Construction mafia extortion – Gangsters with AK47s demand 30% of project value

Alan Fuchs, DA Gauteng spokesperson on infrastructure development, said South Africa’s construction mafias use intimidation and scare tactics to extort a percentage of a company’s contract.

Construction mafias are organised crime groups targeting construction projects across South Africa.

They approach construction companies awarded government tenders or contracted for private construction projects under the guise of a “business forum”.

These “forums” approach the construction companies seemingly in the interest of the local community where the construction is taking place and demand a stake in the contract.

This stake can come in the form of workers on the project and a percentage of the value of the construction contract.

Fuchs told eNCA that “there’s no question” that these mafias have been the cause of several assaults and murders. 

“And the unfortunate situation is that it’s across the whole country,” he said. Fuchs estimates that around R3 billion has been lost to construction mafias in South Africa.

Several projects have been delayed due to these syndicates, and construction companies have been forced to withdraw from projects.

Fuchs explained that these mafias often demand 30% of the value of the contract due to a misunderstanding of a piece of legislation.

According to the Preferential Procurement Regulations, 30% of any project valued over R50 million must go towards what is referred to as “local input”.

Fuchs said this had been misinterpreted as meaning the construction companies must employ people from the local community where the project is taking place.

This misinterpretation has led to fierce competition amongst small businesses in the areas where a project arises. In some areas, this competition has given rise to construction mafias.

Well-resourced and well-armed groupings that refer to themselves as “business forums” come to a construction site, put their automatic weapons on the table and demand to speak to the site’s contractor. 

The group then demands a certain percentage of the project’s proceeds and offers work from small businesses in the area in return. 

If the contractor pays an additional amount, the forum also offers protection from other mafias in the area. “In the events that you decline this absolute extortion and criminal activity, then your life is at risk,” said Fuchs.

In one case, construction mafia members walked onto a construction site and demanded to see the site manager.

“They were armed with AK47s and told the manager the cost of a bullet was R17. If you don’t give us 30% of the contract, that is what your life is worth,” eNCA reported.

Fuchs confirmed the modus operandi, saying when these mafias enter a site, they put their automatic weapons on the table and say discussions should start.

They demand a percentage of the project value for providing approved business partners, workers, and protection services.

“If you decline this extortion and criminal activity, your life is at risk. There is no question about that,” he said.

In other cases, the construction mafias disrupted the operations of projects where the owners refused to pay them an extortion fee.

“The unfortunate situation is that it happens across the country. We have had numerous projects which have been stopped,” Fuchs said.

The impact of construction mafias delaying or stopping projects is growing, and the situation is getting worse.