Construction bigwigs deny World Cup stadium bid-rigging

The four major construction companies are confident that the Competition Tribunal will clear them of charges of collusion and anti-competitive conduct.

The four major construction companies are confident that the Competition Tribunal will clear them of charges of collusion and anti-competitive conduct.

Four construction companies accused of colluding with regard to bid-rigging around the World Cup stadiums, insist they did not collude and they want their day before the Competition Tribunal.

The Competition Commission, however, is not moved by the arguments put forward by the construction companies Wilson Bayly Holmes-Ovcon, Stefanutti Stocks, Basil Read and Group Five, saying it is hopeful the case will be heard before the end of the year.

On Thursday, Stefannutti Stocks chief executive Willem Myburgh told the Mail & Guardian that they were “quite surprised” to find out that the Competition Commission had submitted a case against them to the Competition Tribunal, nearly two years after the company believed they had successfully proved that the charges were baseless.

“Nearly two years ago, during the fast track process, we were informed that we had been implicated by another company and we believed we had successfully disproved the allegations to the commission. We were never part of any meetings around the World Cup stadiums, either directly or indirectly.

“We settled all outstanding cases in 2012,” he said.

Basil Read CEO Neville Nicolau said the company was confident that the outcome of the Competition Tribunal hearing “will confirm that Basil Read was not involved in anti-competitive behaviour and has not contravened the Competition Act with respect to these tenders”.

In the same vein, Group Five said it welcomed the opportunity to fully address issues surrounding its involvement in the World Cup. It had also refused to settle in the original fast track process, which saw 15 firms agree to pay R1.46-billion in penalties for collusive tendering in terms of the Competition Act.

The companies allegedly met to collude on the bid
Many of the allegations around two meetings which allegedly took place between these companies in 2006 come from submissions made by Murray & Roberts (M&R), which has been given indemnity because it was the first to disclose specific contraventions of the Competition Act to the commission.

References to meetings do not come from Murray & Roberts alone; at least two of 11 affidavits submitted to the Hawks by Stefannutti Stocks – and in the Mail & Guardian’s possession – talk of meetings held around the awarding of World Cup stadiums. 

The affidavits do not outline Stefanutti Stocks’s role, but do confirm that meetings were held in the sector.

The charges brought against the four companies said the commission had found “pervasive anti-competitive conduct in the construction industry which extended beyond the scope of its first” investigation.
This led to the second investigation.

The Competition Commission said it is confident that the companies have a case to answer. Spokesperson for the commission, Mava Scott, said: “We are hoping that the matter is still heard by the Tribunal before the end of the year because its an urgent matter.”

He said there were still negotiations going on with some other construction companies, but action in the present case has been brought against companies who have indicated they “are not prepared to settle”.

Aveng concluded a consent agreement with the commission in June 2013, so this company is not included in the present submissions to the Competition Tribunal.

The charges are that Grinaker, WBHO, M&R, Group Five, Steffantti Stocks and Basil Read allocated the building of five stadiums to each other at two meetings, based on the capacity of each company. The companies allegedly agreed on who would submit a cover price – a falsely-priced bid intended to create an impression that there was competition around the bid, thus manipulating the tender process.

The stadiums involved were the Peter Mokaba Stadium in Polokwane, Mbombela Stadium, Moses Mabhiba Stadium in Durban, Soccer City in Johannesburg, Nelson Mandela Bay Stadium in Port Elizabeth and Cape Town’s Green Point Stadium.

The commission is requesting that the Competition Tribunal fine these companies 10% of their General Building and/ or Civil Engineering subsectors annual income. It’s not clear which years’ annual income will be selected.

Many of these companies, particularly Steffantti Stocks, struggled to pay off the first round of fines, with Myburgh saying he was relieved that the commission was allowing it to pay off its R306-million fine in instalments.

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