Rigged tenders escape sanction

More than 50 percent of the 300 rigged projects disclosed by construction firms will go unpunished because the offences were committed more than three years before the Competition Commission’s investigation. Trudi Makhaya, deputy commissioner, said the 15 companies involved had disclosed to the commission a total of 300 projects in which unlawful practices had taken place, but 155 projects had been rigged more than three years before the commission’s investigation started in 2009. The 15 companies can only be penalised for 145 projects. On these, they have either reached a settlement or been granted corporate leniency by the commission.

Makhaya said the commission had to initiate a fast-track settlement process as it would have taken the commission 10 years to lift the lid on the widespread price-fixing, bid-rigging and collusion in construction. One of the biggest construction firms in the country, Group Five, was the first to declare 25 rigged projects and was granted leniency on all. It is, however, disputing four projects in which it has been implicated by other firms. These will be investigated by the commission, which can fine Group Five up to 10 percent of turnover if it is found guilty of contravening the Competition Act in any of the disputed projects. Aveng disclosed 21 rigged projects, but has been granted corporate leniency on 12 and is only being fined for nine. Aveng was also implicated in eight other projects, on which it is settling. It has been fined R306 million.

WBHO, which colluded with Group Five to win the Cape Town Stadium contract, was fined a total of R311m. The company disclosed a total of 45 unlawful practices, but 23 of these will go unpunished as they took place more than three years before the commission’s investigation started. WBHO was granted leniency for 11 rigged projects and is being fined for 11 others. It is disputing four other alleged projects. The other company involved in the construction of Cape Town Stadium, Murray & Roberts, is being fined R309m for 17 rigged projects. It declared 12 rigged projects, but was granted leniency on five for being the first company to disclose illegal practices, and is liable to settle on the others. Murray & Roberts has also settled on 10 other projects and is disputing one project. Murray & Roberts did not make any admissions on the Cape Town stadium.

On collusive tendering, Murray & Roberts disclosed that through its subsidiary, Concor Limited, it reached an agreement with Aveng, Raubex, WBHO, Haw & Inglis and Basil Read in 2006, “in that they were attendees at the 2006 road contractors meeting where they agreed to allocate tenders for the construction of roads”. “There was also an agreement in terms of which firms which were not interested in the projects or winning the tenders, or were not allocated to a project, would submit cover bids to ensure that those interested in particular bids, won them.” Related to the Peter Mokaba Stadium in Polokwane, Murray & Roberts, again through its subsidiary Concor, reached an agreement with G Liviero in 2006 about a cover price.

“Concor provided a cover price to G Liviero so that G Liviero could submit a non-competitive bid to ensure that Concor won the tender. In line with the collusive agreement, Concor submitted the lowest price, but the client awarded the tender to WBHO.”