Lloyd Gedye & Niren Tolsi
John Jackson, one of the men responsible for turning a provincial construction company into a leading player in the sector, was fingered as the Godfather-type figure who arranged a string of collusion agreements between KwaZulu-Natal building companies that ripped off millions of rands from government and private-sector contracts.
This damning allegation against Jackson, who retired as director of Stefanutti Stocks in 2011, was made by his former colleague, Clive Reucassel, in an affidavit submitted to the National Prosecuting Authority (NPA) in the same year. Never made public previously, the affidavit, which was leaked to The Con, unveils, for the first time, the methods and extent of the corrupt practices in the province’s construction sector.
In the affidavit, Reucassel, the contracts director at Stefanutti Stocks Civils KZN, stated that when he was promoted to management, he became aware of “certain industry practices” in the civil engineering construction sector where various companies bidding for tenders included extra amounts in their bid so as to cover “the [losers’] costs of submitting the tenders”.
“This agreed rand value was then paid out by the successful tenderer to those who had been unsuccessful,” stated Reucassel. “The clients therefore overpaid for the contract by paying the expenses of the unsuccessful tenderers.”
Reucassel’s affidavit links Jackson to rigged projects in South Durban. A list of rigged projects Stefanutti Stocks provided to the NPA lists Jackson as the point person for several projects.
According to Reucassel, Jackson was involved in the rigging of a R3.5-million tender to provide civil works for car manufacturer Toyota in 2004. The tender was rigged on 13 August 2004 when “Jackson agreed to include tender fees with individuals from Grinaker-LTA Limited, and possibly other individuals whose names I cannot recall,” stated Reucassel.
“I believe that although Stefanutti was awarded the tender and ought to have paid out tender fees to the other tenderers, there is no record of the payments,” he added.
The second tender Reucassel mentioned was for a R7.9-million multifuel boiler required by paper company Mondi in 2005. It was rigged on 25 October that year after “Jackson agreed with Doug Ross of JT Ross Construction to include tender fees,” said Reucassel.
Using the cartel’s tried-and-tested method of one company bidding very high, and then hoovering up a “loser’s fee”, JT Ross Construction duly lost the bid and was paid out R49 950 by Stefanutti.
Reucassel, contract director at the time, said he was “aware of the agreement but was not involved in discussing it”. He acknowledged that his actions were nonetheless criminal.
The list of rigged projects Stefanutti Stocks provided to the NPA links Jackson to several more projects, including some that companies required to ensure they left a greener footprint and safeguarded worker and community health.
These include a R27-million secondary effluent plant for Mondi in Richard’s Bay, and a new tapping fume-extraction system for Assmang Manganese in Cato Ridge.
The Mondi tender was rigged on 30 July 2004, and tender fees were agreed. A ledger tracking losers’ fees payments within the cartel, supplied to the NPA by Stefanutti, suggests that the winner, Grinaker-LTA, paid total losers’ fees of R3.75 million to Group 5, Rumdell Construction, Murray & Roberts, Stefanutti & Bressan, and Concor.
Stefanutti benefited to the tune of R750 000.
The Assmang Manganese tender was rigged in late November 2008 after a phone call from Jackson to Afristruct director Jerome Keiser. The two companies agreed that Stefanutti would win the tender, and tender fees were agreed. Stefanutti duly paid Afristruct R200 000 after winning the deal.
Two other projects Stefanutti was involved in rigging, but can’t be directly linked to Jackson, are the R600-million construction of the Durban International Convention Centre (ICC) and the construction of Unilever’s head office in Umhlanga Ridge.
The ICC tender was rigged on 29 October 2004, and Stefanutti Stocks told the NPA that tender fees were agreed on the project. These were not disclosed, but the fees could have been between R6 million and R18 million if the construction cartel’s losers’ fees guide of 1% to 3% of tender value is applied.
In his affidavit, Reucassel stated that he assisted Jackson in identifying all the rigged projects from KwaZulu-Natal for the purposes of the NPA affidavit.
Two months after Stefanutti’s submissions, in December 2012, he retired.
In a Stefanutti Stocks newsletter from November 2011, chief executive Willie Meyburgh wrote that Jackson had made an “invaluable contribution” to the group, and wished him well for his future ventures.
Reucassel, now 58, still works for Stefanutti Stocks.
When The Con contacted Stefanutti Stocks, Jackson and Reucassel during this investigation, they refused to provide comment.
The Con received an email from Stefanutti Stocks stating, “As much as we appreciate being given the opportunity to comment, an undertaking was given to the National Prosecuting Authorities to the effect that, with the exception of the Competition authorities, we would not engage anyone around the subject matter which informed the content of the affidavits you have had sight of and matters ancillary thereto.”
Reucassel expressed similar sentiments, arguing he was bound from commenting.
Jackson told The Con he had an agreement with Stefanutti Stocks that he would not comment on any matters related to the construction cartel.
Main Photo: The R7.9-million multifuel boiler required by paper company Mondi in 2005, which was rigged by John Jackson of Stefanutti Stocks: by Durban Centre of Photography
This work was assisted by a Taco Kuiper Grant from the Valley Trust, administered by Wits Journalism.