Cape Town goes after bid-rigging money

The City of Cape Town is claiming R400 million in damages from construction companies involved in bid rigging for construction of Cape Town Stadium, making it the first municipality to attempt to recoup costs. “Bid rigging is the most serious contravention of the Competition Act and is designed to subvert competitive tender processes, leading to increased costs,” said mayor Patricia de Lille during her address at Wednesday’s final council meeting for the year. “The damages suffered were at the expense of the public whose rights we are duty bound to protect.” The Competition Commission has referred the case of collusive tendering for the 2010 World Cup stadiums against WBHO Construction, Group Five Construction, Stefanutti Stocks Holdings and Basil Read to the Competition Tribunal. Murray & Roberts was granted some leniency.

These companies, excluding Murray & Roberts, did not settle the case as part of the general construction fast-track settlement process, which started in 2011. The commission’s investigation found evidence of collusion when bidding for the construction of stadiums by allocating tenders among themselves and agreeing on their profit margins. Among the alleged deals was that the tender for Cape Town Stadium would be given to Murray & Roberts in a joint venture with WBHO. “I have instructed the city’s attorneys to issue summons for the recovery of the damages suffered and they will be attending to the formalities over the next few days,” De Lille said. The city would also lay criminal charges.

ACDP caucus leader Grant Haskin threw cold water on the announcement: “How do we believe what you are saying when the companies involved keep getting contracts from the city?” In October, Haskin asked the mayor which of these contractors were awarded contracts after 2010. De Lille said in her written reply that R313m was paid to Group Five for four contracts after 2011, including two MyCiTi contracts. Group Five Construction was awarded a R70 662 543 contract for Phase 1B and the N2 phases of the MyCiTi service in 2012. It was also awarded a contract for R87 269 708 for construction of the inner-city feeder bus stops. “This shows that the DA government’s prior commitment had been unilaterally ignored and, rather, that they had been rewarded with even more contracts,” said Haskin. Asked why the city had continued to do business with this company, De Lille said: “Watch this space.”

She added that the construction companies had paid fines after the commission’s findings. “We had to wait for the process to run its course (before taking further action).” She later quipped to the ANC, on the other side of the House: “You must be careful, there are a lot of comrades in those companies.”