Murray & Roberts CEO says executives did not know about collusion
The Competition Commission's investigation into collusive practice in the construction industry was one of the big stories of last year. South Africa's biggest construction companies, namely WBHO, Murray & Roberts, Stefanutti, and Aveng, paid a combined R1.46bn fine when they were found guilty of colluding when submitting tenders. The fallout from the investigation was widespread, and the construction industry is now working to rehabilitate its image. It was thus a major blow when the Business Times published what it said was evidence that the Murray & Roberts executive team was aware of collusion in the group; M&R has maintained that executives did not know about the collusion. However, according to M&R's new CEO Henry Laas, the Business Times report is not entirely correct. While the executive team was aware of certain issues of fraud and corruption, they were not aware of the collusions until 2007, several years after the collusion occurred. See for yourself if Laas's explanation rings true. – FD
GUGULETHU MFUPHI: Recent documents obtained from the Business Times show that Murray & Roberts' top brass were well aware of corruption in the construction industry for many years. They have however denied all collusion charges. Joining us now to clear the air is Henry Laas, Chief Executive of Murray & Roberts. Henry, thank you so much for joining us here today to provide some clarity on the matter. I take it, a good starting point is, when did you know about fraud and corruption taking place at your company?
HENRY LAAS: Well firstly, I need to thank you for the opportunity to talk about this matter. I want to start by saying…I want to make it very clear that Murray & Roberts is a company with a very strong value system. Murray & Roberts is a company that will not tolerate any unethical behaviour, including collusive conduct, and we are very firm on that. Murray & Roberts has always maintained the position that its board or senior executives at the time, did not have knowledge of the collusion that was taking place. In other words, we maintain the position that the collusion was the unauthorised activity of former subsidiary company directors. However, during the investigation process, which started way back in 2001, surely the board became aware of the collusion that did occur within the group and as part of investigation, it all translated into the submission that eventually was made to the Competition authorities. The information uncovered by the board all related to historic collusive conduct and the board, at no time, had any knowledge of the collusion as It was happening in the organisation.
ALEC HOGG: Henry, I suppose that's the thrust then of the Business Times' article. You have said – consistently – that you didn't know, but Business Time is now alleging – and it's using the whistle-blower who is unnamed, and then Corrie Gordon who has been named, to say that you personally and your predecessor Brian Bruce, were both recipients of letters from these whistle-blowers. Did those letters ever exist?
HENRY LAAS: Yes, those letters did exist, but I need to clarify what the content of those letters was and I need to clarify how these matters were dealt with at the time. I must say that I'm very disappointed in that the information that was disclosed by Murray & Roberts to the Business Times at the time that it made certain enquiries in preparing this article, that the information disclosed by Murray & Roberts did not find its way into the article. I really believe that people who would read that article would be misinformed. I think you know the saying that goes like this: 'people who do not read newspapers are uninformed and those who do read newspapers, are misinformed'. I'm not saying it's really relevant in South Africa today, but that's how I felt when I read this article. I need to differentiate between the two whistle-blowers. The first whistle-blower commented on matters of fraud, corruption, and collusion.
I must admit the article became confused between fraud, corruption, and collusion. The first reports on fraud and corruption were made in late 2004 by the one whistle-blower. The investigations at the time were undertaken by a forensic consulting company and a first tier law firm and in early 2005 criminal charges were laid against five individuals. At the time it was one subcontractor, three executives that had already left the group – or senior managers in the Western Cape at the time – and the fifth executive/senior manager was still employed, was put through a disciplinary process, and dismissed. The whistle-blower himself resigned in late 2005. In 2006 he was unhappy with the progress that was made with this investigation, and he was then invited – himself – to disclose the information to the police's investigating officer, which he did in 2006 in a 43-page affidavit. Having said that, at that stage already the criminal charges were laid by Murray & Roberts.
