Thursday, 20 October 2016 14:09

Murray and Roberts joins voluntary deal

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Murray & Roberts opts to participate in a R1.25bn 'voluntary' settlement agreement between construction companies.

 Hlengiwe_Khumalo_CIDB

Murray & Roberts has opted to participate in a R1.25bn “voluntary” settlement agreement between construction companies and the government to allay competition authority penalties and accelerate transformation in the industry.

It is the seventh JSE-listed South African construction and engineering group to do so after Wilson Bayly Holmes-Ovcon, Group Five, Stefanutti Stocks, Raubex, Basil Read and Aveng put out statements on Tuesday to this effect.

The companies would pay annual dues over a period of 12 years into a trust that will be governed by trustees appointed by the government, the construction companies themselves and the South African Forum of Civil Engineering Contractors.

“The payment across the 12 years and seven companies will increase to a total of about R1.5bn,” Ed Jardim, Murray & Roberts group investor and media executive, said on Thursday.

The financial effect of the settlement for Murray & Roberts was a charge of R255m over the 12 years. The current value was about R170m and would be accounted for in the current financial year, the group said.

This would settle many of the collusion claims in the industry including by the South African National Roads Agency.

Murray & Roberts said companies that did not participate in the agreement had five business days from the date of announcement to confirm their participation. It did not provide further details other than to confirm that the settlement agreement settled participating construction companies’ exposure to potential claims for damages from “identified public entities”.

These had arisen primarily from the fast-track settlement process launched by competition authorities in February 2011 and included infrastructure projects built for the 2010 Soccer World Cup. “The construction companies will still be exposed to any claims brought by state-owned enterprises and public entities that are not covered by the settlement agreement,” it said.

Murray & Roberts, like other participating groups, said a crucial outcome of the settlement agreement was that it would enhance relationships between the government and the construction industry.

Fifteen construction and engineering groups had in 2013 agreed to collectively pay a R1.46bn competition authority penalty for collusion in the industry. Group Five had said on Tuesday that the R1.25bn was a “voluntary contribution” in addition to the earlier penalty.

The latest agreement was reached with companies with a combined annual construction revenue of about R45bn, according to the Construction Industry Development Board.

The Construction Industry Development Board had said it welcomed the signing of the “voluntary rebuild programme agreement” between the government and companies involved in collusion uncovered by the Competition Commission.

Acting Construction Industry Development Board CEO Hlengiwe Khumalo said the agreement embodied the principles of development and growth of emerging contractors in the construction sector.

source: Business Day

Last modified on Thursday, 20 October 2016 14:29

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