Minister Ndebele on Competition Commission and Construction Firms

3 Feb 2011

We are distressed and concerned at the news that South African construction companies had been found by the Competition Commission to have colluded on the costing of 2010 FIFA World Cup projects. We are equally shocked and saddened at this news which, according to the Competition Commission, resulted in the taxpayer paying more for the World Cup infrastructure.

The Commission says bids in projects such as World Cup soccer stadiums, the Gautrain and various road construction projects were affected.

Government spent staggering amounts of rands in readiness for the 2010 World Cup. The transport sector spend included R25 billion for the Gautrain, R19 billion for the Airports Development Programme and R23 billion for the Gauteng Freeway Improvement Scheme.

That we were possibly robbed leaves a bitter taste in my mouth. This finding by the Competition Commission raises a number of issues.

The first is about the nature of our construction industry and, in particular, the dominance of a few firms. In this regard, we welcome the statement by the Commission that it was not only interested in retribution, but was cleaning up the construction industry.

According to Tembinkosi Bonakele of the Commission, "this is an industry that has had a culture of collusion; senior executives found it easy to meet and allocate largely public sector contracts and decide how to milk the state".

The second issue we must raise relates to Broad Based Black Economic Empowerment (BBBEE). The construction sector has committed to the Construction Sector Charter which recognises the sector as a stimulus for development and job-creation in our economy.

The charter indicates that the sector is beset by vast inequalities in ownership, with little transformation and limited numbers of Black people, especially Black women, in controlling positions, managerial positions and in the specialised professions in the larger enterprises in the sector. Government is a major client of the construction sector.

The Department of Transport will be spending billions of taxpayers' money in a number of projects over the next 20 years. This includes rail and road projects and many others. Our programme will create thousands of jobs, develop thousands of BBBEE entrepreneurs and upgrade the rural parts of our country while maintaining our current transport infrastructure. Our programmes will transform our country forever.

We must therefore be clear; we want to get to the bottom of this matter. Corporates cannot be allowed to subvert our national objectives for narrow, corrupt self-interests. The transformation question is whether we have alternatives. Do we have significant new entrants who are big enough? What is the rate at which we are creating new construction companies with sufficient muscle and a new culture of business?

We would like to work with industry partners who are genuine about transformation and empowerment. We want genuine partners who respond to the need to achieve equity in our country, develop skills required by this sector, and innovate better for the common good of our country. We will thus be more stringent going forward. Those who get in must be genuine with regard to government objectives, taking into account these recent revelations. We must deploy our huge expenditure to force the change we want to see: a better country not only for a minority but for a broad section of our people.

Statement issued by the Department of Transport, February 3 2011

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