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South Africa

Author: Sapa, Moneyweb|

04 February 2013 08:08

Competition Commission probes R30bn construction 'cartel'

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WBHO responds to reports, construction shares take a beating.

A probe shows top construction companies fixed state and other contracts worth billions of rands, City Press reported on Sunday.

Affidavits detail a decades-long, formal kickback and price-fixing racket that allegedly involved prominent names in the industry.

At least 11 affidavits were made by executives from Stefanutti Stocks --one of the country's biggest construction firms -- to the Hawks serious economic offences investigator and the National Prosecuting Authority, the newspaper reported.

The statements were also handed to the Competition Commission for its probe into construction industry tender-rigging, thought to involve contracts worth at least R30 billion.

Some of the companies allegedly involved in the bid-rigging were: Wilson Bayly Holmes Ovcon (WBHO), Stocks & Stocks civil engineering, Murray & Roberts, Group Five, Concor, and Aveng.

According to the affidavits the projects "fixed" included the National Stadium (FNB Stadium) in Soweto, the Coega development project in the Eastern Cape, Green Point soccer stadium in Cape Town, the Nelson Mandela Bridge in Johannesburg, and the Gautrain.

In their statements the executives admit they may be guilty of fraud, corruption and racketeering, and offer to co-operate with police in exchange for immunity from prosecution. So far only one person had received this, according to the report.

In a SENS statement released on Monday, WBHO said it is currently engaging in "confidential discussions" with the Competition Commission pursuant to the its invitation to the construction industry.

"These discussions involve a small number of projects and WBHO hopes to conclude this process shortly, at which stage investors will be advised accordingly."

It states that it strongly rejects any suggestions of criminal conduct.

Shares of South African construction companies such as Stefanutti Stock fell on Monday after the reports surfaced.

Stefanutti Stocks had lost 6% to R10 at 09h47, while WBHO was down 3.75 to R148.69. Basil Read fell 3.6% to R11.18.

Topics: cartel, construction, WBHO, Competition COmmission, Aveng, Concor, Group Five, Stocks and Stocks

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