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Thursday Mar 05, 2015

Construction board reigns in building contractors

The Construction Industry Development Board (CIDB) has charged 15 contractors, including seven listed construction groups, for contravening its code of conduct.

These contractors will now have to appear before an independent CIDB investigating committee for a formal inquiry, which is scheduled to take place next month.

"This is a significant step in intensifying the effort to address fraudulent and corrupt behaviour on public sector projects, in the interest of transparency, fairness and economic transformation in the construction industry," Kotli Molise, a CIDB spokeswoman, said yesterday.

The serving of the charges on the contractors follows the CIDB last year appointing an investigating team to probe transgressions of its regulations and code of conduct by the 15 firms that had admitted their involvement in collusion, bid-rigging and cover pricing to the Competition Commission and collectively agreed to pay R1.46 billion in fines.

Sanctions that may be imposed by the CIDB include restricting or prohibiting the contractor from participating in public sector construction works procurement for up to a maximum of 10 years; downgrading a contractor's current CIDB grading designation in the register by a maximum of two grades, for a period determined by the investigating committee; and imposing a maximum fine of R100 000.

Some of the charged companies believed the CIDB process meant they would be punished twice for the same offence.

This raises the prospect of some companies possibly seeking a judicial review of the findings and sanctions imposed by the CIDB investigating committee in terms of Promotion of Administrative Justice Act.

The CIDB regulations make provision for a judicial review of the findings and sanctions of the investigating committee.

Willie Meyburgh, the chief executive of Stefanutti Stocks, said while the CIDB might be acting within its statutory remit, from a public policy perspective it was arguably inappropriate for firms that had already been punished by one regulatory agency, in this case the Competition Commission, to then be faced with the prospect of being punished by another agency for precisely the same conduct.

Basil Read said it recognised that the Competition Commission and the CIDB were two different regulatory bodies, "but the possible effect could amount to double jeopardy".

Shereen Vally-Kara, a spokeswoman for WBHO Construction, said it believed that these matters had already been dealt with by the appropriate authority.

Wessel Van Zyl, the chief executive of Esor, believed that the company was being punished twice for the same contraventions.

"We in good faith entered into a settlement agreement, which was a fast-track process to get a settlement with everyone participating to achieve the same resolution. Esor has paid the R155 000 fine in terms of this agreement."

However, M&R group communications executive, Ed Jardim, said Murray & Roberts Construction did not believe that the CIDB process involved punishing the group twice for the same offences.

"Different bodies have different processes and outcomes may differ."

The 15 companies facing CIDB charges are Murray & Roberts Construction, Basil Read Holdings, Aveng (Africa), Esorfranki, G Liviero Building, WBHO Construction, Giuricich, Haw & Inglis Civil Engineering, Hochtief Solutions, Norvo Construction, Raubex, Rumdel, Stefanutti Stocks Holdings, Tubular Technical Construction and Vlaming.

Several of these companies confirmed yesterday that they had been notified by the CIDB on Monday about the charges.

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