Corruption an act of rogue ‘hoods’, says ex-M&R boss
BRIAN Bruce, the former CEO of Murray & Roberts during the time when construction companies were colluding to fix tenders, said collusion was “not a corporate strategy”, but rather the actions of rogue “hoods”.
Bruce, who has been touted as one of the prime suspects, was speaking to Business Times for the first time about the scandal that has engulfed the construction industry and which has led to calls for executives to be jailed.
More than 300 of South Africa’s largest infrastructure projects worth R61-billion were affected, including World Cup stadiums, the Gautrain and the Gauteng Freeway Improvement Project.
This led to taxpayers paying more than they should have to finance these projects, while construction executives scored big bonuses. Though the Competition Commission levied a fine of R1.46-billion on 15 of these companies, it is the shareholders who end up paying — not the executives who caused the problem.
Bruce said that various gov- ernment departments had approached contractors like Murray & Roberts before the World Cup, and basically said: “Look guys, this is one project we cannot fail on.”
Similarly, the South African National Roads Agency decided that only six contractors would be approached for the Gauteng Freeway Improvement Project, and that everyone would get a share of the project.
As a consequence, Bruce admitted, Murray & Roberts and other companies did attend meetings to figure out “how we were going to do this”.
But Bruce claimed he had no evidence that Murray & Roberts participated in a process specifically to increase profitability or reduce competition.
“I have no evidence of this and was certainly not aware of it as CEO at that time.”
The problem, he said, was that individuals had separate meetings in secret to enhance their positions. “It is more than likely that certain individuals would partake in such activi- ties. I mean, these issues around fraud and theft were issues we had to deal with on a daily basis in the industry. The World Cup collusion was just a more sophisticated form of that,” said Bruce.
There has been much debate about whether individuals who colluded should be jailed.
Perhaps surprisingly, Bruce said he believed those people should be prosecuted.
“But you will have to prove that in fact they have done it, and the legislation is a bit complex as to how one would achieve that.”
Bruce, who left Murray & Roberts in 2011, was one of the highest-paid construction CEOs. In the five years before he quit, he took home R173million from the company in salary and share options, after Murray & Roberts’ stock soared — partly thanks to its government contracts.
Bruce said collusion and fraud were deep-seated traditions in the industry, and had been there for decades.
“I had a full-time forensic team on the job to hunt for such activities, but it’s not easy to eliminate overnight. In fact, I was very surprised when our fast-track submission was made at what we uncovered at the eleventh hour.”
Bruce said the whole collusion scandal was an unfortunate set of circumstances that was created by a couple of ‘‘hoods” in the industry — with one of the leading culprits having run to prosecuting authorities for indemnity.
Stefanutti Stocks was the first to approach the National Prosecuting Authority in exchange for indemnity — which it is yet to be granted except for one director, Schalk Ackerman.
But Stefanutti Stocks has not fired any of the 19 directors who took part in fraudulent practices. Other companies also continue to employ suspects.
“We got rid of people through the years where we had evidence that they were involved in collusive activity, but the ability to prosecute them was very complex. And part of the tragedy of the industry is that these guys would just go and work for another contractor,” said Bruce.