SIU to probe construction regulator

The Special Investigating Unit (SIU) is to investigate persistent allegations of fraud and corruption within the construction industry’s regulator, the Construction Industry Development Board (CIDB). The probe comes in the wake of President Jacob Zuma publishing a proclamation on Friday directing the unit to investigate allegations of unlawful conduct by officials of the CIDB. The proclamation also ordered the unit to investigate unlawful or improper conduct by any person who had caused or may cause serious harm to the interests of the public, dating back to January 2006. The probe starts immediately. The allegations relate to the CIDB register of contractors, which registers and grades contractors according to their capability to carry out construction projects based on financial capability and track record.

Public sector clients are compelled to only award construction contracts to CIDB registered contractors. It is alleged that some contractors were fraudulently and corruptly obtaining a higher CIDB grading, which would allow them to qualify to tender for and be awarded more valuable government contracts. A CIDB report on construction quality released in 2011 showed that fraud and corruption had occurred within the CIDB register of contractors, including the submitting of forged documentation by contractors in support of their registrations and bribing CIDB employees for higher grades. An Engineering News article published in 2009 reported that Ronnie Khoza, the then CIDB chief executive, had said that two employees had been dismissed for accepting bribes and others were being investigated. Khoza said the CIDB had openly named contractors it had suspended from its register for fraud.

CIDB board chairman Lufuno Nevhutalu yesterday welcomed the publication of the proclamation, describing it as “a significant step towards cleaning up the organisation if there is any wrong doing”. Acting CIDB chief executive Hlengiwe Khumalo said the CIDB expected the SIU to leave no stone unturned in its effort to get to the bottom of these allegations. Khumalo said the register of contractors played a very critical role as a macro-risk management tool for public sector clients procuring construction goods and services. She said the persistent allegations of fraud and corruption within the CIDB undermined industry and public confidence in this role. “The CIDB will do everything in its power to co-operate with the investigation and drastic measures will follow against any employees found to be implicated,” Khumalo said. However, she assured clients and the industry of the reliability of the register of contractors, stressing that sporadic allegations of fraud and corruption cases, while unfortunate, should not cast doubt on the capability of contractors registered with the CIDB.

Khumalo said fraud and corruption not only undermined the country’s economy and transformation efforts but also had the potential to put the lives and safety of ordinary citizens in danger as a result of poor quality infrastructure. The CIDB is also involved in a formal inquiry into contraventions of its code of conduct by the 15 companies that admitted their involvement in collusive tendering and reached settlements with the Competition Commission in terms of which they collectively agreed to pay fines totalling R1.46 billion. However, five of the companies – Murray & Roberts, Aveng, Raubex, Stefanutti Stocks and WBHO – lodged a court application to interdict the CIDB from conducting the inquiry and were granted a temporary interdict. The court review about the lawfulness of the CIDB inquiry was due to start in the High Court in December, but the companies requested a postponement to enable the commencement of settlement talks, which are still continuing.