‘I tried to stop cartel’

The FNB Stadium under construction. Several World Cup stadia have come under the spotlight following the lid coming off the price-fixing cartel in the construction industry. Picture: Samantha Simons

Former Murray & Roberts MD took disciplinary action against directors.

A construction company boss told the Hawks how he tried in vain to stop price-fixing collusion in the construction industry, an affidavit to investigators shows.

Former Murray & Roberts managing director of construction Stephen Pell revealed in his statement that he took disciplinary action against several directors of the company – but was in turn threatened that they would expose the “organising and arranging” of projects if he persisted.

Pell, a previous chief operating officer at Stefanutti Stocks and now an executive director of Aveng, said the practice continued despite his chief executive, Brian Bruce, having signed the World Economic Forum anti-bribery and corruption agreement in 2003.

Despite Pell’s outrage at the price-fixing practice in the industry, he also admitted his complicity in collusion in three major mining projects and is seeking indemnity for fraud and corruption.

Pell was appointed MD of Murray & Roberts Construction in 1997 and said it took him only a few months to become aware of the illegal behaviour.

Pell provided the Hawks with a comprehensive list of the members and leaders of the construction cartel at the centre of Hawks and Competition Commission investigations.

Pell admitted to being, at one stage, the “policeman” of the cartel who had to ensure that the preagreed and colluded tender was submitted.

Pell said, after he tried to later stop the practice, he continued to find evidence of more collusion in other Murray & Roberts companies and ordered all operations directors to stop these illegal activities.

He ordered an investigation into “tender fees” that were owed to Murray & Roberts and that were owed to other companies as part of payoffs for collusions.

“I then sent a message into the industry that we would not participate in such conduct going forward and we would not honour, nor expect to be paid any outstanding debts associated with tender fees.”

Pell said Murray & Roberts directors in the Western Cape continued with the practice and he took action against one, who in turn threatened to expose the “organising and arranging” of tenders.

Pell left the company in 2005.

He did not respond to requests for comment this week. Construction companies – with the exception of Aveng and Stefanutti – have not responded to requests for comment on the affair.

Stefanutti admitted last week it had participated in “unlawful conduct”, while Aveng group chief executive Roger Jardine said this week there was no place for corruption, collusion, “deals-for-friends” or nepotism in the construction industry.

Meanwhile, City Press has pieced together the events around the decision of construction executives to approach now-suspended top prosecutor Glynnis Breytenbach to confess their alleged crimes.

“You are nothing but a crook and a criminal, and you deserve to go to prison,” was what Breytenbach told a stunned Stefanutti Stocks managing director Schalk Ackerman when he walked into her office in April 2011 to confess his complicity in price-fixing in the construction industry.

Ackerman was the first to approach Breytenbach to reveal tender-rigging that was so widespread in the industry that he, at the time, did not regard it as a serious crime.

Breytenbach told the 54-year-old civil engineer he was naive and he had in fact committed fraud and corruption, and could go to prison.

He was followed by other Stefannuti bosses. When news of the Stefanutti admissions leaked, executives from Group Five also approached Breytenbach, who subsequently collected their affidavits.

Executives from other companies also approached Breytenbach in the hope of getting indemnity from prosecution, but she declined since so much evidence had already emerged.

Ackerman has become a state witness and has been granted indemnity.

The requests of the others were turned down and they still face potential prosecution on fraud and corruption charges. Criminal action is likely to follow the conclusion of the Competition Commission inquiry.

Breytenbach’s involvement in the case came to an abrupt end with her suspension in April last year.

She would not comment on her role in the construction investigation.

Hawks spokesperson Paul Ramaloko said this week the investigation was in its “early stages” and he would only comment once it had “matured”.

- Jacques Pauw