Often-violent “business forums” continue to hold the construction industry to ransom, and the worst possible outcome will be that companies just adapt to it, a number of industry commentators said.
Business forums emerged in uMlazi, KwaZulu-Natal, in 2014-15, when groups began invading construction sites, demanding a share of the project or that the company employ specific people or companies. By 2018-19, the practice had emerged in other provinces, a statement from the Master Builders Association (MBA) said.
The government has started to make some progress on curbing the scourge, as Public Works and Infrastructure Minister Sihle Zikalala said last week that more than 200 people had been arrested across the country in connection with ‘’Construction Mafia’’ related crime syndicates.
According to the MBA, these business forums often tout heavy calibre weapons, and a similar model of extortion had spread to other industries, notably mining.
Global Initiative Against Transnational Organized Crime researcher Jenni Irish-Qhobosheane said in a statement that while the violence in KwaZulu-Natal had subsided, this wasn’t to say that extortion was still not happening, but, it was, in fact, a signal that extortion had become normalised, a cost of doing business, and with the threat of violence always present, actual violence was less necessary.
The Global Initiative Against Transnational Organized Crime said earlier this year that no less than 183 infrastructure and construction projects worth over R63 billion had been affected by protection rackets.
Ayabonga Cawe, Chief Commissioner at the International Trade Administration, said that extortion was compromising government’s vital infrastructure rollout, which in turn affects the whole economy.
“The problem lies in how preferential procurement has unfolded, and this opens up the way for opportunistic criminals,” he said.
Irish-Qhobosheane said economic exclusion and a lack of economic transformation had created a fertile ground for extortion in construction.
‘’However, it is important to distinguish between genuine community concerns and criminals involved in extortion for their own gain,” she said.
Business forums typically demand 30% of the contract value be allocated to business forum members or direct to the forum itself. The figure appeared to be from National Treasury’s Preferential Procurement Policy Framework, which states that 30% of public procurement contracts should be contracted to designated groups.
‘’The aim is clearly to give the demands a respectable veneer of transformation,’’ she said.
National Treasury previously condemned this practice as illegal and a blow to government’s attempts to advance the interests of historically disadvantaged individuals and SMMEs.
Corobrik director Musa Shangase said that construction companies, and businesses more generally, should put in place comprehensive directives to deal with extortion attempts.
“The first principle should be to afford the business forum the opportunity for dialogue, to present their demands. I advise sharing with them the terms of the contract and what the obligations for advancing transformation goals are,” he said.
“They need to be informed whether the project is a public or private one and what the implications are in each case,” he added.
He said construction companies should also request a database of the business forum’s constituents and to employ a community liaison officer who can act as a mediator between the community and the company.
In public sector projects, the community liaison officer acts as the link between the main contractor and the business forum. In the case of private sector projects, if business forums insist on participation. Shangase said the matter needed to be reported to the police.
Business Against Crime South Africa (Bacsa) has provided guidelines to help companies bring the problem under control. Bacsa National Project Manager Roelof Viljoen said that it was important for companies and their employees to understand what extortion actually is so that they can identify it when it occurs and report it.
‘’Mounting successful prosecutions is key to reducing extortion,’’ he said.
Bacsa said companies needed to prepare properly so that they are well positioned to resist extortion threats. A key point is that uninvited visitors should not be allowed onto the site for discussion as this might create the impression that the desired reward is in reach.
Effort should be made to advertise the low chance of receiving any benefit. ‘’Posting information at the entrance to the site showing there is no basis for extortion makes good sense.’’
For example, an official notice on a government project should indicate that preferential procurement regulations had been followed. A private project should state that these regulations are not applicable. Documentary proof should be held on-site as well.
It could be helpful to explain that on-site personnel were not empowered to make decisions regarding the allocation of work.
It was also illegal to sub-contract without following a fair bidding and tender process and deviating from this principle could lead to the tender being cancelled, ensuring the work opportunity was lost for everybody.
BUSINESS REPORT