Construction firms not yet out of the woods

South Africa’s largest construction companies could potentially face prosecution in neighbouring African countries where construction projects for mining businesses were rigged.

This is according to employees of the competition commission and other experts in competition law.

When South Africa’s construction firms settled with the commission, collusion was declared on a number of projects that were built outside of South
Africa’s borders.

These included projects in Botswana, Zimbabwe, Malawi and Burkina Faso.

At the recent seventh annual Conference on Competition Law, Economics and Policy, the issue was raised that corporate leniency given to companies in South Africa did not protect them from prosecution in other African countries where collusion took place.

Presenting a paper titled Fruit from the Neighbour’s Tree: On the Cross-Border Effects of Competition-Law Rulings, the commission’s Mehluli Nxumalo said that South African companies that had been given leniency in South Africa could still face criminal prosecution in other countries.

This argument was reinforced by Wits academic and competition-law expert Simon Roberts, who said it might not even be competition legislation that these companies could be prosecuted under, but other legislation such as that combating corruption or fraud.

Other competition lawyers who City Press spoke to, but who did not wish to be named, said the possibility of prosecution was a threat, but it was difficult to estimate how real it was.

Rigged construction projects that fell under the fast-track settlement process included civil works for Zimplats in Zimbabwe, civil works for the Botswana Metal Refinery near Francistown, the electrification of a uranium-processing plant in Malawi and the electrification of a zinc-processing plant in Burkina Faso.

South African construction firms that were implicated in collusion on these projects included Murray & Roberts, Group Five, Aveng, WBHO, Basil Read and Stefanutti Stocks.

According to documentation released by the commission at the conclusion of the fast-track settlement process, Basil Read, Stefanutti Stocks, Murray & Roberts and an Aveng subsidiary, Grinaker-LTA, were involved in cover pricing for the Botswana projects.

In the Zimbabwe project, Stefanutti Stocks and Murray & Roberts subsidiary Concor were implicated and, in the electrification projects in Malawi and Burkina Faso, Group Five and Murray & Roberts subsidiary Wade Walker were implicated.

Asked for comment this week about potential exposure to prosecution in these African countries, most of South Africa’s largest construction companies chose not to comment.

Group Five said that it was still in discussions with the commission with regard to settling, so it could not comment at present.

Aveng said it was unable to speculate and give legal opinion on a hypothetical competition-law jurisdictional issue.

“However, we must emphasise that Aveng is committed to a lawful, pro-competitive and anti-collusive approach to conducting business both here in South Africa and internationally,” said an Aveng spokesperson.

WBHO said it had never been awarded a contract in Botswana or any other country in Africa that had involved any type of collusion whatsoever.

Norilsk Nickel, which acquired LionOre International in 2007, the owner of the Botswana Metal Refinery, said it could not comment.

“This is a matter relating to the previous management of LionOre,” said the company’s spokesperson.

“To our knowledge, no contracts were directly concluded by any of Norilsk’s African group companies with the contractors mentioned.”

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