WBHO faces prosecution for bid-rigging

The Competition Commission has completed the first phase of its investigation into collusion and bid-rigging in the construction sector with the referral of a case against listed Wilson Bayly Holmes-Ovcon (WBHO) to the Competition Tribunal for prosecution. Themba Mathebula, a spokesman for the commission, said yesterday that it was alleged that WBHO Construction had colluded with Group Five Construction by fixing contractual conditions related to the N17 link road between New Canada and Soccer City. Mathebula said the commission’s investigation found that WBHO and Group Five had agreed, at a meeting of the SA Federation of Civil Engineering Contractors (Safcec), on a preferred set of contractual conditions for the N17 tender issued by the SA National Roads Agency Limited (Sanral). He said on the basis of this agreement, the two companies had requested Safcec to approach Sanral on their behalf to demand that Sanral change its tender conditions and issue the tender with the conditions on which they had reached an agreement.

“This amounts to fixing of trading conditions which contravenes… the (Competition) Act,” he said. Mathebula said WBHO was notified of this project during the construction fast-track settlement process and was invited to settle but had rejected the offer. He confirmed Group Five was the leniency applicant and WBHO and Basil Read were the respondents. Mathebula said the case against Basil Read had not been referred to the tribunal because of a lack of evidence. Attempts to obtain comment from WBHO were unsuccessful. Tembinkosi Bonakele, the Competition Commissioner, said this referral marked the end of the commission’s investigation of collusive conduct in the construction sector arising out of the fast-track process. Bonakele said the commission’s focus would now be on the litigation of cases that were referred to the tribunal for prosecution. The fast-track settlement process resulted in 21 firms responding to the commission’s offer of a speedy settlement on favourable terms and more than 300 instances of bid-rigging being revealed.

Fifteen firms admitted their involvement in collusion, bid-rigging and cover pricing to the commission and collectively agreed to pay R1.46 billion in fines in terms of the fast-track settlement process. Settlement agreements with a further seven firms, who agreed to pay a total of R13.44 million in fines, have to date been confirmed by the tribunal. Bonakele said yesterday that the construction sector remained one of the key sectors of the economy which the government was prioritising to drive infrastructure development. “It is therefore necessary to address any collusive conduct which might inflate the costs of rolling out infrastructure development,” he said. In the second phase of the process, the commission has decided not to prosecute 20 cases against 14 firms because of insufficient evidence or the implicated company had been liquidated. But 19 cases, including the Fifa World Cup stadiums project, have been referred to the tribunal for prosecution.

Chantelle Benjamin, a spokeswoman for the tribunal, said that of the 11 cases still to be resolved by the tribunal, some were at pre-hearing stage but others were not yet ready for trial.