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S. Africa Builders Rigged World Cup Work Margins, Documents Show

Fans watch a game during the 2010 World Cup match bewtween the Netherlands and Denmark at Soccer City Stadium in Soweto, suburban Johannesburg, on June 14, 2010. Photographer: Monirul Bhuiyan/AFP via Getty Images
Fans watch a game during the 2010 World Cup match bewtween the Netherlands and Denmark at Soccer City Stadium in Soweto, suburban Johannesburg, on June 14, 2010. Photographer: Monirul Bhuiyan/AFP via Getty Images

July 16 (Bloomberg) -- Construction companies in South Africa colluded to rig a profit margin of 17.5 percent on six stadiums for the 2010 FIFA Soccer World Cup, the country’s competition commission said in documents.

Grinaker-LTA, Wilson Bayly Holmes-Ovcon Ltd., Murray & Roberts Holdings Ltd., Group Five Ltd., Concor, Basil Read Holdings Ltd. and Stefanutti Stocks Holdings Ltd. met twice during or about 2006 and agreed to exchange cover prices, allocate tenders and aim for a 17.5 percent margin, the commission said. The details were published in documents on the Pretoria-based competition tribunal’s website, and also detail companies colluding on projects ranging from roads to offices.

The tribunal is meeting tomorrow and Thursday to decide whether to approve a 1.5 billion rand ($153 million) fine agreed between 15 construction companies and the commission for collusion. The fine will be the biggest collective penalty given to companies in South Africa, Shan Ramburuth, head of the commission, said in June. Clients may try to claw back payments and the National Prosecuting Authority may initiate criminal charges related to the collusion.

“We do expect that some of the project owners will try to lodge claims against us and we will deal with it when the situation arises,” Murray & Roberts Chief Executive Officer Henry Laas said in a statement. “Complainants will have to prove damages.”

The South African Local Government Association is seeking as much as 3.9 billion rand from the construction companies. Salga, as it is known, has asked to participate as an “aggrieved party,” said Lance Joel, the association’s chief of operations. “I think that it is likely that the NPA will pursue legal action,” he said.

Aveng Ltd. would pay 307 million rand under the settlement, Murray & Roberts would be fined 309 million rand, and Wilson Bayly would pay 311 million rand, Ramburuth said in June.

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

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net

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