Tribunal panel questions extent of disclosure made by Hochtief

HOCHTIEF Construction has been accused of failing to fully disclose anti-competitive practices in the construction industry during a Competition Tribunal hearing.

This followed Hochtief legal representative Marius Scholtz informing the tribunal yesterday of the company’s inability to find evidence of the payment of a R1 million fixed fee to losing bidders on the Durban undersea tunnel project, other than a payment to Aveng subsidiary Grinaker LTA, because these payments had been disguised and camouflaged in the company’s books.

But tribunal panel member Takalani Madima said he did not accept this explanation and would not support the consent agreement reached with the Competition Commission.

“I think full disclosure has not been made and we are being misled. If full disclosure has not been made, then maybe this agreement is premature,” he said.

Scholtz said Hochtief had indicated it would repay its share of the retained loser’s fee to the eThekwini municipality and it was to its advantage to find evidence that it had not retained the loser’s fee.

“That is a civil matter that is going to come. They are liable and have accepted liability to pay the loser’s fee back to the municipality because it was obviously not part of the true contract price,” he said.

The hearing was to confirm a provisional consent agreement between Hochtief and the commission in terms of which Hochtief agreed to pay a penalty of R1.9m for collusive tendering related to this project.

The project involved the construction of a new tunnel that carried pipelines to transfer the sewage generated by Durban to a wastewater treatment works at the Bluff.

Full disclosure has not been made and we are being misled [so] maybe this deal is premature.

The commission’s investigation revealed that in about February 2005 representatives of all the pre-qualified bidders for this project met and agreed to add a fixed margin of R3m to their bids and pay R1m to the losing bidders.

The Hochtief/Concor joint venture won the tender and Hochtief, the joint venture leader, paid the agreed sum to some losing bidders in 2006.

Andrei Wessels, the chairman of the tribunal panel hearing the case, said the panel could not confirm the agreement at this stage.

A letter was sent by the commission to Hochtief ’s attorneys after the hearing stating that the tribunal had directed, among other things, that Hochtief “must conduct a proper search to determine which ‘loser’s fee’ payments were made” and must consult current and past employees in this regard.

It said a senior employee of Hochtief must also explain in an affidavit how the search was conducted, who was consulted and the findings of the search.

The tribunal also ordered the commission to contact each of the respondents linked to this project to determine whether they had received a loser’s fee and, if so, the amount paid and the payment date.

Apart from the joint venture between Germany’s Hochtief and Concor, the pre-qualified bidders for the project were Stefanutti Stocks in a joint venture with Nishimatsu Construction; Dura Soletanche-Bachy in a joint venture with Group Five; and Grinaker LTA.

The tribunal confirmed yesterday a provisional consent agreement between the commission and Stefanutti Stocks related to this project and the Goedgevonden colliery project for Xstrata Coal. Stefanutti Stocks had agreed to pay a penalty of R55.8m for collusive tendering on these projects.

Martin Versfeld, Stefanutti Stocks’ legal representative, said the company did not admit to adding the R3m fixed margin to its bid or to receiving the R1m loser’s fee.