SA towns seek R3.9bn reimbursement from 2010 World Cup builders

The World Cup hangover appears worse than first thought and now a local government association is seeking reimbursement for overcharge on contracts relating to stadiums and other infrastructure for the soccer event. (Reuters)

The World Cup hangover appears worse than first thought and now a local government association is seeking reimbursement for overcharge on contracts relating to stadiums and other infrastructure for the soccer event. (Reuters)

South African towns are seeking reimbursement of as much as R3.9-billion from construction companies for overcharging on stadium and road contracts for the 2010 soccer World Cup.

“We plan to claim as much as we can from the construction companies,” Lance Joel, chief of operations at the South African Local Government Association (Salga), said on Monday. “It is fair.”

Salga plans to hold meetings with the companies starting this week to reach an out-of-court agreement, according to Joel.

The Competition Commission has already recommended that 15 construction companies be fined a combined R1.46-billion for collusion over prices for projects including those commissioned for the World Cup.

The new claims relate to the R13-billion worth of contracts awarded to build six stadiums, roads and related infrastructure for the soccer tournament. The contracts were awarded from 2006 to the end of 2009, according to the association.
“Overcharge on these contracts range from 10% to 30%,” Joel said. “The association will not be adding penalty interest.”

Salga has filed with the Competition Tribunal to be listed as an “aggrieved party” when the court rules on the final collective fine set by the commission. The association will remain guided by the tribunal, according to Joel.

Aveng, the country’s biggest construction company by market value, was fined R306.6-billion by the Competition Commission for price-fixing and collusion last month. Murray & Roberts agreed to pay R309-million. Wilson Bayly Holmes-Ovcon (WBHO) was fined R311-million. “The industry did a good job in cleaning itself up,” WBHO chairperson Mike Wylie said in an interview with CNBC Africa on Monday. – Bloomberg

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