The Eskom roots of the Construction Mafia

The roots of South Africa’s Construction Mafia reach all the way back to the extensive site disruptions around payment issues at the Medupi and Kusile projects for ESKOM. This emerges from an interview with Construction lawyer Euan Massey who says regulations released in 2017 opened up a door for illicit organisations to use what had happened previously in terms of site disruption to demand payment from contractors and from developers and subcontractors in the construction industry on the premise that it was a government requirement that they be paid 30% of the contract value. Their modus operandi involves extortion, violence, and even murder. Meanwhile, details about the alleged involvement of government officials and crooked cops in the Construction Mafia emerged at a webinar this week with the Minister of Public Works and Infrastructure Sihle Zikalala and industry experts. The Minister says a special task force to deal with the Construction Mafia is being established – and at least 605 suspects have been arrested. – Chris Steyn

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Relevant timestamps from the interview

00:09 – Introductions
00:27 – Euan Massey on the background to the operations of the construction mafia in SA
01:48 – Their Modus Operandi
03:02 – What effective legal steps can be taken to counter this
04:10 – On his optimism about the government’s new special task force to combat this
05:30 – The amounts involved
06:08 – On the amounts that have been paid out
07:15 – On the worst case he’s had to fight
08:05 – How many of these cases are you dealing with at any one time
09:09 – On the advice to somebody who has become a victim
09:50 – To what extent are government officials and crooked cops involved with the construction mafia
10:55 – Concludes

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Highlights from the interview

The roots of South Africa’s Construction Mafia reach all the way back to ESKOM.

This emerges from an interview with construction lawyer Euan Massey who gives BizNews a short history of the Construction Mafia’s operations.

“We’ve had widespread site disruption since 2008, 2009, primarily with the Medupi and Kusile projects for ESKOM, where both those projects were marred by extensive site disruption around payment issues. And what we saw with those site disruptions, the labour force was able to bring ESKOM to the table and they were able to negotiate favourable rates and payment terms.

Read more: The Construction Mafia debacle – holding South Africa hostage

“What happened subsequent to that was that there were several different regulations released during 2015 and 2017 and it seems that the ones in 2017 opened up a door for illicit organisations to use what had happened previously in terms of site disruption to demand payment from contractors and from developers and subcontractors in the construction industry on the premise that it was a government requirement that they be paid 30% of the contract value.

“So when we talk about the Construction Mafia, they first reared their head in the form of what is commonly referred to as business forums. Now, there are legitimate business forums, and there are other business forums which use illegal tactics to extort money from several role players in the construction industry.”

ABOVE: Watch the webinar on construction site disruptions, where a panel of speakers delve into the challenges posed by site disruptions to construction projects and explore effective strategies to mitigate their impact.

Describing their modus operandi, Massey says: “…at the outset of a project, a construction site, (they) walk into the site offices heavily armed and threaten the various individuals at the site offices, either them personally or their families, and halt site operations so that no progress can take place until their demands are dealt with…And it can extend to actual violence as well…We’ve been involved in contracts at MDA (Attorneys) where there have been murders on site. So it’s been fairly severe.”

Describing the worst case he has been involved in Massey says: “…there was an argument between different business forums on site. There was a murder which happened after that. I wasn’t on the site at the time. I was called by my client. We immediately put in place a force majeure. There was a three or four month delay to the project in dealing with the demands of the business forum involved, with the assistance of the employer. There was then a claim for the time and money lost. So…an entirely unsavoury result, in terms of what was happening to the project as a whole.”

Read more: What Oberholzer told Cachalia about Eskom exit

Meanwhile details of the involvement of alleged government officials and crooked cops in the Construction Mafia emerged at a webinar this week with the Minister of Public Works and Infrastructure Sihle Zikalala and industry experts. The webinar was sponsored by MDA Construction and Technology Attorneys, where Massey is the Director.

“…on the panel yesterday, somebody was fairly clear on this point. They said local politicians are involved, local councillors, and their involvement is to arrive on site with these illicit organisations and say, well, this is the organisation who you must contract with and you must give them the 30% cut.

“So according to the other panellists, there is most definitely an involvement through local councillors, local politicians. And the other comment which was made yesterday is that the police often know exactly who these individuals are. They know them by name and they’re reluctant to arrest them and take action against them.”

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Asked why that would be, Massey answers: “I think it would be pure speculation, but I think there’s some illicit arrangement between them and the police. That’s the only answer that there could be.”

Speaking at the webinar Minister of Public Works and Infrastructure Sihle Zikalala said a special task force was being established to deal with the Construction Mafia, and at least 605 suspects had been arrested.