That was way back in 2005. Since that time, people working on this investigation on behalf of Murray & Roberts, have been in constant contact with the NPA, as well as with the police services, on this matter. In 2010, the latest meeting was held between Murray & Roberts's executives. The most recent correspondence from the State Advocate looking into this matter is that the delay with this process is not due to a lack of information or a lack of cooperation by Murray & Roberts, but due to the difficulty that the police services are encountering in obtaining witness statements. That relates to the fraud and corruption. We believe it was adequately dealt with. It was handed over to the police and criminal charges were laid. As far as the collusion is concerned…
ALEC HOGG: Henry, let me just come in there if I may. I know there's a bit of a delay so it sounds like I'm being a little bit argumentative here. We know the situation that is in the criminal justice system in South Africa, and that it's extremely stretched. Most companies who do lay criminal charges in this way, assist the police and assist the investigating officers to make sure that the miscreants are brought to justice. It's no longer enough just to hand over a docket or hand over a charge. Did you do anything to assist?
HENRY LAAS: Absolutely. As I said earlier on, all the information in our possession was handed over. We've been in constant contact with the SAPS and with the State Advocate from the NPA, and in 2010 was the latest meeting with the State Advocate. In that meeting, the State Advocate was urged by the people that represented Murray & Roberts, to actually press for charges, and to see that this matter can actually be closed out. We believe that we've done what we had to do, we are giving our full cooperation to the authorities on this matter, and this has been supported by a recent statement that we have received from the State Advocate on this matter.
GUGULETHU MFUPHI: Henry if I can interrupt, you're focusing mainly on the fraud and corruption charges. With regard to collusion…
HENRY LAAS: Collusion is the second matter. The first report by this whistle-blower to Murray & Roberts regarding collusion came in January/February of 2007. At that stage, that report referred to historic collusive conduct within the group and the report was very clear that that collusive conduct ceased in 2003. The report was made in 2007, whilst the whistle-blower left Murray & Roberts in 2005 and the report contained information on historic collusive conduct, which the report also admitted ceased in 2003. I'm not sure if the whistle-blower knows how the Competition Act works. Firstly, if collusive conduct is reported more than three years after the collusive conduct has ceased, then there is no prosecution by the Competition authorities on this matter – then it will have prescribed. I must also say that the executives/senior managers/directors of subsidiary companies that were named in that statement, at the time, already had all left the employ of Murray & Roberts, other than those executives who were involved in stopping the collusive conduct way back in 2003.
However, since then our investigations have continued. We have, way before the fast-track application process for matter relating to what happened in the Western Cape – which is the subject matter of this whistle blower's report – we have received markers from the Competition authorities on some of the information we've provided through to them. For completeness in the fast-track application, full disclosure was made regarding the so-called Cape Club meetings that took place in the Western Cape. This is what was reported by this whistle-blower in 2007. As I said, by his own admission, all that had ceased by 2003. That was all put forward by Murray & Roberts to the Competition authorities. It is included in the submission – the fast-track app submission – but as I say, at the time all of those matters had already prescribed. I want to make it very clear again, that at the time that the collusive conduct was happening within Murray & Roberts, it happened without the knowledge of Murray & Roberts' board. It was an unauthorised action.
ALEC HOGG: Henry, very quickly: are you comfortable now that it's all behind you, and that you can talk as an honest broker to government? We do have a massive infrastructure program that needs to kick into gear.
HENRY LAAS: Alec, I can say to you that I was appointed, as you know, the CEO in July 2011, so for me that was actually a clean break with the past. I must support my predecessor Brian Bruce, who has done a lot of work in trying to uncover and eradicate collusive conduct from Murray & Roberts. I have a mining background, so at the time I was not involved directly in the construction business. I see that – from the time of my appointment – as a clean break. I can assure you that I have put measures in place within Murray & Roberts that will prevent this from ever occurring again within the organisation.
GUGULETHU MFUPHI: And if that doesn't happen?
HENRY LAAS: Well, you can put measures in place and you can do whatever's reasonable to prevent that, but if people really want to be dishonest, they will always find a way to do that. However, we believe that the measures that we have put in place are strong measures and if any collusive conduct were to occur again in future, it would not only be pure collusions; it would be fraudulent action of the person involved.
ALEC HOGG: Well, a new broom always sweeps clean and Henry Laas is certainly doing that at Murray & Roberts, but it's nice to see that the way the company has addressed these issues in the past is very much another side to this story. Certainly, from listening to him, it does appear as though they did the most that they could have done under the circumstances.