Construction mafia: Mushrooming 'business forums' hold Gauteng projects worth billions ransom

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09-04-2024
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News 24
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• Massive development projects are being hamstrung as so-called "business forums" mushroom across Gauteng.
• The groups all target a 30% stake in lucrative private and government construction projects.
• The Gauteng government says the construction mafias pose a "serious risk to government projects".

Construction projects in Gauteng, worth nearly R2 billion, are under threat as construction mafias, once centred in KwaZulu-Natal, proliferate throughout the country.

As the ground is broken on both private and public sector projects in the province, groups that call themselves "business forums" arrive to demand subcontracts, worth 30% of the project's value, threatening violence if they are not cut in on the deals.

News24 visited four construction sites from a large retail project in Boksburg, Ekurhuleni, to massive provincial government developments around Randfontein, in Rand West City, and heard from senior construction employees how their projects were being disrupted by business forums who refused to play by the rules.

Many of these, the officials said, consisted of companies with questionable references and dubious skills, often on the verge of deregistration for not complying with company law.

Gauteng Human Settlements and Infrastructure spokesperson Tahir Sema said the construction mafia presented a "severe risk" to their projects and that the police "must deal" with them.

"The presence of business forums or construction mafia poses a serious risk to government projects as they disrupt and delay project activities and service delivery to those in desperate need of housing," he said.

Boksburg

At a R900-million project by construction giant WBHO to revamp a shopping complex on Rondebult Road, a senior construction employee bemoaned repeated disruptions by local "business forums".

The employee, who spoke on condition of anonymity, said they had been disrupted four times this year by armed business forum members who forced workers to down tools and leave the site. Even their security guards feared them.

"They demand work. They don’t demand money, like they do in KwaZulu-Natal. They want the 30% stake that is meant for local compliant businesses. There is nothing we can do. Our hands are tied," the official said.

"After dealing with one group, another comes with the same demands. They all claim to belong to some local business forums. We are afraid of them. They are rude and violent. You can't even reason with some of them. If you don't call the main contractor to speak to them, that day is forfeited."

Speaking on behalf of WBHO, Jan Smit, CEO of consultancy Proman Ops, knows how violent some can be.

"I have been assaulted three times on separate occasions by some of the construction mafia members," he said. "Construction mafias are growing in Gauteng, Limpopo and Northern Cape."

Smit said they had been forced to obtain a declaratory order to stop business forum members from entering their site.

He also said anti-money laundering legislation prevented companies from subcontracting to firms without following proper procurement processes.

One of the business forums that disrupted work on Smit's site is the Mzansi Business Association, against which they have laid a criminal case.

Randfontein

Mzansi Business Association chairperson Clement Molobela confirmed that some members had visited the site, demanding a 30% stake, but added: "We are not the construction mafia. We know nothing about the construction mafia.

"We look for work for our SMMEs on construction sites. Our members must benefit and be upgraded. We have stopped construction at that site between four and five times."

Molobela said, unlike the other business forums, Mzansi Business Association did not extort construction companies or demand protection fees.

"We want to work on those sites... We run our own construction companies. We want physical work to benefit us and our employees," he said.

"We will fight Proman Ops until it succumbs to our terms and conditions. The war is not over on that project."

Sixty-seven kilometres to the west of Boksburg, local business forums continue to disrupt at least three major projects in Randfontein, worth almost R1 billion – a housing development in Toekomsrus, a sewage pipeline in Montrose, and an electrical substation in Dan Tloome.

Three senior construction employees at the projects, who spoke separately on condition of anonymity, told News24 how they faced weekly threats by members of various business forums.

The employees said that, once a project was announced and a contractor appointed, various business forums would spring up. After sending men to threaten workers on site, armed business forum leaders would arrive and bring their members to demand work.

If they are given work, the forum members demand money upfront and then disappear without completing the job, they added.

An employee at the R59-million sewage project said: "They target jobs like plumbing, plastering, building, tiling. They want to be paid upfront. They stopped the Montrose Housing Project in Finsbury four years ago. The project is now a white elephant. Those RDP housing beneficiaries are still waiting for their houses.

"They have attempted to stop this sewer project. About three or four of them were ultimately given work. After taking the money, they left incomplete jobs. They don't even pay their workers. They are feared in the area."

A senior official at the R500-million electricity substation project in Dan Tloome said they had been disrupted several times this year by the same groups.

"Some of the business forum members were given a share of the work. However, they didn't deliver. From there, some business forum members began threatening to stop the project," he said.

Fights

He added that some companies were not legally compliant, and others did not have references.

"This week, we expect to make some appointments [of subcontractors]. We don't know what will happen. It can be a mess."

An official at the R400-million Toekomsrus Housing Project spoke of how people claiming to be from the Randfontein Business Forum clashed with the police at the site. The group had ordered the security guard to open the gates.

"They demanded their 30% stake. The situation became tense, and the ward councillor was forced to call the police," he said.

Twelve forum members were arrested after a police officer was assaulted and his firearm stolen.

The site has experienced many disruptions since the project began in 2017.

"In 2023 alone, we were disrupted 12 times by disgruntled SMMEs. Some business forums claimed to represent over 100 SMMEs, but only a handful of companies benefitted. They wanted money in advance. They then abandoned their work, leaving the main contractor to complete their mess," the official said.

Although 416 homes had been built, there was no water and electricity installed because residents had invaded it.

The chairperson of the Rand West Superior Contractors Business Forum, Thabo Makhanya, acknowledged that business forums were mushrooming and that they had a negative impact on construction projects.

"Because politics and petty infighting began, people started breaking away, forming their forums. There are many forums that mushroom everywhere. Fights are erupting within those forums," he said.

"We must work together to benefit from these mega-projects in the Rand West City Municipality. I don't know about any extortion allegations."

Makhanya said business forum members left projects incomplete because they were poorly paid.

"We are not the construction mafia. The construction mafia are the developers and the main contractors. They come here and rip us off with low pay rates. The department (human settlements) gives us rates that they should use to pay us," he said.

"However, developers and contractors come up with their lower rates, leaving us in debt and failing to complete our tasks. Those lower rates make us not grow. SMMEs are called the construction mafia because they fight for better rates. We are not the mafias."