractor and the government refused to disclose the full scope and budget for the entire project. 

A recording of a hostile commotion outside the construction site, which the M&G has heard, vividly sketches the environment the business forum created at government infrastructure projects. 

https://soundcloud.com/mail-guardian/ldos-building-mafia-community-anger-amid-extortion-and-ex-cons

In the recording, people can be heard shouting slurs and profanities before the crowd turns its attention to main contractor Actom’s community liaison officer Keith Duarte.

Actom was the initial principal subcontractor under Setheo Engineering.

“Jy speel met vuur, jy (you are playing with fire),” Meyer says, calling Duarte a liar. “Gaan speel met jou kinders (Go play with your children).” 

Duarte says he is constantly watching his back since his appointment as the community liaison officer. He told the M&G it was not the first time that his children were mentioned in a confrontation over the substation. 

Documents show that out of 32 local small businesses that applied for the first phase of the upgrade, eight were awarded contracts. Of those eight, four businesses confirmed they were part of the so-called Sizwe Sisonke Business Forum, where membership is informal. Sizwe Sisonke is a faceless and traceless association that is widely accepted to be the Sisonke Eldorado Park Business Forum.

Several people disclosed their nightmare as subcontractors in the first civil works phase under Sisonke Eldorado Park Business Forum.  

Speaking on condition of anonymity out of fear, a source at the site told the M&G that small business contractors on the site were regularly intimidated and threatened by Meyer, who would call and demand to see their contracts with Actom.

“I gave him one contract,” the source said. Asked for clarification about what “gave” meant, he said: “He takes over, you give him the papers and he expects the payments,” he said. 

Another small business owner said he was forced to pay Meyer a percentage of his invoices. He claimed that during work at the major Nancefield Primary School construction site nearby, he coughed up more than R500 000 on Meyer’s instruction.

When the M&G asked for proof of at least one payment to an account linked to Meyer, the visibly shaken entrepreneur added that he was not certain of his safety because Meyer did not work alone. 

“That guy told us in a meeting if work comes to Eldorado Park it must come to Sisonke. Sisonke must distribute it. That’s how he bullied Nancefield. He comes there and takes the job and expects you to pay him,” another owner commented. 

The Nancefield Primary School replacement build project, like the substation, was riddled with violent confrontations. 

“He was determined to completely take over this project the way he took over Nancefield,” a contractor said. 

The estimated construction cost for the Nancefield Primary rebuild is R253.3-million. That project was also brought to a standstill because the major subcontractors were not local businesses. 

A third small business told the M&G that businesses were made to believe they would get no work from local government contracts without joining the business forum.

“Let’s say the earthworks are R5.5‑million, he comes there, he says, ‘I will get you the job and this is my percentage.’”

“We were first meant to pay R1 000 a month just to be part of the business forum. The problem comes in when there is no work and you are still expected to pay that fee,” the source said. 

Another contractor told the M&G that Meyer and his forum have bullied people badly and he has had to transfer more than R300 000.

“That money was from all the smaller service providers such as electricians and plumbing,” said a different source. 

Rise of a small business forum 

Sisonke Eldorado Park Business Forum is registered on the Companies and Intellectual Property Commission with three directors: Farok Sahabodien, Neville Williams and Yasien Mac Mohamed. Farok Sahabodien is thought to be an alias for Farouk Meyer, using his mother’s maiden name. 

Fellow forum director Neville Williams told the M&G that he was unaware of intimidation and threats by the business forum’s representatives at construction sites.

“The reason I joined the organisation was to help fellow people in Eldos. I have never extorted money from anyone, nor have I been part of any extortion. I’ve never witnessed such transactions,” said Williams in a response. 

Those who spoke to the M&G emphasised neither Williams nor Yasien Mac Mohamed were part of the disruptions or alleged extortion.

However sources told the M&G that the forum positioned itself as a leader in a noble cause that would benefit local businesses, a cause that disguised Meyer’s alleged extortion.

Some forum members and directors have held meetings with City Power officials; the principal subcontractor, Actom; Democratic Alliance (DA) councillor Vasco da Gama; and the DA spokesperson for community development, Belinda Kayser-Echeozonjoku, to find solutions to the ongoing disruptions. 

Minutes of three separate meetings show that city officials were able to provide the forum with a breakdown of the community’s entitled 30% benefit from the upgrade and resolved contractual issues around payments, invoicing and local supply procurement.

Duarte said that the substation, and the Nancefield Primary School rebuild was the area’s first infrastructure development since 1994. He said that at times he understood what Meyer was arguing for. 

“Farouk’s presence made a big difference alone, in the atmosphere at meetings over the contracts with local government. You know? When someone walks into a room and suddenly the whole thing changes because he had that type of influence — I respected that,” he said. 

