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South Africa Towns Seek $380 Million From World Cup Builders

July 8 (Bloomberg) -- 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 the Pretoria-based South African Local Government Association, said in a phone interview today. “It is fair.”

Salga, as the association is known, plans to hold meetings with the companies starting this week to reach an out-of-court agreement, according to Joel. The Competition Commission has already recommended that 15 construction companies be fined 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 for the soccer tournament. The contracts were awarded from 2006 to the 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 interest.”

’Aggrieved Party’

Salga has filed with the Competition Tribunal to be listed as an “aggrieved party” when the court rules on the final collective fine set by the commission. Salga will remain guided by the tribunal, according to Joel.

Aveng Ltd., the country’s biggest construction company by market value, was fined 306.6 billion rand by the Competition Commission for price-fixing and collusion last month. Murray & Roberts Holdings Ltd. agreed to pay 309 million rand. Wilson Bayly Holmes-Ovcon Ltd was fined 311 million rand.

“The industry did a good job in cleaning itself up,” WBHO Chairman Mike Wylie said in an interview with CNBC Africa today.

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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