Murray & Roberts‬ to fork out R64.1m for collusive tendering

The Competition Commission has issued yet another additional fine to Murray & Roberts, for its involvement in collusive tendering on 2010 FIFA World Cup projects.

“On Wednesday, the competition tribunal confirmed a R64.1 million fine to Murray & Roberts,” said the commission’s spokesperson Itumeleng Lesofe.

This is in addition to the R309m it had to pay in 2013, when the Commission wrapped up its fast-track investigation process into collusion in the construction sector. The commission began the fast-track process in 2011.

The R64.1m must be paid by August next year and came as no surprise to Murray & Roberts, company spokesman Ed Jardim said on Wednesday. The company had made a provision for the fine following "an in-principle agreement in 2014 with the Competition Commission that was confirmed by the tribunal".

During the Commission’s first fast-track investigation, Murray & Roberts had co-operated and as such, had reportedly received a lesser penalty.

The fast-track settlement process resulted in 15 companies concluding consent agreements with the commission in terms of which they agreed to pay penalties totalling R1.46 billion.

Others fined during this phase included Aveng with a R306.57 million, WBHO with a R311.29 million fine and Stefanutti Stocks with a R306.89 million penalty.

Construction Sector

South Africa’s construction sector is on the brink of a crisis with many construction firms reported declining profits in the last few years, mainly as a result of the global financial crisis and a lack of civil engineering activity.

Markets have recently gone from bad to worse on the global mining commodities rout and a worsening longterm slump in demand for steel products used in infrastructure.

This has seen the market capitalisation of many JSE-listed infrastructure groups drop in recent years, including for major companies with attractive price:earnings multiples such as Murray & Roberts and Aveng.

More job losses in construction are likely, with executives in the sector predicting it will continue to suffer the effects of slow economic growth and falling commodity prices during the next financial year.

South Africa’s big five construction companies all took a beating in the 2015 financial year in terms of earnings, and all had to right-size quickly, leaving thousands of construction workers without work.

“Our order books and revenue streams have been on the decline, and if we don’t get the work quickly we will have to reduce our workforce further,” Aveng CEO Kobus Verster said.

During the past financial year, the company cut 885 permanent jobs and let 6000 contract workers go.

Henry Laas, who heads Murray & Roberts, cut the company’s workforce by between 15% and 20% across several divisions.

Group Five CEO Eric Vemer let 2600 people go during the past financial year.

Employment in construction is mostly cyclical, and closely linked to economic activity and the roll-out of projects. The government has promised to roll out infrastructure projects of more than R800-billion over the next year.

But Laas pointed out that the money was mainly being spent on rail rolling stock and roads, and not on civil engineering projects, leaving a glut of skilled people without projects to work on.

Verster said the construction sector was worse off now than it was after global markets collapsed six years ago. “Back then we had a number of big projects to work on in South Africa because of . the World Cup,” said Verster.

Construction companies were heavily fined for collusion on World Cup projects, which ate into their bottom lines during the past financial year.

Verster said the industry had been in constructive talks with the government to mend relationships.