Loser’s fee probed

CityPress - - Busi­ness - LLOYD GEDYE busi­ness@city­press.co.za

AR1 mil­lion “loser’s fee” that wound its way across in­ter­na­tional wa­ters from Ger­man con­struc­tion com­pany Hochtief to South African con­struc­tion com­pany Gri­naker-LTA, a sub­sidiary of Aveng, could cause fur­ther headaches for the com­pa­nies.

A “loser’s fee”, as it was known in the South African con­struc­tion car­tel, is a fee a win­ning bid­der pays col­lu­sive los­ing bid­ders when it wins a ten­der.

The Com­pe­ti­tion Tri­bunal has asked the Com­pe­ti­tion Com­mis­sion to no­tify the Ger­man au­thor­i­ties about the pay­ment af­ter it was re­vealed dur­ing a tri­bunal hear­ing this week.

The ten­der col­lu­sion that re­sulted in the pay­ment was over a project to build an un­der­sea tun­nel to house pipe­lines car­ry­ing sewage to a treat­ment plant on The Bluff in Dur­ban.

The com­mis­sion launched its in­ves­ti­ga­tion into the eThek­wini mu­nic­i­pal­ity’s ten­der for the un­der­sea tun­nel project in Au­gust 2009.

The win­ning bid­der of the 2004 ten­der was a joint ven­ture be­tween Hochtief and Con­cor, a Mur­ray & Roberts (M&R) sub­sidiary.

Other com­pet­ing con­struc­tion firms were Nishi­matsu Con­struc­tion, Gri­naker-LTA, Dura So­le­tanche-Bachy, Group Five and Ste­fanutti Stocks.

The com­mis­sion says its in­ves­ti­ga­tion un­cov­ered that in Fe­bru­ary 2004, rep­re­sen­ta­tives of the con­struc­tion com­pa­nies met and agreed to add R3 mil­lion to all their bids, so they could pay the losers R1 mil­lion each when they won the ten­der.

M&R spokesper­son Ed Jardim said: “We have noted the pro­cesses rec­om­mended and to be fol­lowed by the South African com­pe­ti­tion au­thor­i­ties with the Ger­man com­pe­ti­tion au­thor­i­ties.”

Jardim said that M&R only be­came aware of the pay­ment by Hochtief to Gri­naker when Hochtief set­tled with the Com­pe­ti­tion Com­mis­sion in 2013.

“M&R was not aware of, nor fa­cil­i­tated this pay­ment,” said Jardim. “We are not aware that any other pay­ments were made.”

At­tempts to get com­ment from Hochtief and Aveng were un­suc­cess­ful.

The un­der­sea tun­nel was one of four cases set­tled this week be­fore the tri­bunal by M&R.

None of them had been set­tled un­der the fast-track set­tle­ment process.

Mur­ray & Roberts agreed to pay a fine of more than R64 mil­lion.

This was on top of the fine of R309 mil­lion it agreed to pay un­der the fast-track set­tle­ment process in 2013. The com­pany set­tled 17 cases un­der this process.

The other three cases M&R was set­tling this week in­cluded ten­ders for fab­ri­cated steel for the roof of Green Point Sta­dium in Cape Town, a 2006 Transnet ten­der for the Sishen-Sal­danha rail project and civil works for the Tati Nickel mine project in Botswana.

The com­mis­sion’s in­ves­ti­ga­tion into the Sishen rail project was ini­ti­ated in July 2009 af­ter it re­ceived a le­niency ap­pli­ca­tion from Len­nings Rail Ser­vices, which is part of the Aveng Group.

It found that in Novem­ber 2006, WBHO Con­struc­tion had reached an agree­ment with Len­nings and Con­cor, now part of M&R, to rig the ten­der.

WBHO was awarded the south­ern sec­tion of the rail­way line and Con­cor the north, while they both con­tracted the track work­out to Len­nings.

M&R were im­pli­cated in the 2007 ten­der for the Green Point Sta­dium roof and the 2007 ten­der for the nickel mine in Botswana through in­for­ma­tion re­ceived from Ste­fanutti and Aveng dur­ing the fast-track set­tle­ment process.

In 2007, Gen­rec, a sub­sidiary of M&R, shared its pric­ing for the fab­ri­cated steel roof of Green Point Sta­dium with Aveng sub­sidiary DSE Fabri­ca­tion, hop­ing to get sub­con­tract­ing work if it did not bid.

In Fe­bru­ary 2007, M&R Botswana and a joint ven­ture be­tween Ste­fanutti Stocks and Aveng sub­sidiary Gri­naker-LTA rigged the ten­der for the nickel mine.

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