South Africa's Construction Industry Rocked By Bid Rigging Scandal

Cape Town – A total of 21 big South African construction companies have admitted to the Competition Commission that they were involved in bid-rigging to a combined value of R26 billion, Parliament’s Portfolio Committee on Public Works heard today.

Furthermore, action will be taken against a total of 22 other large South African construction companies that had not taken up an offer from the Competition Commission to present evidence of bid-rigging.

Investigations into their alleged collusion will start once settlements with the 21 companies have been reached.

These 21 companies, which cannot be named at this stage, accepted the offer and are in discussions with the Competition Commission. These companies were allegedly involved in 131 rigged projects, which have a value of R26 billion.

They are expected to sign a Consent Agreement by the middle of next month. The companies involved are due to be named between June and July. The companies were implicated in collusion on projects to build dams, stadia, mines, shopping centres and roads.

Briefing the portfolio committee, Construction Industry Development Board (CIDB) chairman Bafana Ndendwa said the Competition Commission had begun to look deeper into allegations that cartels were operating in the construction industry in 2008.

At the time, there was an outcry about the escalating costs of building stadia used for the 2010 FIFA World Cup hosted by South Africa. The investigations covered the construction of these stadia as well.

Evidence of possible collusion was uncovered and the Competition Commission, in an effort to process the matter expeditiously, invited companies involved to come forward and make a full disclosure.

Only 21 companies had taken advantage of this offer. Evidence has now emerged of another 22 other companies under suspicion.

On the way forward, Ndendwa said that the CIDB was in the process of scheduling a meeting with all entities, including the Competition Commission, South African Revenue Service, Department of Public Works, National Treasury and the National Prosecuting Authority to discuss the outcome and implications of the investigation.

“The Special Investigations Unit will look for evidence of criminality and SARS will look at money changing hands. If the firms involved got leniency from the Competition Commission, it doesn’t mean that they’ll get leniency from other agencies,” Ndendwa said.

Committee chairperson MC Mabuza said the results of the Competition Commission investigation had serious implications for the construction industry, South African economy and the country at large.

Committee members said that the CIDB’s report was an eye-opener and pressed for criminal charges to be laid as well as for the names of the companies involved to be released.

Mabuza urged members of the committee demanding that action be taken now to wait for the final report, which would be available between June and July because “then we can engage with it. That report will have the names of all the firms involved”.

Dennis Cruywagen