WBHO gets off lightly but Murray & Roberts left to stew

The construction company WBHO got off lightly for collusive tendering on a Transnet project – paying a fine of just 0.3% of its 2010 civil sector turn­over – because former Competition Commission officials were in a hurry to reach a deal, it has emerged at a Competition Tribunal hearing.

The company was a previous offender and should have been fined accordingly. It had already paid an admission-of-guilt fine in terms of the fast-tracked investigation into collusion over the pricing of other construction projects, including 2010 World Cup stadiums. But the commission agreed to treat the Transnet project – the upgrading of the railway line between Sishen and Saldanha – as a separate issue but as part of the fast-track process.

Had this not happened, WBHO would have been expected to pay between 4% and 7% of its annual civil engineering turnover, instead of the R10.2-million it paid for collusion over the Transnet project.

WBHO's civil engineering division, in the year to June 2012, had revenue of R5.2-billion, which means that a maximum fine of R364-million could have been levied. It had paid a R311.3-million fine relating to the World Cup contracts.

The WBHO's co-accused, Murray & Roberts's Concor company, will not be as lucky. It did not reach a deal with the commission and, as a repeat offender, is facing higher penalties.

Murray & Roberts has already paid a fine of R309-million in terms of the fast-tracked settlement agreement and is currently negotiating with the commission over the Transnet project.

Not transparent
The tribunal's chair, Norman Manoim, said that the companies involved had not been transparent with the commission about the rail deal. The collusion came to light only after an appeal for leniency by a third company involved in the project, Lennings Rail Service, in 2009, which implicated both WBHO and Concor. Lennings received conditional leniency.

Tribunal members made it clear at the settlement hearing last week involving WBHO that they were not happy with what the commission told the hearing was an "unfortunate decision" by former employees.

Manoim said: "So the upshot of what you are saying – just so people can understand that – is that the penalty is more lenient than it might have been had it not been considered as part of the fast-track process."

Another tribunal member, Yasmin Carrim, said: "And, in fact, this would have been a second or third or fourth contravention of the [Competition] Act by WBHO, because, if it was treated outside the fast-track process, it would have been an additional contravention."

The fact that it was an additional contravention would have been taken into account by the tribunal.

Nelly Sekata, a senior legal counsel for the commission, said the deal with WBHO should not be seen as setting a precedent that firms could take advantage of. "This is a peculiar case and the commission is sensitive to the fact that a commitment was made [to WBHO] and in the circumstances … the commission could not renege on the agreement."

Highest bid
According to the commission's investigation, the tender to upgrade a section of the railway line carrying iron ore to Saldanha was won by WBHO and Concor, after colluding with Lennings at a meeting in 2006. It was agreed that Lennings would put in the highest bid so that one of the other two companies would win the overall bid. In exchange, Lennings would be subcontracted to lay the tracks for both companies.

But, after the tender process was completed and WBHO was selected as the preferred bidder, Transnet allegedly had budgetary problems and divided the project into north, south and central sections, with the latter assigned to its in-house construction division.

WBHO took over work on the southern part of the line and Concor was awarded the northern section, and Lennings was selected to lay the tracks for both companies.

A legal representative for WBHO said: "We would accept that the likely outcome of the north/south split was the result of a collusive process and hence we would accept the commission's findings in that respect."

Advertisting

Stay in China, government tells homesick South Africans

As ‘impisoned’ children at epicentre cry to be reunited with their parents, top official says families mustn’t be ungrateful

Cradock Four back to haunt De Klerk

Pressure is mounting on the NPA to charge the former president and others involved in political killings during apartheid

Ramaphosa makes peace with Malema over gender-based violence comments

In his Sona response, the president apologised for the weaponising of gender-based violence, saying the attack on the red beret leader was "uncalled for"

Steenhuisen takes the lead in DA race while Ntuli falters

‘If you want a guarantee buy a toaster. This is politics’
Advertising

Press Releases

Response to the report of the independent assessors

VUT welcomes the publishing of the report of the independent assessors to investigate concerns of poor governance, leadership, management, corruption and fraud at the university.

NWU student receives international award

Carol-Mari Schulz received the Bachelor of Health Sciences in Occupational Hygiene Top Achiever Award.

Academic programme resumes at all campuses

Lectures, practicals, seminars and tutorials will all resume today as per specific academic timetables.

Strategic social investments are a catalyst for social progress

Barloworld Mbewu enables beneficiaries to move away from dependence on grant funding

We all have a part to play to make South Africa work

Powering societal progress demands partnerships between all stakeholders

So you want to be a social entrepreneur?

Do the research first; it will save money and time later

Social entrepreneurship means business

Enterprises with a cause at their core might be exactly what our economy desperately needs

Looking inwards

Businesses are finding tangible ways to give back – but only because consumers demand it