WBHO blames media for collusion

It is hard to tell why Wilson Bayly Holmes-Ovcon (WBHO) executive chairman Mike Wylie was given 900000 shares worth R6.5-million in the construction company's past financial year

While the integrated report handed out at the company's AGM this week had 18 full-page colour photographs, only two half-pages of text were dedicated to executive cash and share handouts.

Virtually no explanation was given.

This irked shareholders who attended WBHO's AGM this week. They made their irritation felt as 44.1% of them voted against the remuneration report. While this was only a nonbinding vote, it was certainly an indicator that investors were less than charmed.

This apparent lack of transparency is especially troubling, given the R300-million fine that WBHO had to pay earlier this year for rigging bids and colluding with other companies to divvy up the spoils of big build projects. The deals ensured the companies made profit margins of 17.5%.

In one example of the scam, which was submitted to the Competition Commission, WBHO in 2006 reached an agreement with Group Five, which enabled it to win the R2.4-billion tender for the Cape Town World Cup stadium contract. WBHO provided Group Five with a cover price on the basis that Group Five would not win the stadium contract.

Yet the annual report had scant details of how it paid its executives. By way of explanation, WBHO's report stated that the report "does not disclose certain detail" considered "strategically confidential to WBHO".

It was hard to understand how the key performance indicators of executive members would give WBHO's game away, but when pressed by shareholder activist Theo Botha, Wylie said little more than "there is a lot of head-hunting going on in the industry and we don't want to compromise our competitive edge".

Ironically, the report opened with the contention that "We endeavour to improve the way we disclose information to our community of stakeholders."

WBHO was implicated in 45 incidents of bid rigging - 22 were nonprescribed and just 11 have been exposed. The other 11 non-prescribed incidents are currently being considered by the Competition Tribunal, and Wylie clearly didn't want these discussed.

When Botha asked about them, he suggested that evidence could be unearthed through "clues" that existed in certain documents.

Botha was scathing about being made to work out a "jigsaw puzzle" to get to the truth.

The 23 prescribed incidents that took place outside of the timelines considered by the Competition Commission would not be exposed either, Wylie said. "The transgressions happened between 10 and 15 years ago." Notably, the same excuse was not used by the likes of Murray & Roberts and Stefanutti, which listed each of the incidents and took steps to pursue the directors involved.

In his report, Wylie said he, WBHO CEO Louwthie Nel, the group procurement director, and several divisional managing directors had worked "day and night for weeks" to review the 3 500 or so tenders submitted in this period.

However, this made them the company poacher and gamekeeper since - as Wylie pointed out after the AGM in a more congenial context - many of them had been in the company for decades and were therefore likely the ones who did the colluding.

Wylie later admitted he had been involved directly in the backroom conspiracies.

After six weeks of intense searching through more than 2000 tenders submitted in the five-year prescribed period, just "22 potential transgressions" were found.

Use of the word "potential" was another instance showing a lack of conviction that anything really wrong had been done. After all, no company would pay a R311-million fine for a series of potential misdemeanors.

And a small number of transgressions does not minimise the company's guilt - just as one cannot be a "little bit pregnant", the company cannot be "a little bit guilty". It either is or it isn't.

However, he was adamant that no more skeletons would be found in the company's closet. In his chairman's report, he wrote that "from the perspective of WBHO, I am convinced that this is not the 'tip of the iceberg'." It was unlikely to happen again, he said. "We have no doubt that with all the training process in place, breaches of any aspect of competitive law will never happen again."

But Wylie made it clear he wanted to put the entire debacle behind him - and the construction industry as a whole. "I think we've exhausted this," he said.

Wylie made it plain that he felt the media was responsible - if not solely, then largely - for keeping the conversation alive and for eroding the company's reputation.

He railed against the unfair way the company had been treated. "It has been concerning to me to observe how many misconceptions have been circulated in respect of this investigation."