Construction cartels verdict expected in June

Briefing Parliament's public works committee, Construction Industry Development Board (CIDB) chairperson Bafana Ndendwa said he was updated by the Competition Commission last week on a probe into the major construction industry companies which had admitted being guilty of collusive practices.

"There are 21 companies that came in with disclosures and those companies, they [the Competition Commission] are processing it," said Ndendwa.

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He could not satisfy MPs' calls for the companies to be named and shamed, as commission rules prohibited him from doing so until an order had been made against the firms.

According to a report tabled in the committee, the commission received 160 applications in terms of its Corporate Leniency Policy (CLP) in November 2009.

The policy is used as a means to encourage cartels to come forward and disclose their involvement in collusion in return for immunity from prosecution.

The commission would issue fines as a deterrent to future collusive behaviour. Over 130 rigged projects worth around R26-billion were identified. They included construction of stadiums and roads.

Settlement talks
"From the settlement applications, the 21 firms also implicated an additional 22 firms that had not participated in the settlement process," the commission said in the report.

It would probe the involvement of the 22 firms, following the finalisation of the settlement process.

The settlement talks would be completed by mid-May, after which a consent agreement would be filed with the Competition Tribunal.

"The tribunal is likely to finalise the agreement in June/July," said Ndendwa. Firms could be fined billions of rand. MPs expressed concern that issuing fines, with no jail time, could send the wrong message.

"If people behave wrongfully there must be consequences," Democratic Alliance MP Anchen Dreyer said.

Criminal conduct
ANC MP Celiwe Madlopha compared the settlement process to incentivising firms which admitted their anti-competitive conduct.

"I think these criminals must be taken to prison … I think we need to make an example of these people if they are found out," said Madlopha.

The CIDB responded by saying that leniency by the commission did not mean guilty parties would be exempt from action by other agencies or individuals.

This included action by the CIDB itself, if it found any contraventions of its own regulations.

"You'll find the South African Receiver of Revenue will take an interest … Has there been any money that has changed hands? How was that handled?" he said Ndendwa said civil claims would possibly also follow the commission's settlement process.

"Say a tender was about R1.5-billion and it was meant to be a R1.2-billion, then a client has got to say why have you robbed me of my R300-million, give it back," said Ndendwa.

The Hawks are conducting a parallel investigation to the commission probe.

Affidavits leaked to the media showed evidence of collusion in some of the country's major infrastructure projects, including Soccer City, the Green Point Stadium, and the Nelson Mandela Bridge. – Sapa

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