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Africa|Business|Construction|Contractor|Infrastructure|Mining|PROJECT|Projects|Safety|System|Equipment|Infrastructure
Africa|Business|Construction|Contractor|Infrastructure|Mining|PROJECT|Projects|Safety|System|Equipment|Infrastructure
africa|business|construction|contractor|infrastructure|mining|project|projects|safety|system|equipment|infrastructure

Is SA Inc fighting the construction mafia, or adapting to incorporate it?

27th June 2023

By: Irma Venter

Creamer Media Senior Deputy Editor

     

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The construction mafia, or so-called ‘business forums’, first reared its head in KwaZulu-Natal in 2014 and 2015, invading construction sites to demand a share of projects, or that companies employ specific people or subcontractors. 

By 2018 and 2019 this practice also emerged in other provinces, with these forums often touting heavy-calibre weapons as they made their demands.

A similar model of extortion has since spread to other industries, most notably mining.

Much of the violence has subsided in KwaZulu-Natal, says Jenni Irish-Qhobosheane, a researcher at the Global Initiative Against Transnational Organised Crime. 

However, this is not a sign that the illegal activities have stopped, she notes, but rather that extortion has become normalised, and yet another cost of doing business in South Africa.

Ayabonga Cawe, chief commissioner at the International Trade Administration Commission of South Africa, says extortion is compromising government’s infrastructure rollout, which affects the entire economy.

He explains that conflicts such as these often arise when there are different interpretations of laws and regulations. 

“The problem lies in how preferential procurement has unfolded, and this opens up the way for opportunistic criminals,” he says.

Irish-Qhobosheane agrees.

“We do need to recognise that economic exclusion and a lack of economic transformation creates fertile ground for extortion in construction. 

“However, it is important to distinguish between genuine community concerns and criminals involved in extortion for their own gain.”

Business forums typically demand 30% of the contract value be allocated to forum members, or directly to the forum itself. 

This figure appears to be derived from National Treasury’s Preferential Procurement Policy Framework Act. 

This Act states that 30% of public procurement contracts should be contracted to designated groups, as provided for in the Preferential Procurement Regulations, with the forums’ demands then painted with the veneer of transformation.

National Treasury has strongly condemned this practice as illegal, and as a blow to government’s attempts to advance the interests of historically disadvantaged individuals and small businesses.

Irish-Qhobosheane and Cawe spoke at Human Sciences Research Council events.

Where to Now?
It can hardly be emphasised enough that business has to put in place comprehensive directives for dealing with extortion attempts, says Corobrik director Musa Shangase.

“The first principle should be to afford the business forum the opportunity for dialogue; to present their demands. 

“I advise sharing with them the terms of the contract and what the obligations are for advancing transformation goals,” notes Shangase. 

“They need to be informed whether the project is a public or private one, and what the implications are in each case.”

Shangase also advises companies to request a database of the business forum’s constituents, and to employ a community liaison officer who can act as a mediator between the community and the company. 

The duties of the community liaison officer include negotiating, and developing and fostering relationships.

In public sector projects, the community liaison officer acts as the link between the main contractor and the business forum. 

In the case of private sector projects, if a business forum insists on participation, the matter should be reported to the police, says Shangase.

Business Against Crime’s Guidelines
Business Against Crime South Africa (Bacsa) has, as part of the work of the National Priority Committee on Extortion and Violence at Economic Sites, authored a set of guidelines to help companies deal with extortion.

Bacsa national project manager Roelof Viljoen says it is important for companies and their employees to understand what extortion is, so that they can identify and report it as and when required. 

Also, successful prosecution is vital to reducing extortion.

Extortion as a crime requires two elements: the demand for a benefit, such as money, work or a contract that would not normally accrue to the ones making the demands, or his or her beneficiaries; as well as a threat of damage should the demand not be met.

The threat must be serious enough to cause a reasonable person to experience fear, and may be made in person or by telephone, letter or email. 

For example, if a demand is made with no threat uttered, then, by law, there has been no extortion.

Bacsa says it is important that uninvited visitors should not be allowed onto the construction site for discussions, as this might create the impression that a reward is possible.

On the contrary – efforts should be made to advertise the very low chance of receiving any benefit. 

Also, so-called business forums often use legal terminology in an attempt to give their demands credibility, which means that it makes good sense to post information at the entrance to the site showing there is no basis for extortion.

For example, an official notice on a government project should indicate that preferential procurement regulations have been followed.

A private project should state that these regulations are not applicable. 

In the case of the former, documentary proof should be held on site.

Being able to prove that local contractors have been granted a certain percentage of work, or that none were found, would be helpful, as local communities expect to benefit from work carried out in their area. 

This should undercut the typical claims by business forums that they represent the local community.

It is also worth pointing out that it is illegal to subcontract without following a fair tender process, and that deviating from this principle could lead to the tender being cancelled, which would mean that the work opportunity is lost for everybody.

Other precautionary measures, according to Bacsa, include ensuring that there is a safe-area for employees on site, as well as an alternative exit. 

Recording equipment such as CCTV is also important, as anything related to any attempt at extortion must be recorded.

If a disruption occurs, a set of outlined safety procedures must be followed, and the incident should be logged with Bacsa and reported to the police.

Further Steps Needed
Irish-Qhobosheane says that strong partnerships are vital to addressing the challenge, in what could otherwise become the normalisation of extortion. 

The State must develop a comprehensive strategy to address systemic extortion and this must include a more proactive response from the criminal justice system. 

Victims must also feel safe enough to report extortion. 

The practice has become so prevalent that victims are fearful of speaking out, and/or they are accommodating extortion practices by working it into the companies’ budgets. 

Master Builders Association North executive director Mohau Mphomela says that extortion must never be allowed to become routine.

“Our industry has been battling severe headwinds for many years, and extortion continues to put vital contracts at risk.

“Bacsa is to be commended for coming up with these guidelines, and we urge all members of the industry to use them to put us back on solid footing.”

 

Edited by Creamer Media Reporter

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