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Arbitration in Cape Town Stadium construction collusion claim hears new evidence

14 December 2021

There is new evidence in Cape Town’s R429.47m civil damages claim against construction companies, and the arbitration proceedings have been postponed until July 2022.

The claim relates to collusion and bid-rigging connected to the construction of Cape Town Stadium ahead of the 2010 Fifa World Cup.
New evidence was presented in the City of Cape Town’s R429.47 million civil damages claim against the three listed construction groups WBHO, Aveng and Stefanutti Stocks. The claim relates to collusion and bid-rigging on the Green Point Stadium, subsequently renamed the Cape Town Stadium. The arbitration was set down from September 27 to October 8 this year, and ran from the scheduled commencement date until October 5.
On 13 December, City of Cape Town spokesperson Luthando Tyhalibongo noted that only a few of the witnesses had completed their evidence and the arbitration was accordingly postponed by agreement between the parties.
“The arbitration was postponed due to new evidence being provided to the City and the parties requested time to consider the evidence,” he said.

Tyhalibongo stressed that he “is not at liberty to comment on the merits”.of the form of the new evidence, could not disclose its nature nor provide any comment on how the new evidence might affect the eventual outcome of the arbitration. However, he emphasised that the City of Cape Town was confident as to its claims. He confirmed that there have not been any amendments to the claim by the City of Cape Town against Aveng, WBHO and Stefanutti Stocks.

July 2022 is the first date on which all parties are available. “The parties have agreed to set aside seven and a half weeks in July/August 2022 to ensure that there is sufficient time for the matter to be fully heard during the next session,” said Tyhalibongo.
He noted that certain of the City of Cape Town’s witnesses have given evidence, with more to follow, but maintained they are not at liberty to disclose the identity of witnesses.
Russell Crawford, chief executive officer of Stefanutti Stocks CEO had last month confirmed the commencement of the arbitration proceedings when the company released its interim financial results for the six months to end-August 2021. He also confirmed they had subsequently adjourned and been postponed to July 2022 “at the request of the City of Cape Town”.
“The group remains confident it can defend this claim,” Crawford added at the presentation.
WBHO previously told the media it did not believe the City of Cape Town had suffered any damage and it would be defending. The civil damages claim was lodged in 2015 and originated from admissions made by the construction companies in the Competition Commission’s construction settlement process.

At the time, the City of Cape Town’s civil damages claim was the first claim lodged following the conclusion of the commission’s construction fast-track settlement process.
The stadium was originally a landmark ‘green’ project using 95% of demolished components from old stadium, salvaged, recycled or reused, fill material comprising concrete with 50% recycled content and hazardous materials avoided.
This process resulted in the Competition Tribunal in 2013 confirming settlement agreements reached between the commission and 15 construction companies, including seven listed firms, in terms of which they collectively agreed to pay fines totalling R1.46 billion for bid rigging and collusive tendering.

The Green Point Stadium was among the projects listed by WBHO and Stefanutti in a settlement that was confirmed by the tribunal. Both companies admitted that they had reached agreement with Group Five in December 2006 to provide a cover price for this project to ensure that Group Five did not win the tender.
Stefanutti Stocks admitted receiving a cover price from WBHO to ensure that it could submit a non-competitive bid and ensure that WBHO was awarded the tender. The tender was awarded to the Murray & Roberts/WBHO joint venture and the project was completed in December 2009.
M&R previously said the group had not been cited in the civil damages claim because it did not collude on the project. The group said it had an open book negotiation with the City of Cape Town and its proposed margin and revenue for the project was shared with the client.

Group Five, which is in business rescue and whose listing on the JSE has been terminated, has not been joined to the claim or proceedings. The City of Cape Town’s civil damages claim against the three construction companies was set down to be heard in the Gauteng North High Court early in 2020 but the parties subsequently agreed to refer the matter to arbitration.

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