Ramaphosa slams ‘construction mafia’

President Cyril Ramaphosa has slammed the conduct of the so-called construction mafia and called for consequences in situations where individuals “disrupt work projects demanding a 30% stake”.

Moneyweb earlier reported that the so-called construction mafia has been disrupting construction projects countrywide, demanding that 30% of the project value be awarded to local companies. In some instances, the groups, calling themselves business forums, seek control of the full 30%, with the aim of distributing jobs and contracts among local workers and business people themselves.

The South African National Roads Agency (Sanral) told Moneyweb that its road-building projects countrywide have come to a virtual standstill due to the violent conduct of these groups. JSE-listed Wilson Bayly Holmes-Ovcon (WBHO) chief executive Louwtjie Nel last week told Moneyweb that hardly any projects get started without being disrupted by these groups, which he says are not bona fide business forums.

Moneyweb also reported that virtually every major construction project in KwaZulu-Natal has been similarly affected due to threats of violence. Law firm Cox Yeats Attorneys has won about 30 court interdicts against such groups in the province.

While these incidents started in KwaZulu-Natal, with the Delangokubona Business Forum playing a prominent role, they are now prevalent in several other provinces.

Sanral engineering executive Louw Kannemeyer said the situation had arisen due to local communities misunderstanding a National Treasury regulation about subcontracting that was implemented in April last year. In June Treasury denied this, saying there was no evidence of such a link.

In August, however, Treasury issued a statement saying it had received complaints in certain provinces and at municipalities about abuse of the requirement that 30% of public procurement contracts be subcontracted to designated groups, as required by the preferential procurement regulations. According to Treasury, groups in some instances demand the 30% stake in cash.

Treasury warned that organs of state that are using procurement preferences not provided for in the regulatory framework – including ring-fencing contracts for service providers and suppliers who live in a certain geographical area – are non-compliant and that such expenditure will be classified as having been irregularly incurred.

On Saturday Ramaphosa weighed in on the matter, the SABC reported. He was addressing business leaders in Pietermaritzburg as part of his Thuma Mina Campaign. (The campaign “is about the ANC reconnecting with the people through activities that improve people’s lives and solve the problems they face,” according to the party’s website.)

He covered the economy, land reform and radical economic transformation.

Ramaphosa referred to people who are hijacking policies and distorting radical economic transformation by disrupting sites and demanding 30% of the value of projects, describing these practices as “radical economic robbery” and calling for consequences.

Malusi Zondi, newly-elected president of the Federation for Radical Economic Transformation (Ffret), earlier rejected the idea that the 30% subcontracting requirement is not geographically defined.

Ffret currently represents 37 business forums, including the infamous Delangokubona Business Forum, which reportedly has more than 3 000 members. Zondi acknowledged to Moneyweb that most of these members are former criminals.

He says Ffret is working to professionalise them and is organising itself in all provinces, adding that members shut down construction sites because they were robbed of their “fair share” (by contractors).

Ffret has also engaged with state-owned companies such as Transnet and Eskom. According to Zondo, it is branching out into other sectors too, such as mining.

Zondi says Ffret will “radically engage” National Treasury, which he says is “controlled from somewhere”, to influence its unacceptable stance against ring-fencing 30% of the value of contracts for local communities.

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