Public Investment Corporation (PIC) decries building collusion

Public Investment Corporation (PIC), says construction firms recently fined R1.46-billion for colluding to fix tenders for soccer stadiums, roads and other major projects, should claw back bonuses from the crooked executives who fixed the projects.

The PIC invests R1.1-trillion on behalf of the Government Employees Pension Fund (GEPF) but has drawn flack in recent years for taking on an active shareholder role only when it comes to black empowerment, ignoring other issues such as collusion.

Yet it has huge influence: the PIC or the GEPF hold 22.2% of Murray & Roberts, 17.6% of Group 5, 14.5% of Wilson Bayly Holmes-Ovcon and 18.1% of Aveng.

The PIC’s chief investment officer, Daniel Matjila, said that he believed there needed to be “some form of punishment” for the executives.

“We need to claw back something from the executives involved. It needs to be made clear that if they make money properly then they can be rewarded appropriately. It mustn’t be the consequence of collusion,” said Matjila.

Groups like Cosatu have expressed dismay that the construction firms got off with only a slap on the wrist for fixing tenders worth more than R46-billion, while those executives responsible effectively walked away without any censure, and large bonuses.

Matjila admitted that the PIC failed to enforce good governance in the construction industry.

Competition commissioner Shan Ramburuth recently blamed the collusion on a “failure of corporate governance”, with shareholders not being sufficiently vigilant.

Matjila agreed that the PIC, as the largest shareholder of these construction firms, should take some of the blame. He said the PIC would “see if we can exercise more influence at board level”.

He conceded the PIC “should have watched them more closely”, but argued that “we don’t necessarily have our own appointees on the boards”.

“We subscribe to good governance and we take anti-competitive behaviour very seriously.

“We’re going to have to engage with the companies. Our guys have already started talking to the companies to find out what the issues are.”

There is public outrage at the way the individuals involved have seemingly suffered no consequences themselves for indulging in, condoning or tacitly encouraging criminal activities.

“Some of these things are done with the board’s approval. Boards approve strategy. Implementation is left to management, which does it the way they think best. So we need to understand exactly what went wrong and how it can be avoided, so we can move on very quickly.”

On Wednesday and Thursday this week, the construction companies will appear before the Competition Tribunal to discuss the settlement. Civil society groups are expected to make presentations about the sanction meted out to the companies.