The construction industry’s engagement with the Competition Commission and the rest of South Africa remains a “work in progress”, says Group Five CEO Mike Upton.
The commission earlier this year imposed R1.46-billion in penalties on 15 companies in the industry for collusive tendering related to projects concluded between 2006 and 2011.
Upton says the fines already issued are an “immediate remedy”, adding that all matters relating to the investi- gation into collusion have not yet been settled.
“It’s not over yet.”
Group Five, as a whistleblower on collusive practices, was granted leniency by the commission on all 25 of its submissions. However, despite its cooperation over a period of four years, Group Five earlier this year received notice from the commission that it intends to fine the group for infringements on four projects in which it was implicated and for which no leniency was granted.
Upton says the group has no evidence of such collusive involvement, and “could not accede to the penalties, and chose not to settle hastily”.
However, Group Five is currently “positively engaged” with the commis- sion on the matter, and has already raised a financial provision, “in case of a penalty”.
Upton adds that the risk of civil claims against the industry does exist, and that the situation is “continually monitored”. He believes the public sector, for example, may be “looking at its options”. However, Group Five has no information on the existence of any such civil claims.
“We’ll have to see what happens next.”
‘Great Anger’
The construction industry has reached a place where “all the cards are on the table now”, says Upton. What remains of importance is how the industry reacts to the collusion scandal.
He says there is “great anger, of course”, especially from black business, which feel they may have been marginalised during a time – prior to the 2010 soccer World Cup – when government vastly increased its infrastructure spend.
“There is a lot of mending to be done . . . Is there going to be retribution? . . . All of these are open questions.”
He says SA Inc, as a whole, is also “certainly not happy” with the construction industry.
Upton says Group Five believes the industry and government should engage with each other in the months ahead in order to mend fences.
It is also possible for the industry, for example, to set up a fund to develop new emerging black contractors, or to contribute to a number of community projects.
“There are a lot of opportunities here,” says Upton. “We need to reset the base. The industry is in a bad place and it is up the industry to fix it.”
He adds that Group Five’s business with government has not suffered a setback as a result of the Competition Commission investigation.