Government mulls review of law regulating construction companies

16th March 2016

By: African News Agency

  

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Government was “itching” to do a complete overhaul of the laws governing South Africa’s construction industry which continued to be dogged by allegations of collusion, Public Works Minister Thulas Nxesi said last week.

Briefing Parliament’s portfolio committee on public works, Nxesi and officials from one of his department’s entities, the Construction Industry Development Board (CIDB), said the current sanctions available to them to punish construction companies found guilty of breaching the CIDB code of conduct with regard to collusion was inadequate.

The sanctions include a fine not exceeding R100,000, which one MP called “pocket money” for big construction companies. Another sanction includes prohibiting companies from participating in work in the public sector.

“We have been itching on the issue of legislative amendments. In fact not just amendments [but] fundamental altering of the current legislation which is regulating the construction industry…,” Nxesi told MPs.

CIDB acting chief executive Hlengiwe Khumalo told MPs that following the Competition Commission’s imposing of a R1.46-billion fine on 15 construction companies who admitted to collusive tendering in connection with the construction of stadiums for the 2010 Fifa World Cup, they had commissioned their own investigation into collusion in the industry.

Gobody Forensic Investigative Accounting was appointed in 2014, and after the firm handed its report to the CIDB, a formal inquiry was recommended.

In March last year, the 15 construction companies implicated were issued with notices of the charges against them in terms of the CIDB code of conduct, which bars collusive practices.

Five of the companies – Murray and Roberts, Aveng, Raubex, Stefanutti Stocks Holdings and WBHO – lodged a court application to interdict the CIDB from conducting the inquiry.

While a temporary interdict was granted, a review of whether the CIDB inquiry was lawful was to start in the high court in December last year.

The companies, however, requested the CIDB and Nxesi’s legal team for a postponement so that a settlement talks could begin under the auspices of the South African Forum of Civil Engineering Contractors.

Khumalo said while they found this to be a “delaying tactic”, the minister conceded and agreed to a postponement.

Explaining the concession, Nxesi said government was considering whether it would not be less costly to settle, as legal fees spent on fighting the companies would be “enormous”.

“It can be legal action after legal action, appeal after appeal and top dogs in terms of the lawyers are in one way or another contracted by these big companies… but the reality is for them legal fees, it might even be sweets. To us, it means we’re sacrificing the monies which are supposed to be used for something else,” Nxesi said.

He insisted that if government was to accept an out of court settlement it would do so “on its own terms”.

“We will listen to what they are offering and we will report publicly what they might be offering and if the executive feels we must settle with that, we will be able to do that.”

Edited by African News Agency

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