Dec 4, 2022

Mawazo Writing Africa

Writing about the main

R135m settlement ends collusion tussle over Cape Town Stadium construction

The City of Cape Town and three construction companies they have accused of collusion and bid rigging at Cape Town Stadium have reached an agreement ending a R430 million damages case in the Supreme Court.

In In a joint statement on Wednesday, the City Council, WBHO, Stefanutti Stocks and Aveng Africa said the settlement includes a payment of R31.3 million from each contractor to the council.

WBHO and Stefanutti Stocks have Also committed to corporate social investment projects in Cape Town and Mayor Geordin Hill-Lewis said that would include solar power systems worth R42.5 million. Aveng no longer has a construction company in SA.

The settlement ends a dispute that dates back to 2014 and has its roots in a R4.5 billion project that started in 2007 to build one of the new stadiums to build for SA Soccer World Cup 2010.

Following an investigation by the Competition Commission, 15 construction companies agreed to pay penalties totaling R1.46 billion for collusion and bid rigging.

< p>The Cape Town Stadium was one of 15 projects covered by a settlement agreement with one of the companies, Group Five.

In December 2006, the Commission said Group Five had worked with WBHO Construction to to provide a “cover price” for the stadium tender to ensure it would not be accepted.

The tender was awarded to the Murray & Roberts (M&R)/WBHO joint venture and the project was completed in December 2009. The World Cup began at the stadium in June 2010.

Wednesday’s joint statement said the three suing companies had “cooperated positively with the City of Cape Town”.

“Since 2010 South Africa’s construction sector has shrunk in scale and capacity, with limited government infrastructure spending over the past decade, compounded by the lackluster economy and the Covid-19 pandemic.

“These challenges have hit multiple industries with failures, while others, including Aveng, have divested their South African construction companies.

“While the City and the contractors remain confident in their respective legal positions, it has been mutually agreed that it is in the best interests of all parties to address the matter amicably, rather than protracting lengthy and costly arbitration and court proceedings. This will allow for future positive relationships between the city and the contractors.”

Hill-Lewis said the settlement was the developers’ final proposal and was intended to prevent similar collusion in the future.

This article has been updated to reflect Hill-Lewis’s comments.

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