South Africa Pursues Payments from World Cup Builders

South Africa’s government is reportedly applying pressure on construction companies for further payments as punishment for rigging contracts to build stadiums when the country staged the 2010 FIFA Soccer World Cup and other projects.

In June 2013 antitrust authorities imposed fines totaling 1.5bn rand (ZAR) of US$141m on 15 builders, including Murray & Roberts Holdings and Aveng, after an investigation that took nearly four years found evidence of collusion to push up prices.

“The ZAR1.5bn in penalties is not the end of the story with the construction industry,” said South Africa’s economic development minister Ebrahim Patel. “We are now in discussion with the construction industry on a restitution package for their collusion and price fixing.”

The Competition Commission probe found that companies held meetings to rig profit margins on the construction of six stadiums ahead of the soccer tournament. Murray & Roberts, South Africa’s biggest listed builder, and competitors met twice and agreed to exchange cover prices, allocate tenders and aim for a 17.5% margin, according to documents on the competition tribunal’s website. The papers also detailed collusion on projects ranging from roads to offices.

“We are in discussions with the government on a settlement package, which the government and the participating construction companies will unveil at an appropriate time yet to be mutually determined,” said Webster Mfebe, chief executive officer (CEO) of the South African Forum of Civil Engineering Contractors (SAFCEC), said in an e-mailed response to questions.

Murray & Roberts was fined ZAR309m, Aveng ZAR307m, Wilson Bayly Holmes-Ovcom ZAR311m and Stefanutti Stocks Holdings ZAR307m.

Patel did not specify which companies will be asked to make further payments or how much the government expected to raise.

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