THE South African Local Government Association (Salga), representing six municipalities where direct or indirect bid-rigging with infrastructure projects had been confirmed, says it has embarked on a process of quantifying the claims where municipalities have been overcharged.
Salga said its first approach to recover the money would be to intervene in the proceedings before the Competition Tribunal, where the settlement agreements reached between the Competition Commission and 15 construction firms still need to be confirmed. If it is not successful in reaching settlements with the firms through the tribunal process, Salga will take the matter to court for civil damages.
Salga operations chief Lance Joel said on Friday that it had filed papers to be allowed as a party to the hearings before the tribunal later this month. Salga’s aim with the intervention was to ascertain if all the projects had been identified, given that the commission relied entirely on the data provided by firms.
The commission will collect R1.46bn in administrative penalties after reaching settlement agreements with 15 of a total of 21 companies that participated in its fast-track programme, which was initiated in February 2011. Only three companies have not settled with the commission, including Group 5, which received corporate leniency for its involvement in bid-rigging and collusion in 25 projects. The other two companies are Construction ID and Power Construction.
Mr Joel said Salga wants to ensure that the collective fine of R1.46bn was appropriate, given that projects worth R28bn were involved. R13bn of this related to projects done on behalf of municipalities.
He said Salga would like the tribunal to postpone the proceedings until Salga had an opportunity to engage with the firms to see if they could not reach an out-of-court settlement that could be made part of the order by the tribunal.
Mr Joel said the difficulty would be the quantification of actual damages. “We will certainly not be thumb-sucking. W e will ensure that we get the proper expertise who will assist us to quantify the claims of the municipalities.”
The municipalities where direct or indirect bid-rigging had been confirmed are eThekwini municipality, Nelson Mandela Bay metro, the City of Cape Town, City of Johannesburg, Polokwane and Mbombela. The projects that had been identified include the soccer stadium in Nelson Mandela Bay, Soccer City in Johannesburg, the N17 road link in Johannesburg, the Durban International Convention Centre, Peter Mokaba Stadium, Cape Town Stadium and the Mbombela Stadium.
Salga legal representative John Ngcebetsha said of concern was the basis on which the commission proposed the lower fines of between 1% and 5.7% of the firms’ turnover, as opposed to the maximum of 10%, and whether that was appropriate.
Mr Joel said the construction bid-rigging case showed that internal controls within municipalities were inadequate. “There had been efforts to improve supply chain management, but this case shows more work needs to be done.”