African Development Bank denies probe of construction firms

Posted On Monday, 29 July 2013 13:34 Published by Commercial Property News
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African Development Bank denies that the bank is investigating possible collusion by construction companies in bank-financed projects in SA.

Ebrima FaalThe Pretoria-based regional director of the African Development Bank (AfDB) has denied that the bank is investigating possible collusion by construction companies in bank-financed projects in SA.
 
Business Report said in an article on Friday that the AfDB and the World Bank were “expected to be trawling through details of the construction projects won through collusive tendering by the 15 construction firms that were recently found guilty of contravening the Competition Act”.
 
AfDB regional director Ebrima Faal clarified that the bank had not contributed to the article.
 
Both the World Bank and the AfDB apply tough sanctions against companies found guilty of collusive tendering‚ which can include total debarment from tendering for their projects for a specific period in the most serious cases.
 
According to information on the AfDB’s funding activities in SA‚ it has largely been involved in providing strategic assistance and capacity building. It also provided the Development Bank of Southern Africa with a line of credit in 2004.
 
As regards the involvement of the World Bank in SA‚ its major project is its $3.75bn Eskom investment support project but this was approved only in April 2010 - after the Competition Commission had already begun its initial investigation into allegations of collusive behaviour in the construction industry.
 
Otherwise‚ the bank has mainly been focused on providing technical assistance‚ capacity building and funding for environmental and renewable energy projects.
 
According to the World Bank’s website‚ its lending programme in SA consists of three operations funded by the International Bank for Reconstruction &  Development and Global Environment Facility grants. These projects include the Eskom project‚ the Isimangaliso wetland park project ($9m) and the renewable energy market transformation project ($6m). In addition‚ a $250m grant from the Clean Technology Fund supports the building of renewable solar and wind energy sources.
 
The period of construction activity that came under the commission’s spotlight was between 2006 and 2010‚ when construction firms were busy building the stadiums for the 2010 Soccer World Cup and the Gauteng Freeway Improvement Project.
 
Construction companies were unlikely to engage in further collusion in projects after 2010 when they knew that they were being probed by the commission and faced massive penalties. In the end more than 20 companies confessed to irregular conduct in more than 300 projects and tenders worth close to R30bn.
 
A total R1.46bn penalty was finally slapped on 15 firms for bid-rigging and cartel behaviour related to stadiums for the World Cup and the Gauteng freeway. 
Last modified on Monday, 29 July 2013 18:21
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