South African Towns Seeks $380 Million From Building Companies

South African towns are seeking reimbursement of as much as 3.9 billion rand ($380 million) from construction companies for overcharging on stadium and road contracts for the 2010 Soccer World Cup.

“We plan to claim as much as we can from the construction companies,” Lance Joel, chief of operations at Pretoria-based South African Local Government Association, said in a mobile-phone interview today. “It is fair.”

Salga, as the association is known, plans to hold meetings with the companies from this week to reach an out-of-court agreement, according to Joel. The Competition Commission has already fined 15 companies a combined 1.46 billion rand for collusion over prices for projects including those commissioned for the World Cup.

The new claims relate to the 13-billion rand worth of contracts awarded to build six stadiums, roads and related infrastructure. The contracts were awarded from 2006 to end of 2009, according to the association.

“Overcharge on these contracts range from 10 percent to 30 percent,” Joel said. “The association will not be adding penalty interests.”

Aveng Ltd. (AEG), the country’s biggest construction company by market value, was fined 306.6 billion rand by the Competition Commission for price-fixing and collusion, according to a June 24 statement. Murray & Roberts Holdings Ltd. (MUR) agreed to pay 309 million rand.

To contact the reporter on this story: Kamlesh Bhuckory in Johannesburg at kbhuckory@bloomberg.net

To contact the editor responsible for this story: Simon Thiel at sthiel1@bloomberg.net

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