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Engineers leave SA due to ‘construction mafia’

And Aveng prevented from working on the highest bridge on the continent. Desperate contractors appeal to Ramaphosa for help.

Armed ‘community forums’ – widely referred to as the ‘construction mafia’ – are prevalent on virtually all construction sites in the country, and the situation is so bad that engineers prefer to leave South Africa rather than work under such conditions. This is according to WBHO CEO Louwtjie Nel.

Nel spoke to Moneyweb on Monday after the release of the group’s interim results for the six months to December 31, 2018.

His comments came shortly after those of the management of Aveng, which released its interim results on the same day.

Aveng told reporters that staff at its Mtentu Bridge project in the Eastern Cape were threatened by people armed with illegal weapons who wanted to dictate which sub-contractors Aveng should fire and who the company should replace them with.

They said the police in fact escorted the ‘community forum’ members onto the site, and failed to act when the construction group secured interdicts against the alleged perpetrators.

Members of site management were sent threatening messages and followed home, and a female engineer was manhandled, Aveng management said.

Force majeure, contract terminated

Aveng and its joint venture (JV) partner Strabag International GmbH are currently in a legal battle with their client, the South African National Roads Agency (Sanral), to prevent Sanral from calling its performance and retention bonds on the project after the JV terminated the contract based on the force majeure provision.

Read: Treasury, Sanral and the construction mafia

This came after the site was inaccessible for more than 84 days – the limit in the contract before a party is entitled to terminate it.

Sanral disputed that it was too unsafe for the JV to return to the site and announced that it had terminated the contract from its side.

The JV’s equipment and material are still on site and the staff are in limbo. Aveng executive chairman Eric Diack said the JV will claim demobilisation costs from Sanral.

Aveng management said the JV secured the site at its own cost, but it is difficult to secure equipment and material being moved onto the site or protect staff who live off-site.

‘Our German partners said they have worked in 80 countries, including Afghanistan and Baghdad (Iraq), but have never experienced anything like this,’ said newly appointed Aveng CEO Sean Flanagan.

Flanagan said the threats started in KwaZulu-Natal and spread to the Eastern Cape and further. The situation has now also spread into mining, with three of Aveng’s mining sites, two opencast and one underground, currently being affected.

Aveng CFO Adrian Macartney said construction projects are often situated in extremely rural areas where socio-economic conditions are difficult and expectations among locals that they will benefit from projects are very high.

Bridge ‘cannot be built’ this way

Flanagan added that the Mtentu Bridge – which is set to be the highest bridge ever built in Africa – is a technically complex project, with concrete being poured at a height of 180 metres. It cannot be built with interruptions as caused by these demands, he says.

Aveng management said this is not the kind of thing a contractor can foresee at tender stage or price for. It is outside the control of both contracting parties, which is why the JV declared force majeure.

Nel said WBHO has lost 60 man-days in the last three months due to unrest caused by ‘community forums’.

He said the group and the industry, through the South African Forum of Civil Engineering Contractors, have appealed to President Cyril Ramaphosa and his cabinet for assistance, and continue to do so.

“There is currently no reasonableness [in the demands],” says Louw.

The police only act when there is a physical assault – and to get an interdict, the complainant has to provide the particulars of the individual perpetrators, which is difficult, adds Nel.

Aveng management says the argument is often made that nobody has been seriously injured or killed on site, but the group is not prepared to put its staff at risk and wait until that happens.

Malusi Zondi, president of the Federation for Radical Economic Transformation, which represents a large number of business forums, could not be reached for comment.

* Nel apologised for disappointing shareholders with an 80% drop in headline earnings for the reporting period due to provision for $50 million losses on a roads project in Australia. He said he doesn’t expect further losses from the project and believes that results will be better in the second half of the financial year. WBHO’s UK operations showed profit for the first time, and its order book is at an improved level of R50 billion.

 

Watch Moneyweb’s interview in September last year with Malusi Zondi, president of the Federation for Radical Economic Transformation:

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SOON THERE WILL BE NO CONSTRUCTION GOING ON IN SA – DRC HERE WE COME

How is this a head line news

Engineers leave SA due to ‘construction mafia’

But the reason is this one.

* Nel apologised for disappointing shareholders with an 80% drop in headline earnings for the reporting period due to provision for $50 million losses on a roads project in Australia

Nel is taking shareholder for a ride.

YES IT IS NEWS !..news we have been paying attention to for a long time, that’s why most of us are not surprised this is one of the main reasons the construction industry has been killed ( and please don’t bring 2010 into this )

Interesting…..
Is he using the construction mafia as an excuse?

