State plans action against collusion

The government says it wants to ensure its R4.3 trillion infrastructure spending is not exploited – as has happened before – through collusion and price-fixing by big players in the construction sector. This is after 15 firms have admitted to involvement in the rigging of contracts valued at billions of rand. After making leniency applications the firms were fined a combined R1.4 billion by the Competition Commission, which investigated the actions of these cartels. Economic Development Minister Ebrahim Patel said the government would explore further civil claims against the construction companies implicated in the corruption racket, while the National Prosecuting Authority would determine whether any criminal charges should be brought against individuals.

Speaking in Durban yesterday during the KwaZulu-Natal Economic Council summit, Patel hit out at the construction companies involved in defrauding the state, saying their acts were outrageous. “It is outrageous private companies so clearly exploited the large infrastructure projects and profiteered at the expense of the ordinary citizen.” He said the actions of these companies involved meetings where “they divided contracts, came up with fictional prices which they described as cover prices below which no one would tender, and they introduced a loser’s fee for companies who colluded with the winning tenderer”. Such actions by these cartels had cost the state dearly, he said.

“In KZN alone, projects just in the public sector for which full project value was available totalled R1.65bn, of which R1.2bn had not prescribed and are thus the subject of penalties for the companies concerned.” The projects in KZN – prescribed and non-prescribed – disclosed by companies during their leniency applications include: the Bayhead Khangela Bridge project, the Durban harbour tunnel, the Hlabisa Hospital contract, the R102 to the airport, Durban harbour projects, the International Convention Centre Arena, the then Edwin Swales VC Drive, the Enseleni interchange near Richards Bay, the Nkandla pump water project, and the N2 North Coast freeway.

Patel was speaking before business, civil society and union leaders signed the provincial KZN social accord, an agreement on how to speed up economic growth and job creation in the province. He said the provincial accord in its next chapter should urge private companies to support the integrity pact in which chief executive officers commit themselves to providing value for money and meeting developmental objectives. MEC for Economic Development Mike Mabuyakhulu emphasised the role of business in job creation, saying the government alone could not produce millions of sustainable jobs: “We have a joint responsibility to bring about tangible socio-economic transformation.”