COSATU welcome prosecution of colluding construction firms

The Congress of South African Trade Unions applauds the announcement by Economic Development Minister, Ebrahim Patel, in Parliament on 7 May 2013, that construction companies guilty of collusion in the awarding of contracts face fines running into billions of rands.

In its campaign against corruption, COSATU has time and time again cautioned against the view that this is only, or even mainly, a problem in the public sector.

The roots of corruption lie in the private sector and the system of capitalism, with its evil morality of crass materialism and self-enrichment, which then finds its way into public bodies. For every public official who has been bribed to manipulate a tender, there is a private company which has paid the bribe to secure the business for itself.

We do not have a ‘free market' economy, in which every South African can compete on equal terms, but monopoly capitalism, in which private companies corruptly collude to divide up contracts between them, inflate prices, and keep out competitors.

Minister Patel told Parliament that the total value of rigged construction industry projects being investigated by the Competition Commission (CC) is even higher than the expected R47bn which had been forecast.

No fewer than 300 cases of collusion and price-fixing have been identified by the commission. "Eighteen construction companies," said the minister, "including the top six firms, have now confessed and are in discussions on settlements with the competition authorities... Private sector collusion and price-fixing cost the state many billions of rands in previous infrastructure projects, including the construction of Soccer City in Johannesburg and the Cape Town Stadium.

COSATU applauds his determination to eradicate cartels which use taxpayers' money to line their own pockets.

This case follows earlier prosecutions by the Competition Tribunal of companies in the bread, dairy, milling and pharmaceutical industries, and the minister has now announced investigations into the private healthcare sector and the glass manufacturing industry.

COSATU hopes that the CC will also re-investigate the banks, cell phone companies and retail chains, where there are frequent allegations that their prices are suspiciously too high.

The federation is appalled by the cynical defence of the collusion in the construction by that stout defender of the ‘free market', Peter Bruce, Editor of Business Day. In his Thick end of the wedge column, on 15 April 2013, he wrote:

"Surely the idea in some industries and in some circumstances would be to see the value in price collusion and to regulate it... The only way to get things done, and done [to build the 2010 World Cup stadiums] shipshape, was to allow the big firms basically to divide up the work among themselves.

"Now Patel wants to police collusion in the state's big infrastructure programme. He's going to get the CEOs of the big firms to sign an integrity pledge every time they get a contract, which pledge, it seems, will cater for jail time should the CEO's firm be found at any level of its tender to have colluded on prices with another."

At a stroke, this spokesperson for big business has demolished the fallacy that South African companies operate in line with the principles of ‘free competition'. He has and exposed the reality behind the myth of a ‘free market economy'.

Bruce has admitted that collusion by cartels - which fix high prices and keep out other firms, including small and medium enterprises - is normal and acceptable practice within the business community.

And he then has the audacity to try to justify this highway robbery of the taxpayers! If even such an august opinion-former as Peter Bruce can condone such collusion, it shows just how deeply ingrained such practices have become, and how big is the challenge we face to build a society founded on principles of fairness and honesty.

COSATU pledges its full support for comrade Ebrahim Patel in his battle to force companies to conform to the values of free and fair competition that they are supposed to uphold, but clearly do not in practice.

Statement issued by Patrick Craven, COSATU national spokesperson, May 8 2013

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