Cartels are criminal
THE theft of state funds on a massive scale must surely be punished by criminal prosecutions and long jail terms for the people responsible.
That is what everybody says they want for politicians and public servants. Why should anybody else be different?
Earlier this week 15 of South Africa’s biggest construction companies agreed to pay R1,46-billion in fines for rigging state and private tenders to the value of R47-billion. Projects included the building and overhaul of major roads and building several 2010 World Cup stadiums.
Senior executives of these companies met many months ago and agreed how they would pitch their tenders on major public and private projects. By so doing they were able to overcharge by billions of rands – a total which competitions commissioner Shan Ramburuth says the commission is unable to calculate precisely.
On the Gauteng Freeway Improvement Project (GFIP) alone – the heart of toll-road protests – the overcharge was between R1,8-billion and R5,4-billion. The original estimate for GFIP was R6,4-billion but the final cost reached R18-billion, partly due to collusion among the companies.
On this scale, the fines are a “mere slap on the wrist”, as they were described by the Black Business Council in the Built Environment (BBCBE). The council wants the companies banned from government contracts for 10 years. Cosatu has accused their executives of “treason”.
Business Report columnist Pierre Heistein says: “…Instead of fines being a penalty, they can simply be considered a cost of production.” And not a very high cost at that.
“Murray & Roberts was fined R309-million, or 0,08% of its total revenue last year. Aveng was fined R307-million, 0.75% of its total revenue last year. Both Murray & Roberts and Aveng said they had already made sufficient provision for these amounts.”
Their executives are most fortunate they do not live in our BRIC partner, the People’s Republic of China. There the penalty for financial crimes is death by bullet to the head, plus the cost of the bullet, which is charged to the offenders’ families.
Perhaps that would have reduced the “illness that has infected the economy” – collusive pricing in petroleum, bread, milk, maize meal, steel, air travel, media, health care and freight.
South Africa has never had the death penalty for economic or financial crimes. But Heistein concludes: “A decision to break the law is a crime and it is the person responsible to whom punishment should be dealt.”
That is our law and the period of imprisonment should be proportionate to the amount stolen.