Roger Jardine. File photo by Jeremy Glyn/Gallo Images
A chronic shortage of skilled engineers left Roger Jardine, the former head of South Africa's largest construction and engineering group, Aveng, between a rock and a hard place when he uncovered the extent of the corruption to which some of his staff had been party.
"My impulse when this issue first arose was to fire everyone who had any potential relation to what I would consider misconduct.
"Now, the problem for the company is this: construction and engineering, especially heavy civil construction, requires considerable skill and experience. You cannot fire everyone, because you have a company to run and projects to deliver.
"You rely on your tried and tested engineers to deliver projects that are safe and profitable," he told Wits Business School on Tuesday night.
Jardine, who was not employed when the corruption occurred, said Aveng also needed to keep staff in the company who could assist in providing the information needed to assist in the investigation into collusion by the Competition Commission. He said the management team was largely new; his own tenure as chief executive began in July 2008.
Research into the local engineering sector has revealed that more than 40% of engineers in South Africa are presently over 55, and 40% between 40 and 55.
Scale of measures
Jardine said in his company the colluders "were mainly in the older, more experienced age demographic".
"I really grappled with this issue. You need to manage a process where people feel that they can trust the system and make full disclosure without fear of losing their jobs. And so it is necessary to put in place a scale of measures for dealing with people in the organisation."
Those found to be blatantly lying about their involvement incurred a disciplinary hearing and dismissal.
"Some people resigned before I could fire them," Jardine said.
Full disclosure that assisted the company at the commission meant a written warning, possible demotion, or a bonus being withheld.
Jardine said he was aware that a practical approach was needed that did not lose sight of the need to retain skills to do the work for which Aveng was contracted, while "shifting this rotten culture into a new ethical space".
Penalties
He did not want staff to see that wrongdoers received a mere slap on the wrist.
Aveng was among the companies that incurred the largest penalties for collusive practices, paying a R306.57-million fine for 17 projects, after the Competition Commission fined 15 major construction companies a collective R1.46-billion for 300 projects.
The charges involved collusive tendering relating to projects concluded between 2006 and 2011.
Alongside Aveng was Wilson Bayly Homes Ovcon, which was fined R311.29-million for 11 projects; Murray & Roberts, which was fined R309.05-million for 17 projects; and Stefanutti Stocks, fined R306.89-million for 21 projects.
During his tenure, Jardine also paid a R43.6-million fine in 2009 for contraventions in the pre-cast concrete market, and R128.9-million in 2011, after Murray & Roberts applied for corporate leniency for market allocation, price fixing and collusive tendering in the mesh and rebar markets, implicating Aveng.
Jardine, who resigned abruptly in August this year, said dealing with corruption and cartel complaints occupied most of his first two years in the midst of the 2008 economic slump, the World Cup infrastructure project, and pressure on the company, which operates in 30 countries, to build its global business.
"I sometimes joked with colleagues that we should look for a new chief executive as I had taken on the role of chief competition officer," he said.
Jardine said he was surprised at the structured nature of the collusion he uncovered, with clear succession planning and junior staff being inducted to the elite group who co-ordinate the tender process, usually meeting at five-star hotels.
However, he warned against punitive action by the government, such as a proposal to withhold tenders, saying that despite public demand for penalisation, the companies were working with very narrow margins at present.