There’s road construction going on for months/ years in my area – not a national road but upgrading and widening of the old single lane road linking Kalk Bay and Kommetjie, upgrading Ou Kaapse Weg, etc It seems they are making progress there so one wonders if the mafia targets mainly national road construction projects?

there’s only one construction mafia in this country and it is made up of Aveng, basil read, SS, M&R and WBHO. they stole billions from South Africa during the construction ahead of the worldcup.

The existence of Construction mafia are 100% real – just look at various road works (especially North Coast) which haven’t been completed in 5-10 years. All due to community mafia’s wanting a cut, threatening contractors etc.

Government needs act now!

Well done to Aveng for walking away from this. It is a sad day when reputable companies cannot engage in their commercial activities due to the lack of the rule of law. South Africa is in big trouble. In the long run this will push up the cost of doing business and there fewer new roads, bridges, mines, buildings, ect

I agree – no business should be subject to this kind of intimidation or interference, but reputable companies are not fined R46 million for collusion, like Aveng was….chickens coming home….

And the point is…if you get fined by authorities for collusion 9 years ago, then you can expect to be submitted to intimidation and violence – that is your comeuppance?

Not at all, as I said – NO business should be subject to intimidation, but calling Aveng reputable is more than a stretch. It implies a good reputation. I do think comeuppance (learnt a new word, thank you) would be not to allow businesses (or public administrations) who have been proven to be corrupt to continue to operate or exist. What ever happened to going to jail for corruption? Our ruling party wrote the law in such a way that there is no punishment for getting caught colluding, all you have to do is share in the loot….

Why bother to go to the polls to vote? The country and business activity is determined by people and groups who live by their own rules – and law and order hardly exists because law enforcement has also been hijacked. What difference is an election supposed to make?

This is theft pure and simple. It also explains why KZN has such a huge budget for road construction….this behavior was just another way to steal from the fiscus without having to tender ( and face scrutiny when it’s awarded ) one good thing is that KZN has some spectacular roads and bridges because of the enormous budget from central government ( possibly Zuma way of rewarding his Zulu voters) Just my opinion.

Thugs are the only ones living any kind ‘South African dream’. Political, taxi and construction thugs do as they please while the authorities and police look the other way. When thug elements in society realizes law enforcement is weak and non-existent they do as they please. Even worse, not a single major political party has addressed the taxi industry ‘killing machine’ in their manifestos i.e. we don’t even have the political will to fight back. Just think about it: A lawless, violent industry has taken over the roads with thousands of (mainly Black) people dying every year and political p[arties seem disinterested. All it means is more will follow. It is the construction mafia today and next week it will be something else. So much for ‘freedom’ and as for ‘economic freedom’ there is no chance. Other countries that are getting our engineers – an engineer relative recently moved to New Zealand and was made to feel so welcome in the process unlike in his home country – must think we are mad (and they are right).

Not many skilled people under 40 left in the country. Under siege in their homes due to creeping socialism from all politicians who lust after power. Now they are under siege in the workplace as well.

One thing I’ve had to come to terms with in the last decade or so, is that no matter how First World our laws may be, South Africa remains firmly in the Third World and will remain there for the duration of my life.

A story like this one just drives home the point for me.

The more I expect us to rise up as a nation, the more disappointed I get. Life is much better when you accept Africans on their own terms.

There is money to be made on this continent, if you’re willing to laugh when you feel like crying.

Personally, I couldn’t deal with these so-called construction mafias. That’s a bridge too far. Luckily the work I do doesn’t require me to.

For the rest of my productive life I am going to try and extract as much wealth as I can from this continent. By any means necessary. And I’m going to teach my children and grandchildren to do the same.

I am a civil engineer. Worked in other parts of Africa for the past 20 years and will never work in SA. I have become a successful trader. Can do it anywhere in the world. Maybe to consider for your children.

Avenge is 86.79% Black Owned!
3 cent share price? Not much left for them to loose. But no harm in them loosing everything. They did not pay for it after all.
And we might have to get a 4×4 or new Speedo to get through the river in the absence of a bridge or just stay in the bush on your side of the river.

Mtentu bridge is really a vanity project and likely only pushed to get Australian owned mining products out to benefit them and their connected BEE shareholders. Maybe turn pristine coastline into Margate; for ANC cadres to sell of course. Would have been much more relevant to upgrade the N3 or CT / Jhb road infrastructure. In KZN you have the Sani Pass upgrading as a similar vanity project and waste of public funds (R400m to R1bn?). IMHO of course.

The government will need to crack down, hard, on these rackets. The election can’t come soon enough.

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