Most Read Contributor in South Africa, September 2016
ECONOMIC Development Minister Ebrahim Patel says it is important
to have an appropriate balance between actions that are necessary
to stamp out collusion and pricefixing in the construction industry
and ensuring SA has an industry that can deliver on the mandate of
the infrastructure build programme.
Commentators have expressed concern about suggestions by the
Construction Industry Development Board (CIDB) that companies found
guilty of bid-rigging and collusion may be deregistered from the
CIDB and disqualified from state tenders.
Mr Patel said yesterday the Competition Commission would supply
all its information to the CIDB, and if the conduct continued in
future the board would be entitled to progressively apply proper
sanctions as the circumstances might warrant. "We are in the
process of cleaning up the industry," the minister said. CIDB
spokeswoman Kotli Molise said it would await the decision of the
Competition Tribunal and a report on the commission's findings.
"The CIDB will determine its course of action on the basis of
She said the board was obliged to investigate any breach of the
CIDB code of conduct. The board was established to promote a
regulatory framework for the industry.
Mr Patel said the settlements were the first step in the process
to avoid overpayment in infrastructure programmes. Where government
departments had suffered losses, they were entitled to seek civil
damages. "One of the key gains for us out of the fast-track
settlement process is that the cartels have been dismantled.
Individuals who were the instruments of the cartels have been
identified and have been brought to the attention of their CEOs,
and their boards will have to reflect on the fines and the
corrective action that will be required in each of those
companies," he said.
Commissioner Shan Ramburuth said the commission had reached an
understanding with the National Prosecuting Authority that no
criminal investigations would proceed until the commission's
fast-track process had been completed.
The Competition Tribunal still has to confirm the settlements.
The 16 projects where no settlements have been reached will come
before the tribunal for prosecution.
Justin Balkin, a director at law firm Edward Nathan Sonnenbergs,
said it was essential an effective penalty was levied, but one that
did not result in the decimation of the industry. "This is all
the more true in an industry such as construction, which is so
pivotal to SA's stability, growth and development," he
Mr Ramburuth said a competitive culture would be critical to
bring down costs of future infrastructure investments, and would
incentivise firms towards innovation and efficiency in future
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