Construction companies settle multi-million-rand claim over World Cup stadium

Three construction companies have agreed to settle a civil damages claim by the City of Cape Town after allegations of collusion and bid-rigging around the construction of the Green Point Stadium ahead of the 2010 Fifa World Cup.

The settlement brings to an end a dispute dating back to 2014, when the companies were involved in the R4.5 billion construction of the stadium, now called the Cape Town Stadium, in 2007.

The Competition Commission South Africa has welcomed the move of the companies – Stefanutti Stocks, WBHO and Aveng.

WBHO, Stefanutti Stocks and Aveng Africa said the settlement includes a payment of R31.3 million by each contractor to the council.

In June 2013, the Commission announced that 15 construction companies agreed to pay fines – that collectively totalled R1.46 billion – for collusive tendering.

The settlements were reached in terms of the construction fast-track settlement process which started in February 2011.

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The Commission found that the companies colluded to create the illusion of competition by submitting bogus tenders or cover pricing, to allow an alleged conspirator to win a tender.

The Competition Tribunal confirmed the settlement agreements in July 2013, which included an annual payment of R10.5 million each by Stefanutti Stocks, WBHO, and Aveng over the next three years.

It also included a commitment, worth R42.5 million, to corporate social investment projects in Cape Town by WBHO and Stefanutti.

Competition Commissioner Tembinkosi Bonakele said the agreement is a ground-breaking and precedent setting victory for taxpayers and competition regulators.

“It affirms our long-held position that there is always a recourse for third parties to recoup unduly generated income and profits, through civil litigation, outside of competition regulation avenues. We have no doubt that this precedent will be emulated in various other sectors for the full realisation of social and economic justice.”

Bonakele said the construction bid-rigging cartel was one of the most extensive ever uncovered by the Competition Commission, affecting most major public works projects from all spheres of government as well as major private sector projects.