Wednesday, August 16, 2017

After treating dishonesty as the norm for 50 years South Africa's furniture removers are finally getting what they deserve

Dear Readers,
Mel Potgieter a Stuttaford Director
          The question I want to ask all CEO’s of furniture removers is this: “Are any of you running an honest business?”
          What a shocker. Companies I exposed in the Financial Mail magazine in 1976 are now facing similar allegations before the Competition Commission. And this time it looks as though there is no escaping a very heavy fine.
            As an investigative journalist I probed the widespread tendering collusion among removers, which has cost the government and the private sector millions of rand.
          Significantly the FM never received any complaints about the accuracy of my report

          It’s disturbing, to say the least, that the removers association has been accused of turning a blind eye to the skulduggery that has been going on for all these years. Now the Chairman's own company has been proved to be involved.       
When I was on the FM it was so rife that Eddie Pettitt, President of the 127 member SA Furniture Removers & Warehousemen’s Association (SAFWA) from 1968-1971, when he headed Algoa Transport in Port Elizabeth, told me that tender rigging was “unfortunately accepted practice.”
          They hadn’t been able to stop it because neither the Department of Transport nor the Public Service Commission would back them. The head of the Military Police told me that SAFWA was also ignoring the racket.
          It was so acceptable that last year Peter Brauteseth a Director of Joel Transport told the Commission’s Tribunal that in his 25 year’s removal experience he had found tender covering to be a “sort of normal practice.” His firm was one of the 13 highlighted in my FM expose`.
          The way the swindle works is that when transferred employees have to get quotes to have their belongings moved the first removal firm approached will get all the ones needed from a friendly competitor ensuring that theirs is the lowest to get the job.
In my FM days it was known as the 3Ts as that was the number of quotes required by government departments. With competition effectively eliminated it ensured that removals were done at inflated prices.
        The Nationalist Party government of the day did nothing about this corruption even though there was considerable evidence to show it was going on.
It has taken years for our African National Congress rulers, who came to power in 1994 to get this scourge in it sights. But now it looks as though the no nonsense approach of the Competition Commission, which has the power to impose heavy fines, will finally stamp it out.
The Commission found that 3 500 relocation quotes were fixed between 2007 and 2012 with as many as 69 companies being involved. Raids were carried out at the premises of these firms.
Transgressors who co-operate with the Commission by telling all get a lesser penalty than those who try to bluff it out. It is left to the Tribunal to pass judgement on the intransigent ones.
The Commission has just charged the Cape Town based Stuttaford Van Lines with 649 counts of collusive tendering involving numerous government departments including the Presidency, Parliament, the Secret Service, the Police, the  National Prosecuting Authority, Revenue Services, the Reserve Bank, the Department of Justice, the Defence Force, the Public Protector’s office and state owned businesses and private companies.

