WBHO was named among two other companies, namely, Stefanutti Stocks and Aveng, in a tender fraud scam related to the construction of the Cape Town Stadium.
Why is WBHO accused of Cape Town Stadium tender fraud?
The sporting arena that sits within close proximity to the Atlantic ocean, and only a stone’s throw away from the V&A Waterfront, was constructed as part of the country’s preparations for the 2010 FIFA World Cup.
Initially, the development project was, in 2006, awarded to construction giant Group Five. However, based on documents filed to the Competition Commission of South Africa (CCSA), it’s alleged the company colluded with WBHO to submit a ‘cover price‘ which, according to the commission, is designed “to give a false impression of a competitive bidding process when in actual fact the price level at which bidder A submitted its bid was derived taking into account commercially and competitive sensitive information obtained from bidder B.”
In other words, Group Five may have purposefully foiled their bid to allow WBHO passage to score the multi-million-rand contract.
The matter was brought before the commission by the City of Cape Town in early 2011, and two years later, “15 construction companies agreed to pay fines that collectively totalled R1.46 billion for collusive tendering.”
“The commission had 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 commission wrote in a statement.
While at first, WBHO, Stefanutti Stocks and Aveng had defended the claims, earlier this week, a settlement totalling R94.5 million was reached between the companies and the City of Cape Town.
As part of the agreement, the three companies will have to make annual payments of R10.5 million each to the City of Cape Town for the next three years.
This is over and above a number of corporate social investment projects in the Cape Town district that WBHO and Stefanutti have committed to.
“This is a grounbreaking and precedent-setting victory for taxpayers and competition regulators alike. 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,” Competition Commissioner Tembinkosi Bonakele said in a statement.