Small contractor takes on Stefanutti

| Mediator in painting company’s R8m claim against construction giant is alleged to be biased

CHARGES have been laid against besieged construction group Stefanutti Stocks by a small contracting company alleging “fraudulent misrepresentation”.

This raises new questions about the ethics of the construction giant, which was fined R363million last year for participating in a construction cartel the members of which were accused of bid-rigging, paying losers’ fees and inflating profits.

No executives at Stefanutti Stocks have been prosecuted or fired for their involvement in or knowledge of the collusion, said to have spanned decades.

But now Brakpan paint company Yellow Dot Coatings claims Stefanutti bosses are continuing to flex their financial muscle to bully small contractors.

The dispute dates back to 2005 when Yellow Dot Coatings won a Stefanutti Stocks contract to paint Sun Ridge Village, a big development in Midrand, northern Johannesburg. The job took two years, and Stefanutti did not make the final payment to Yellow Dot because the job took longer than expected.

Stefanutti paid R5.5-million to Yellow Dot, but this small company is claiming another R8million for work done plus interest.

The two companies locked horns in arbitration — less costly than going to court — but the process dragged on for years.

In 2012, Stefanutti proposed bringing in an independent mediator, Louis Stapelberg.

Now Yellow Dot manager Gerard Sullivan has claimed in an affidavit that Stapelberg was not independent, and that, unknown to him, Stapelberg had worked with Stefanutti on a big contract for the Stats SA head office.

When Yellow Dot found out about his previous links to Stefanutti it withdrew from the mediation.

Stefanutti then asked the Johannesburg High Court to declare Stapelberg’s findings — one of which was that Stefanutti was to pay Yellow Dot just more than R1-million — binding on all parties.

But this backfired, and Judge AJ Ngalwana dismissed Stefanutti’s application. Stefanutti has appealed. Yellow Dot is still seething. It has hired a forensic investigator, Chad Thomas, to probe the relationship between Stefanutti and the mediator.

“I suspected the mediator of having been compromised because he was so biased during the mediation,” said Thomas.

“This was proved in the end,

Stefanutti Stocks bosses should be prosecuted for perjury

when we found that Stapelberg had previously consulted for Stefanutti Stocks on a major tender, and that this had not been disclosed prior to or during the mediation.”

Stapelberg rejected the suggestion that he was biased or not independent.

Thomas has now laid charges against Steffanuti Stocks for “fraudulent misrepresentation” in respect of the mediation, describing this as a case of David taking on Goliath.

A furious Sullivan said that he believed the Stefanutti bosses should be prosecuted for perjury because they continued to “lie under oath” about the mediation agreement being binding on all parties. When contacted, Stapelberg said he “did not declare it binding per se [but] that reality emerged from the pre-agreement between the parties”.

Stefanutti Stocks MD Luc Jacobs is adamant that his company did nothing wrong. He said the dispute was being dealt with “strictly” through arbitration between the companies.

Jacobs said he was not aware that a criminal complaint had been made against his company’s directors. He rejected Yellow Dot's allegations, saying Stefanutti had made full disclosure of the fact that Stapelberg had worked for the company in the past.

An e-mail sent by Jacobs to another Stefanutti executive, Tiaan Erasmus, referred to the construction giant’s legal strategy, saying: “I would like us to meet next week . . . to discuss our legal position and prepare a defence strategy if Yellow Dot is serious about pursuing the cancellation of the mediation.

“My approach would be to first get them to declare our undertaking to make the mediation binding.

“Second would be to demand from them bonds to cover our legal costs of defence.”

Sam Amod of the SA Institution of Civil Engineering said a mediator would not judge between right and wrong in a conflict, but would help the parties to find a mutually acceptable solution.

“The mediator cannot impose a solution on either party, and is expected to be impartial,” said Amod.

There is little sympathy left for construction bosses following the construction cartel debacle.

Murray & Roberts recently reported six of its former executives to the police.

But former Murray & Roberts boss Brian Bruce, who was heading the company while the soccer World Cup collusion was taking place, was not among them, according to former Murray & Roberts board member and legal counsel Millard Arnold.

Arnold defended the collusive conduct of construction companies this week, saying it was done to “stabilise” the industry and not to make huge profits.

He blamed collusion on the practices of a few “rogue individuals”, and said many people at the top were not aware of what was being done in their company’s name.

Certain amendments to the Competition Act currently being considered suggest that a director could be held liable for collusive and corrupt activities by virtue of his position in the company.

Competition commissioner Oliver Josie said there was no way that senior company officials were not aware of what was going on.