File picture: Russell Cleaver, Shelley Kjonstadt File picture: Russell Cleaver, Shelley Kjonstadt
Durban ratepayers were charged R3 million more than they should have paid for a sewage pipeline after major construction companies colluded to inflate their bid prices for the multimillion-rand project.
This is according to a settlement agreement concluded this month by listed construction group Stefanutti Stocks and the Competition Commission.
A notice of motion filed by Stefanutti Stocks at the commission on August 2 outlines how several construction companies agreed to add a fixed margin of R3m to their bid prices for the project.
The tender, known as the Durban undersea tunnel project, cost eThekwini R210m to complete. It involved the construction of a new tunnel to carry pipelines transferring the sewage generated by Durban to a wastewater treatment works on the Bluff.
According to the agreement, the construction companies met in February 2005 and agreed to fix the amount they would tender.
They undertook that the firm winning the bid would pay R1m to each of the losing bidders.
Stefanutti Stocks concluded a provisional settlement agreement with the Competition Commission for transgressions on this project and on construction of the Goedgevonden colliery for Xstrata Coal.
Trudi Makhaya, the advocacy and stakeholder relations manager at the commission, said yesterday that these two projects had been excluded from the recent fast-track settlement process – where major construction companies were given fines after coming clean about their collusive deals – because the commission had already been investigating them.
She said the settlement deal had not been confirmed and the commission would meet tomorrow to decide on it.
She did not want to comment any further.
The eThekwini municipality put out a tender for the project in 2004, but only invited prequalified contractors to submit bids.
They were Stefanutti Stocks in a joint venture with Nishimatsu Construction, Dura Soletanche-Bachy and Group Five, which joined the joint venture later; Aveng subsidiary Grinaker LTA; and German firm Hochtief Solutions in a joint venture with Concor. Murray & Roberts (M&R) acquired Concor in 2006.
Winner
The tender was awarded to the Hochtief/Concor joint venture and Hochtief, the joint venture leader, paid the agreed sum to some of the losing bidders in 2006.
The project cost R210m and was completed in June 2007.
The commission launched its investigation into the undersea tunnel project in August 2009.
Former eThekwini city manager Mike Sutcliffe, whose administration awarded the contract, said it was very difficult for the municipality to know that the tender had been fixed.
“How do you even know that people are meeting in an office somewhere to collude. It is almost impossible to find this out,” he said.
Sutcliffe said that in addition to the Competition Commission investigation a national inquiry should be held and charges should be brought against those who broke the law.
“As all of this comes out there needs to be some sort of inquiry into the (construction) industry. It is brilliant that we have a competition commission, but I do think that we need at a national level some kind of inquiry into how to prevent things like this from happening,” Sutcliffe said.
The difficulty was that very few companies in South Africa could undertake huge projects.
“Therefore the potential for collusion among large companies is very high,” he said.
Sutcliffe said it was up to municipalities to break the stranglehold of big construction firms.
“Municipalities should be looking at ways to split up their bids, for example, and how do we promote more competition and how do we improve transparencies in the municipalities?”
Lilian Develing of the Durban Combined Ratepayers Association said: “Once again it is the man in the street who suffers; R3m could have been used for other things. We, the ratepayers, are being bled dry from all directions.”
Develing called on the municipality to tighten its tender controls and employ experts to advise it on whether or not a contract bid was fair.
“We are not talking about small players, these guys are big construction players. It seems we are living in cuckoo land. How do they sleep at night?” she asked.
By last night the eThekwini municipality had not responded to questions e-mailed to representatives by the Daily News. - The Daily News