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Ramaphosa slams ‘construction mafia’

Calls for consequences to ‘radical economic robbery’.

President Cyril Ramaphosa has slammed the conduct of the so-called construction mafia and called for consequences in situations where individuals “disrupt work projects demanding a 30% stake”.

Moneyweb earlier reported that the so-called construction mafia has been disrupting construction projects countrywide, demanding that 30% of the project value be awarded to local companies. In some instances the groups, calling themselves business forums, seek control of the full 30%, with the aim of distributing jobs and contracts among local workers and business people themselves.

The South African National Roads Agency (Sanral) told Moneyweb that its road building projects countrywide have come to a virtual standstill due to the violent conduct of these groups. JSE-listed Wilson Bayly Holmes-Ovcon (WBHO) chief executive Louwtjie Nel last week told Moneyweb that hardly any projects get started without being disrupted by these groups, which he says are not bona fide business forums.

Moneyweb also reported that virtually every major construction project in KwaZulu-Natal has been similarly affected due to threats of violence. Law firm Cox Yeats Attorneys has won about 30 court interdicts against such groups in the province.

While these incidents started in KwaZulu-Natal, with the Delangokubona Business Forum playing a prominent role, they are now prevalent in several other provinces.

Sanral engineering executive Louw Kannemeyer said the situation had arisen due to local communities misunderstanding a National Treasury regulation about subcontracting that was implemented in April last year. In June Treasury denied this, saying there was no evidence of such a link.  

In August, however, Treasury issued a statement saying it had received complaints in certain provinces and at municipalities about abuse of the requirement that 30% of public procurement contracts be subcontracted to designated groups, as required by the preferential procurement regulations. According to Treasury, groups in some instances demand the 30% stake in cash.

Treasury warned that organs of state that are using procurement preferences not provided for in the regulatory framework – including ring-fencing contracts for service providers and suppliers who live in a certain geographical area – are non-compliant and that such expenditure will be classified as having been irregularly incurred.

On Saturday Ramaphosa weighed in on the matter, the SABC reported. He was addressing business leaders in Pietermartizburg as part of his Thuma Mina Campaign. (The campaign “is about the ANC reconnecting with the people through activities that improve people’s lives and solve the problems they face,” according to the party’s website.)

He covered the economy, land reform and radical economic transformation.

Ramaphosa referred to people who are hijacking policies and distorting radical economic transformation by disrupting sites and demanding 30% of the value of projects, describing these practices as “radical economic robbery” and calling for consequences.

Malusi Zondi, newly-elected president of the Federation for Radical Economic Transformation (Ffret), earlier rejected the idea that the 30% subcontracting requirement is not geographically defined.

Ffret currently represents 37 business forums, including the infamous Delangokubona Business Forum, which reportedly has more than 3 000 members. Zondi acknowledged to Moneyweb that most of these members are former criminals.

He says Ffret is working to professionalise them and is organising itself in all provinces, adding that members shut down construction sites because they were robbed of their “fair share” (by contractors).

Ffret has also engaged with state-owned companies such as Transnet and Eskom. According to Zondo, it is branching out into other sectors too, such as mining.

Zondi says Ffret will “radically engage” National Treasury, which he says is “controlled from somewhere”, to influence its unacceptable stance against ring-fencing 30% of the value of contracts for local communities.

COMMENTS   17

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Imagine for one second that if the average South African voter miss understands a simple message from treasury.

How will these average voters understand Expropriation Without Compensation?

From corruption down to downright robbery and blatant extortion. All our “new president” can do is slam, slam, slam!! And no further action is taken on any matters. This guy is nothing but an empty can. While in the backbround Zuma is mustering his troops fr a comeback???

”the pot calling the kettle black”.
govt. leads the way in crookery by not paying construction companies for infrastructural work done , giving contracts to unqualified friends and family at highly inflated prices.
the difference here CR is the mafia in this article wear overalls and you and your mates wear $10,000 dollar suits

Best comment here.

One mafia calling another mafia a mafia. Only in Africa…

What exactly is the difference between what these guys are doing and BEE transactions that made Mr Ramaphosa amongst others a very rich man?

Sometimes I feel some sympathy for Zuma. Everybody calls him a liar and a thief for doing fundamentally the same thing as what CR and a host of other cadres have benefited from.

These guys are now a mafia for demanding 30% local contracts but when some government charter demands it, it is redistribution. I am confused.

Do as I say and not as I do.

The they cannot understand why Africa remains the ‘Bottom Billion’.

Have the Fresnaye Mafia demanded 30% of construction costs on your new house Cyril?

Social engineering: Good intentions which unfortunately always pave the way to hell. Such is human nature and the sooner the ideologists realize this, the better off we will be. But, no hope, I am afraid.

When can we expect a statement on the taxi mafia that kills, on average, 20 people on a daily basis on our roads with their special brand of lawless, reckless and entitled driving?

The Construction mafia are a direct result of BEE policy which, apart from being racist, allows fraudulent opportunists to leverage any potential situation to their own advantage. Get rid of BEE policies and you will get rid of theft, extortion and fraudulent manipulations.

Ah but the difference is that this mafia isn’t politically connected to the mafia currently running the ANC. Also the construction mafia is much more broad based than the previous deals that made Cyril, his family and his sly close mates billionaires.. Strictly a no no in this SA I’m afraid.

come down to – don’t steal, Government hates competition!

Another day, another policy blunder.

I would love to see a parallel universe where the ANC had found the right balance between growth friendly policy and strong regulators. I truly believe SA would be one of the most sought after investment destinations in the world if that happened, instead we have this mess that no seems to know how to clean up.

1..South Africa is perfectly geographically locates to support trades routes into Africa and from South East Asia to South West America and again from Europe outwards.

2. We have a many types of natural resources and our people resource with regards to innovation are world class.

The only rational explanation for our failure is political greed.

Where did CR uses violence to get 30%?

Point taken, but what value did CR add to the companies that gave him shares? Little except for his status as ANC heasvyweight and possibly political connections. That is pretty much the textbook defination of corruption or graft.

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