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New evidence in Cape Town’s R429.47m civil damages claim against construction companies

Arbitration has been postponed and will resume in July 2022.
The claim relates to collusion and bid-rigging connected to the construction of Cape Town Stadium ahead of the 2010 Fifa World Cup. Image: Supplied

New evidence has emerged in the City of Cape Town’s R429.47  million civil damages claim against listed construction groups WBHO, Aveng and Stefanutti Stocks related to collusion and bid-rigging on the Green Point Stadium, now called the Cape Town Stadium.

City of Cape Town spokesperson Luthando Tyhalibongo said on Monday the arbitration was set down from September 27 to October 8 this year, and ran from the scheduled commencement date until October 5.

Read: New twist in R429m civil damages claim against construction companies

Tyhalibongo said only a few of the witnesses have completed their evidence and the arbitration was accordingly postponed by agreement between the parties.

“The arbitration was postponed due to new evidence being provided to the City and the parties requested time to consider the evidence,” he said.

No details

Tyhalibongo did not disclose the nature of the new evidence or provide any comment on the importance of the new evidence to the outcome of the arbitration.

But he reiterated that the City of Cape Town is confident in its claims while stressing that it “is not at liberty to comment on the merits”.

Tyhalibongo also confirmed that there have not been any amendments to the claim by the City of Cape Town against Aveng, WBHO and Stefanutti Stocks.

He said the arbitration has been postponed to July 2022 as this is the first date on which all parties are available.

“The parties have agreed to set aside seven and a half weeks in July/August 2022 to ensure that there is sufficient time for the matter to be fully heard during the next session,” he said.

Tyhalibongo said certain of the City of Cape Town’s witnesses have given evidence, with more to follow, but maintained they are not at liberty to disclose the identity of witnesses.

Claim 

Stefanutti Stocks CEO Russell Crawford confirmed late last month when the company released its interim financial results for the six months to end-August 2021 that the arbitration hearing commenced but was subsequently adjourned and postponed to July 2022 “at the request of the City of Cape Town”.

“The group remains confident it can defend this claim,” Crawford added.

WBHO previously told Moneyweb it did not believe the City of Cape Town had suffered any damage and it would be defending the claim while Aveng did not respond to a request for comment.

The civil damages claim was lodged in 2015 and stemmed from admissions made by the construction companies in the Competition Commission’s construction fast-track settlement process.

At the time, the City of Cape Town’s civil damages claim was the first claim lodged following the conclusion of the commission’s construction fast-track settlement process.

This process resulted in the Competition Tribunal in 2013 confirming settlement agreements reached between the commission and 15 construction companies, including seven listed firms, in terms of which they collectively agreed to pay fines totalling R1.46 billion for bid rigging and collusive tendering.

Collusion

The Green Point Stadium was among the projects listed by WBHO and Stefanutti in a settlement that was confirmed by the tribunal.

Both companies admitted that they had reached agreement with Group Five in December 2006 to provide a cover price for this project to ensure that Group Five did not win the tender.

Stefanutti Stocks admitted receiving a cover price from WBHO to ensure that it could submit a non-competitive bid and ensure that WBHO was awarded the tender.

Read:

The tender was awarded to the Murray & Roberts/WBHO joint venture and the project was completed in December 2009.

M&R previously said the group had not been cited in the civil damages claim because it did not collude on the project.

The group said it had an open book negotiation with the City of Cape Town and its proposed margin and revenue for the project was shared with the client.

Group Five, which is in business rescue and whose listing on the JSE has been terminated, has not been joined to the claim or proceedings.

The City of Cape Town’s civil damages claim against the three construction companies was set down to be heard in the Gauteng North High Court early in 2020 but the parties subsequently agreed to refer the matter to arbitration.

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Surely the penalties paid to the competition commission have been agreed and paid, so why more money being wasted on squeezing blood from a stone?

“ Stefanutti Stocks admitted receiving a cover price from WBHO to ensure that it could submit a non-competitive bid and ensure that WBHO was awarded the tender.”

When will people go to jail for this nonsense? The shareholders end up paying the fine years later while they were not involved. By then the hired help that pull the stunts have long since disappeared with their bonuses and share options

Jail time will change attitudes

Maybe they could learn from a certain ex-President who’s corruption trials for tender fraud have been ongoing for the last 20 + years.

End of comments.

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