Outcry over contract awards

BLACK business organisations have hit out because national construction companies involved in a price-fixing debacle have been awarded government contracts in the Eastern Cape worth millions of rands.

WBHO was recently appointed by the national Department of Public Works to build the R127.5-million National English Literary Museum (Nelm) in Grahamstown and Basil Read is to construct the R240-million Redhouse-Chelsea interchange in Port Elizabeth, between Sherwood and Rowallan Park. The interchange will connect the new Baywest Mall to the N2 freeway.

Both companies were found guilty by the Competition Commission that investigated about 140 public and private sector projects, which included the building of the Nelson Mandela Bay Stadium and other 2010 Soccer World Cup projects.

A string of fines, adding up to almost R1.5-billion, were then paid by 15 of the companies involved in collusion and price-fixing. WBHO and Basil Read were among them and had to pay about R 311-million and R95-million respectively.

Some national organisations have demanded that the price-fixing companies be blacklisted by government and black organised business in Nelson Mandela Bay has demanded harsher action be taken against the companies.

In the light of these contracts being awarded, the National African Chamber of Commerce and Industry (Nafcoc) echoed many black-owned entities – like the National Black Contractors and Allied Trades Forum and the Black Business Council – in an outcry that the big construction companies found guilty of collusion should be blacklisted from government contracts.

“The rules and regulations have been in place for a long time, and all these big companies know them. So if you’ve known the rules for so long, and still you do not stick to them, you must be severely punished,” Nafcoc regional president Mnyamezeli Dyala said.

“Maybe this kind of collusion has been going on for a long time, but we only picked it up now. And what is stopping these people from doing it again? Yes, they paid a fine, but there should be more severe punishment for them.”

Dyala agreed that blacklisting “for up to 10 years” would be an appropriate punishment, as it would give smaller companies an opportunity to improve themselves.

“Removing the big companies would provide smaller, developing companies with the chance to better themselves and to become more competitive in the future.”

Executive director of the Building Workers Union (BWU) Rodney Damon believes a more severe punishment is in order, but blacklisting is not the way to go.

“The smaller companies do not have the infrastructure to take over large jobs if the bigger companies are blacklisted.”

Damon could not say what an appropriate punishment would be, but wished that unions, such as the BWU, were given the opportunity to be part of the investigation and punishment process.

“I do believe an entity must be established to monitor companies more closely, to help prevent this type of situation from occurring again.”

South African Federation of Civil Engineering Contractors chief executive Webster Mfebe said: “People have a democratic right to make their opinions known on this matter.”

In the meantime, chief executive of the Construction Industry Development Board Mzwandile Sokupa says they are aware of the outcry to take action against the companies on a national level. “We believe all these companies deserve fair treatment. The CIBD is investigating to see what further action can be taken.”

The museum in Grahamstown. which houses documents and literary works, started in the 1960s, with the original building situated in Beaufort Street. The new museum, unveiled at the 2011 COP17 in Durban, will be in Worcester Street.

It will be South Africa’s first Green Star rated museum, in terms of the Public and Education Building rating tool by the Green Building Council of South Africa. Funded by the Department of Arts and Culture, the project will take up about 5 000m² and is expected to be completed by July.

In Port Elizabeth the road network will include two carriageways, two bridges over the N2 and lanes to accommodate the Integrated Public Transport System (IPTS) buses. Two more bridges will run over the Baakens River and over rare plant species on the southern side of the N2.

The project, funded by the Baywest developers – Abacus Asset Management and Billion Group – the South African National Roads Agency (Sanral) and the Nelson Mandela Bay Municipality, is set to be completed along with the mall in 2015.

In addition to the two Eastern Cape projects there is a list of contracts elsewhere in South Africa that have been awarded to other construction companies involved in the price-fixing debacle.

 – Riaan Marais  

This story appeared in Weekend Post on Saturday, 19 April, 2014. For the full story read Weekend Post, or get the complete newspaper, including comics, classifieds, crosswords and back editions in our e-Edition

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