Construction collusion case faces fresh delay

The Competition Commission has been delayed in its aim to get three companies added as parties to two collusion complaints involving the Gautrain Rapid Rail Link and Lesotho Water Highlands projects. This follows the Competition Tribunal last week ordering the commission to file supplementary applications related to its application to link Esor Africa, Franki Africa and Geomech. Esor Africa and Franki Africa are subsidiaries of listed Esorfranki, now named Esor. The commission must state when it initiated the complaint against the three companies and make it clear which allegations in its referral relate to which specific initiation. The commission’s applications are linked to the fast-track settlement process that resulted in 15 construction companies concluding consent agreements in 2013, in which they agreed to pay penalties totalling R1.46 billion for collusion and bid-rigging. The other respondents in the two cases are Esorfranki, Rodio Geotechnics, Dura Soltanche-Bachy, Geomechanics and Diabor.

Grinaker LTA, part of listed Aveng, was given leniency in this matter and Dura has settled with the commission. The commission sought to add Esor Africa and Franki Africa as parties to the case based on allegations made in an answering affidavit by the then Esorfranki chief executive, in which he denied Esorfranki’s involvement but confirmed Esor Africa and Franki Africa were involved with the projects. The commission based its application for Geomech to be joined as a respondent on comments made by a director of Geomechanics, who was also a director of Geomech. Dura admitted in a consent agreement reached with the commission that it, Grinaker LTA division Ground Engineering Limited (GEL), Geomechanics, Rogel, Diabor and Esorfranki, colluded in 2007 in bidding for services related to the Polihali Dam and transfer tunnel for the Lesotho project.

Dura said in terms of this arrangement it, GEL, Geomechanics, Diabor and Esorfranki bid at a higher price than Rogel to ensure Rogel won the tender. The reason they agreed to submit a cover price for this work was because Rogel would in return provide a cover price for the Gautrain project. Dura said deals were made between GEL, Rodio, Esorfranki and Dura after an unsuccessful attempt to form a consortium and it was agreed that Rogel and Esorfranki would give a cover price of R50 million for part of the Gautrain project to ensure the Dura-Geomechanic joint venture won the contract. It was also agreed that Rogel and Dura would give a cover price to the joint venture between Diabor, Geomechanics and Esorfranki geotechnical drilling unit Soiltech for the OR Tambo-Malboro drilling investigation project for the Gautrain.