Three-year reign of 'mafia' terror
Armed gangs acting with apparent impunity have forced the abandonment of 84 infrastructure projects worth more than R27bn and need to be stopped before SA becomes a mafia state, says Webster Mfebe, the CEO of the South African Forum of Civil Engineering Contractors.
Appeals to the government since June 2016 have fallen on deaf ears, says Mfebe, whose forum represents JSE-listed, non-listed and emerging construction companies. Now, following the worst such attack on a project in the Western Cape, which left it looking "like a war zone", he has written directly to President Cyril Ramaphosa and seven cabinet ministers appealing for immediate intervention.
That was more than three weeks ago, and, so far, only finance minister Tito Mboweni has acknowledged receipt. None of the others, including Ramaphosa, has done even that.
"The government response has been lethargic to say the least," says Mfebe, 59, a former National Union of Mineworkers trade union activist and ANC MP.
He has been pleading with the KwaZulu-Natal provincial department of safety & security to do something since mid-2016 when attacks by what he calls the construction mafia - "their characteristics are extortion, enforcement of a ruthless behavioural code and demands made at gunpoint" - became a serious threat to the industry in that province.
It has been "a waste of time", he says. "Nothing effective came out of our meetings with them."
Since 2016, this "mafia" has been active at virtually all construction sites in the country, Mfebe says.
People calling themselves "business forums" say they are trying to ensure that local communities ravaged by unemployment and poverty derive economic benefit from construction projects in their neighbourhood.
One such "business forum" is called Dalangokubona, meaning "you ignore us at your own peril".
In February, Aveng and its joint venture partner, Germany-based Strabag International, terminated the R1.5bn Mtentu bridge project in the Eastern Cape after a gun-wielding "business forum" threatened staff and made the site inaccessible for 84 days.
"Our German partners said they have worked in 80 countries, including Afghanistan and Iraq, but have never experienced anything like this," said Aveng CEO Sean Flanagan.
On March 13, armed gangs halted a R2.4bn German oil storage project being built by WBHO in Saldanha. CEO Louwtjie Nel said recently WBHO had lost 60 man-days in the past three months due to unrest caused by so-called business forums.
Mfebe says in most cases there has been a conspicuous failure of law-enforcement agencies to take action.He says it smacks of collusion and should be ringing alarm bells for the government."If there is assimilation of law-enforcement agencies in this ruthless, lawless way of doing business then you have the building blocks of a mafia state."In 2016, a black construction company owner in Durban was accosted by a "business forum" demanding a 30% stake in his project. When he refused, he was killed."That case has a case number and a police officer on that case till today, but nobody has been arrested," says Mfebe.People terrorising staff at the Aveng Mtentu bridge project were arrested and released, and returned with AK47 assault rifles. Nobody has been arrested since.Mfebe says the police response in Saldanha was equally "baffling".An armed gang arrived on the site and burnt down property, plant, cars and buildings while police stood around watching."That is totally unacceptable. The constitutional responsibility of the state to maintain law and order is a primary responsibility, and key to positive investor sentiment."He finds it staggering that there wasn't a single government statement condemning what happened.He says the government's "lethargic" response is partly the result of a "trust deficit" between it and the construction industry."The construction sector was regarded as being a white enclave excluding black people for a long time. And if you look at the JSE-listed entities, for quite some time it has been white CEOs."He says this creates a "wrong impression". If measured "empirically rather than emotionally", the construction sector is "the most transformed sector" with 80% black ownership of non-listed companies.The 2010 World Cup collusion scandal exacerbated the lack of trust, but the sector has done a lot to build bridges with the government and communities since then, he says."No-one can discount the desire of communities to be part of the mainstream economy," Mfebe says. The sector is compliant with the Preferential Procurement Policy Framework Act, which requires that 30% of contracts should go to local enterprises."But these construction mafia gangs use extortionate methods to demand to be included in the contract."We've explained to them that the local subcontractors do not have to be members of their group. It depends on the requirements of the contractor and competence of those wanting to be subcontracted."Contractors complain that when they try to accommodate local business forums, their members pitch up on the first day and do nothing until month-end, when they demand to be paid. Others do sub-standard work and also demand to be paid.
He says the construction industry contributes 3.49% of GDP and 8.3% to employment, and is the biggest employer of unskilled labour in SA."If government really wants to defeat the ills of unemployment, inequality, poverty, then this is a sector that has to be prioritised."Ramaphosa has prioritised infrastructure spending as a critical driver of economic activity, "but we don't see this complemented by action from government"."The construction sector is bleeding, and this is why government needs to wake up and smell the coffee."He says Basil Read, Aveng and Group Five are in business rescue because work is not coming into the market, "and the activities of the mafia have accelerated their demise".The government's failure to act is chasing away investment, he says. "Two international investors have already been directly affected by the mafia attacks in Mtentu and Saldanha. You don't have to be a rocket scientist to understand what message it sends."