Construction mafia cost SA R63bn so far - Sarupen

The affected projects are projected to be worth R63 billion. 

Sarupen spoke at the 2024 National Constriction Summit in Durban on Tuesday.

He said common tactics used by the so-called construction mafias include extortion, intimidation, violence, and sabotage.

"Their demands for up to 30% of contract value undermine the integrity of our procurement systems and delay critical infrastructure delivery,”  Sarupen said.

“Let us be clear: these disruptions are not merely operational challenges. They represent a critical stress test for our economic governance. They expose the vulnerabilities in our institutional frameworks and the socio-economic fractures within our communities."

He told delegates that the government is reforming public procurement, expanding public-private partnerships and Increasing infrastructure investment in an attempt to assist the sector. 

"The Public Procurement Act, signed into law earlier this year, lays the foundation for a more transparent, efficient, and inclusive procurement system. Under the new regulations, subcontracting will be allowed only where feasible and must follow due process to prevent abuse.

"Government entities will have the option to pay subcontractors directly, eliminating the delays and exploitation often experienced under the current system. These reforms are designed to empower small and emerging contractors while safeguarding the integrity of our procurement processes."

Meanwhile, Public Works and Infrastructure Minister Dean Macpherson warned that the disruptions at construction sites continue to chase away private sector investment. 

In his keynote address, Macpherson said that tough decisions are required to end the construction mafias’ influence.

"The action required to bring an end to criminal syndicates at construction sites may not be easy. They may require that we compromise for the greater good. It will require that we work closely together with the private sector and the police to promptly identify and address issues experienced.

"It may require that we replicate the pioneering work of the City of Cape Town to join forces with the private and public sectors to join forces to fight the scourge at developmental projects. The police will need to take stronger action to arrest those found guilty of disrupting infrastructure projects."

"For us to succeed, the National Prosecuting Authority will also need to act quickly to hold those accountable. Delays to court cases against those accused of disruption of construction sites cannot be delayed for months on end, similar to the matter at the Camperdown Magistrate’s Court, which I attended in August.

"To end the influence of these criminal syndicates at infrastructure projects, it will require that we remove the incentives for these criminal syndicates to operate at construction sites. Once we open the door to negotiations, and once we give in to paying what is, essentially, a bribe, it means that these criminal syndicates are incentivised to repeat their actions elsewhere.

"We must never be complicit in bribery, corruption, extortion, and racketeering, for that is what this is. We need to have a frank discussion about the 30% local procurement rule, which has been abused by the so-called construction mafia."

Previously, National Treasury introduced a 30% local procurement rule under the leadership of former President Jacob Zuma.

The 30% local procurement rule stipulates that 30% of spending on public infrastructure and procurement worth more than R30 million should go to subcontractors based in local communities.

"They demand that only their people or contractors be hired for construction to continue,” Macpherson said. 

“In many cases, these criminal syndicates demand 30% payment without ever doing any work. They demand their 30% share, even if the construction project isn’t valued over R30 million. And now, they demand their 30% share from the private sector as well - even though the Treasury rule has never applied to their projects.

"This simply cannot continue. We cannot turn a blind eye to something wrong we all know is happening. We need to have an honest conversation today about whether the 30% local procurement rule achieves its intended outcomes or whether other interventions can be used to meaningfully empower our people.

"In the end, it is legitimate, hardworking black businesses in the built environment that have suffered the most when they were supposed to benefit the most. We are unashamedly committed to the empowerment of all South Africans, but we cannot allow criminals to profit under the guise of empowerment. Let us draw a line in the sand today."

Speaking at the same event, Police Minister Senzo Mchunu said four of the country's provinces, KwaZulu-Natal, Gauteng, Western Cape, and Eastern Cape, are bearing the brunt of the scourge. 

Recently, seven police officers were arrested on charges of extortion in Milnerton, outside Cape Town.

Delivering his address, Mchunu urged companies being extorted on construction sites to open cases with the police. 

"We are not going to spend a long time condemning and lamenting on this; we are rather inviting our brothers and sisters who are on the wrong side to join us in constructing a South Africa we want.

"We are encouraging responsible departments and companies on construction sites to promptly report and open cases whenever they come across incidents of this nature. I want to emphasise this point: cases can be opened at any police station. If progress is slow, cases must be escalated up to provincial commissioners.

"We ourselves as the ministry have a dedicated warrant officer who follows up on identified cases - where progress is reportedly slow. While a significant number of calls were made to the National Extortion Hotline, only a few of these were genuine reports. We urge the public to make use of this hotline.

"There are a number of measures we are implementing internally: we are reviewing the departmental structure, with a stern focus on improving efficiencies and capacity. Crime Intelligence plays a critical role in identifying emerging threats, gathering intelligence, and locating suspects linked to these syndicates.

"Our organised crime unit will be crucial in ensuring that these activities are carried out. In addition to specialised investigative teams, visible policing combat units have been deployed to hotspot areas for patrols and crime prevention to stabilise the situation and address the violence associated with these syndicates."

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