Other sources confirmed Meyer often held local government to account, saying that Meyer would demand that small businesses and those aligned to him walk out of unresolved meetings in a rage before promising that the project would stay shut down.

In another recording of a meeting, a city official confirmed that it also adjusted the contract to help increase the value of the SMEs’ gradings and raise the value of their agreements in response to their demands. 

In that meeting an official speaking for Actom said that he would not be intimidated into disclosing the full value of the contract. 

The meeting explodes into a shouting match before Meyer storms out, demanding that small business owners follow. 

On 18 March councillor Kayser-Echeozonjoku released a statement condemning a decision by the city’s ANC member of the mayoral committee (MMC) Mpho Moerane to meet with the forum as chaos outside the project continued unabated. 

The councillor said that it was important that the government did not “legitimise these thugs who do not represent the community”.

“Now the MMC has done an about-turn and agreed to meet with the same business forum who stopped the project again yesterday, this time supported by the Patriotic Alliance (PA),” she added.

“For speaking up against these people I’ve been told that I am putting my life in danger. MMC Moerane must say no to meeting with the PA and the business forum thugs and the city should deploy JMPD to protect the project site so that no more work stoppages happen,” she said.  

This week Kayser-Echeozonjoku said that she could not be sure who the threats were coming from because they were anonymous and received through WhatsApp. 

Moerane’s office failed to respond to detailed questions around issues at the substation despite earlier promises to do so. 

The alleged extortion slipped through oversight in a DA mandated ward.

Newly elected PA ward 17 councillor Peter Rafferty helped the “New Greens” scoop a landslide win in two wards in Eldorado Park in last week’s by-election. Rafferty led party candidates and other members in a protest to stand in solidarity with Meyer’s cause outside the substation on 17 March. Rafferty and Faizel Jaffer resigned from the DA and as councillors last year. 

Rafferty said that the PA supported the forum’s demonstrations over allegations that the contractors were being underpaid. 

On the allegations of extortion, he said, “I have no knowledge of that and can’t say anything about that. The person unfortunately is no longer with us to answer for himself.

“These were not political but small business forums that wanted to be treated fairly by main contractors. Farouk has not managed any project, however, he assisted small businesses in getting what is due to them,” he said. 

Records show that Meyer is not registered to any contracted small business working at the site but sources said this was not the case on the ground. 

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Eldorado Park in the dark

The substation fiasco started in 2017 when then-mayor Herman Mashaba flagged the contract awarded to Setheo Engineering for alleged fraud and accused the company of providing a false bank guarantee. Three City Power officials and two employees from Setheo Engineering are still facing fraud and corruption charges in court. 

Mashaba brought the project to an abrupt halt before the stalled work began to aggravate small businesses. 

The stopped project birthed the 2017 protests and surrounding areas’ shutdown, led by a different business forum at the time.

The protests became the subject of a Human Rights Commission probe. 

The area is regularly hit by blackouts over rising demand from backyard dwellers and illegal electricity connections. 

Under a PA-led ward, party leader and ex-convict Gayton McKenzie said that they will never allow anyone to ask for money because of work that they are doing for the community.

“Our mayoral candidate Ashley Sauls has been receiving complaints from contractors that local gangsters are demanding payments from them. These gangsters are not members of the PA and the party condemns all forms of crime,” McKenzie said.

He said that the party members who joined the protests were unaware of the allegations [of extortion] and so was the party’s leadership. 

Government warned in 2019

However the Eldorado Park mayhem and allegations of extortion are not new. 

In 2019, Webster Mfebe, the chief executive of the South African Forum of Civil Engineering Contractors, wrote a letter to President Cyril Ramaphosa requesting intervention.

As the M&G reported at the time, industry bodies claimed that about 183 infrastructure and construction projects nationwide, valued at more than R63-billion, had been hindered — often by violent disruptions led by entities claiming to be local community or business forums, demanding a stake, typically 30%, in projects.

Mfebe told Ramaphosa that there were more sinister reasons at play. He cited allegations some business forums are used as “mobilisation instruments for certain politicians at local, provincial and national level”.

“Violence begets violence. When people have seen that extortion methods yield results, they mimic the same tactics and strategies,” Mfebe said, referring to the spread of similar incidents across the country.

He said that the construction sector had become fertile ground for gangsterism, state capture and a “survival of the fittest” mentality.

In response, Ramaphosa bemoaned the rise in dangerous groups of people who were shutting development projects down to demand a stake. He said that was not what radical economic transformation should look like.

“That is not radical economic transformation, that is radical economic robbery and we cannot allow it,” Ramaphosa said at the time.

When the M&G visited on 25 May, construction at the site continued undisrupted, but workers were reluctant to engage. “We heard they are collecting again. It is still not safe,” said a local contractor, who walked away hastily. 

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