NEWS

Construction Cartel Firms Have To Pay A R1,4bn Fine AND Take Steps To Transform The Industry

In addition to a R1.4-billion fine, firms must now mentor and financially support black-owned firms.

14/02/2017 07:29 SAST | Updated 14/02/2017 12:41 SAST
Edgar Su / Reuters

In addition to a R1,4 billion fine, seven large firms accused of colluding on several large projects will also have to take steps to transform the construction industry, according to reports.

Fin24 reported on Tuesday that this is expected to result in an annual turnover of between R21 billion and R27 billion for black-owned construction firms in the next seven years, the publication reported. It is part of a settlement package between seven firms –- WBHO, Aveng, Murray & Roberts, Group Five, Basil Read, Raubex and Stefanutti Stocks and government.

This was reportedly announced by Economic Development Minister Ebrahim Patel on Monday.

Business Day reported that Patel also said the settlement does not guarantee an increase in national infrastructure spend.

"The settlement agreement is not a direct quid pro quo that government will increase infrastructure spend," Patel reportedly said.

The paper reported that all the firms agreed to sell stakes to, mentor and financially support black-owned firms. Murray & Roberts reportedly sold its South African stakes to "empowerment" firms, Business Day reported.

Over and above the R1.4-billion fine, the settlement also includes a payment of R1.5-billion into a trust that will be governed by a state-appointed board, the South African Forum of Civil Engineering Contractors and the construction companies, according to the paper.

Aveng had reportedly agreed to sell a 51% stake in a subsidiary to a black, women-owned group, while WBHO would mentor emerging contractors.