This is a new record for this authority, being the largest number of charges against a single company in the history of its anti-cartel enforcement. It is pressing for the Tribunal to fine Stuttaford 10% of is annual turnover on each of the 649 charges.
It has so far concluded settlement agreements with 16 firms with Stuttaford not yet being one of them. The cases of 13 still have to be finalised.
Stuttaford promotes itself on its website as a super goody-good market leader that does all the right things.
          Under a large “Anti-Bribery & Anti-Corruption” heading it claims to be a member of the United Nations Global Compact initiative launched in 2000. This requires companies to embrace a set of values in the areas of Human Rights, Labour Standards, Environment and Anti-Corruption.
          It boasts that it is a certified member of Fido Fame and it adheres to its Anti-bribery and Corruption Charter. “This,” it goes on “is customised to the removal industry and guarantees a common understanding on the topics of bribery and corruption. We adhere to the Charter’s principles and communicate this to our staff, clients and agents.”
          Founded in 1857 Stuttaford tells us, “As one of the first removal companies in Africa to get Fame accredited, we have continually lived up to our reputation as Africa’s most superior removal company.”  
          This is what my FM inquiries revealed about “Africa’s most superior removal company.”
          I canvassed 17 removal firms in what was then the Transvaal and Free State and told them I needed three quotes.
          Eight offered to supply all three themselves and in all cases the firm contacted gave me the lowest price.
Stuttaford Van Lines arranged three quotes for a Mr Steele for a removal from Johannesburg to Durban after being told a company would be paying. They were Stuttaford R600; Petfords R630 and Express Transport R645. For another Johannesburg-Durban move Express quoted R685 with J.L van Nijmegen at R720 with Stuttaford’s price being R725. For the same job Morkel’s price, which I got completely separately, was almost half at R355.
          I then spoke to the Stuttaford regional manager in Johannesburg Dave Bradford, who was also on Safwa’s executive committee. I asked him if there were removal companies supplying three tenders and he replied: “I don’t know how they can do that because they would have to be in league with other companies. What you are suggesting is virtually a bit of cheating.”
          I showed him the two sets of quotes in which Stuttaford was involved and he said rival companies often phoned one another and asked for quotes. They gave the volume of the goods to be moved and then the quote was sent directly to the customer.
          He denied there was any price ring in the removal business. 
          After my FM disclosures appeared the Public Service Commission sent a circular to all government departments informing them of the FM’s findings. According to a spokesman department heads were told that “immediate steps should be taken” to stop the abuse of the tender system.
          Had anything been done then Stuttaford and various other firms would not now be facing possibly huge fines that might even put some of them out of business.
           The new name of SAFWA, which was founded in 1959, is the Professional Movers Association (PMA).  
   
          The corruption picture has become even more tainted by the fact that Crown Relocations, headed by the PMA’s Chairman Ian Pettey, has just pleaded guilty to being involved in 81 cases of cover pricing for various government departments. The Commission fined it R840 873, the equivalent of 7% of its 2013 turnover.
          His company is part of the Hong Kong based Crown Worldwide Group.
The PMA’s Code of Ethics requires members to have “a commercial reputation beyond reproach” and Stuttaford is one of them.
          One wonders just how culpable some of the people are in the various government departments mentioned by the Commission, such as the Defence Force, the Police and the National Prosecuting Authority.
In the FM I included details of the comical interviews I had with Col Piet Prinsloo, head of the Military Police at the time and his deputy Major Gert Pretorius at their Pretoria headquarters. The way they kept contradicting each other indicated that something very wrong was going on.
The Military Police had investigated the 3T scam because the Defence Force was involved. It was suspected that government officials might have been bribed. But they had not been able to get a single cartage contractor convicted due to lack of evidence.  
In his office Pretorius told me that in their last investigation they discovered that a Pretoria removal firm had given about R5 000 (A lot of money in those days) worth of liquor to Defence Force personnel the previous Christmas.
Then, when he took me into Prinsloo’s office next door, the Colonel said somebody had spoken out of turn as the amount had never been established. Pretorius played it down by saying it wasn’t much as not more than two bottles per person had been given to certain members of the Force.
Our conversation became even more ridiculous when Pretorius said their investigation, which began about 10 months earlier, was continuing. But Prinsloo denied this saying it had been dropped, “Not because there was any pressure on us, but because we didn’t have the staff to carry on.”
Pretorius said he had obtained considerable evidence against a Pretoria company but it was still getting a lot of business from the Defence Force. When I asked why this was he replied: “I don’t know. I’m afraid some very high up authority must answer that question, which is also a question I would like to ask the Chief of the Army; the Chief of the Air Force and the Chief of the Navy.”
According to Prinsloo removal firms had carved up the government work so that they each had their own section from which they got business. “We have gone a long way in curbing this practice (the 3Ts) which got out of hand. All of a sudden one of these contractors starts again with their funny business. It takes a couple of months before we hear about it and then we just clamp down again.
 “In our own way we have saved the Defence Department quite a lot of money by telling head office who to supply with tenders and who not to supply,” Prinsloo added.
Judging by what the Competition Commission is now uncovering and what my inquiries revealed they were not at all effective.
And it’s extremely suspicious that all those government departments continued to be duped for, on the face of it, as long as most people can remember. 
         Unfortunately it’s not the Commission’s job to deal with them.
Regards,
Jon, a Consumer Watchdog of long standing, who does his best to cut his removals to the minimum.
                              

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