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M&R outlines labour losses and concerns, confirms more competition provisions

13th September 2013

By: Irma Venter

Creamer Media Senior Deputy Editor

  

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Murray & Roberts has incurred around R350-million in losses in its South African business owing to labour unrest and strikes in the 2013 financial year, says CE Henry Laas.

He says the deteriorating labour situation in South Africa is a “big problem” and that he is concerned about the spate of strikes at the Medupi power station construction project, as well as the current general strike in the local construction industry.

He says it is “very difficult” to build projects in South Africa in the current labour environment “safely, on time and [within] budget”.

He cites an example where Murray & Roberts staff, working on a construction site in Rivonia in August, were attacked by people arriving in three buses, breaking into the site and harassing the company’s staff.

Several of the company’s people had to be hospitalised.

Murray & Roberts group financial director Cobus Bester adds that workers on the Medupi site worked only 7 out of the 12 months in the 2013 financial year.

“There is absolutely no way you can make money if you don’t work 5 out of 12 months.”

Laas says he has the feeling that trade unions in South Africa are assuming more rights than should be the case for labour bodies.

He also believes it is difficult for government to exercise control in the labour environment, as the trade unions form a big part of its support base, more so now, as the 2014 elections loom large.

Laas says there is no justification for demands of 40% pay increases in an environment where inflation is only 6%.

Murray & Roberts in August reported that revenue for the financial year ended June 30 increased by R3-billion to R34.6-billion over the previous year, with the group swinging from a loss of R358-million to an operating profit of R1.7-billion.

Competition Update
Murray & Roberts says it has made financial provision for another possible penalty from the Competition Commission, following on from the settlement of 17 cases of collusive behaviour earlier this year.

The commission in June imposed a collective R1.46-billion in penalties on 15 companies in the industry for collusive tendering related to projects concluded between 2006 and 2011.

Laas says he does not want to quantify the provision made, as it may prejudice the case against the construction group.

Two of the cases involve the steel sector, two in companies that Murray & Roberts acquired, and one in Botswana. However, Laas notes that the group does not believe the commission has jurisdiction in Botswana, while it is also convinced that this specific matter has already been settled under the 17 incidents already resolved.

He says the Competition Commission did not want to include the five cases in the fast-track process, as it had already started investigating these incidents prior to the start of the fast-track process.

Murray & Roberts was fined R309-million, to be paid over three years, under the fast-track process, with the first payment of R103-million already made.

Laas says the infringements under the fast-track process, all at companies Murray & Roberts acquired, happened from 2004 to 2007. Roughly half of the incidents happened before the group acquired the companies, and the remainder following acquisition.

He says the six executives implicated in the infringements have already left the group.

One of Murray & Roberts’ remedies to the problem of fraud and collusion is to ensure that management, Laas included, sign an ethical declaration following each tender submission.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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