A construction company from Centurion that lost goods valued at more than R3 million when a so-called business forum raided its offices has turned to the courts to get its insurer, Momentum, to pay out its claim for theft.

Thugs who engage in extortion on building sites, also referred to as the construction mafia, often pose as ‘business forums’ representing the interests of local communities. They typically bring operations on site to a halt unless they get 30% of the contract value in work.

Although such activity is widespread, law enforcement has not acted against it in any significant way.

President Cyril Ramaphosa highlighted it last week in his opening of parliament speech, saying it is one of the police’s priorities in the seventh administration – and several ministers and MECs have echoed his resolve to stamp out the practice.

Tebelo Construction is suing Momentum Insurance for its refusal to pay a claim for the stolen goods. Momentum is contesting the claim.

The company states in court documents that it has been paying more than R57 000 per month to Momentum to cover the property in its offices against fire and theft.

Andre van Rooyen of Tebelo says the company secured a contract for the installation of optical cables in Durban, and appointed a subcontractor in Durban to dig the trenches, install the optical cables, and then properly fill the trenches.

Dispute

When the work was completed, Tebelo’s client was dissatisfied with how the subcontractor had filled the trenches. Tebelo withheld payment, leading to a dispute between Tebelo and the subcontractor.

Eventually, someone else was appointed to complete the work.

On 29 June last year, several business forum members from Durban arrived in a number of vehicles at Tebelo’s offices in Centurion and began seizing everything in sight.

It turned out that the gang was unhappy because the subcontractor had not paid its workers.

Tebelo’s security company called the police, and soon everyone was at the police station. The police instructed the culprits to return Tebelo’s property to their offices. They drove away, but failed to pitch at the Tebelo offices. In fact, that was the last time they were seen.

They made off with goods worth R3.1 million, including the office kettle, microwave oven, computers, printers, and specialised equipment for laying optical cables.

They took seven machines used to splice optical cables, each worth more than R100 000.

The irony, says Van Rooyen, is that these machines are likely now gathering dust somewhere.

“We would have known if they tried to sell them,” he says.

‘Contractual breach’ says Momentum

Tebelo relied on its insurance policy and filed a claim with Momentum.

According to Tebelo’s statement to the court, the insurer denied the claim, alleging that Tebelo had not provided all the necessary information and that the loss resulted from “contractual breach” and a consequent civil claim between Tebelo and its subcontractor.

Tebelo contends that it provided all necessary information, and that it was not the subcontractor that took the goods.

“No one can take the law into their own hands and seize Tebelo’s property without the necessary legal steps,” says the company.

Van Rooyen asserts that there was no agreement between Tebelo and the people who looted its offices. They had no right to take the company’s goods.

On enquiry, Momentum stated that the claim was subjected to its normal claims process but was rejected because, based on the facts, it did not fall within the scope of the policy.

The insurer declined to comment further considering the pending lawsuit.

Disturbing acceptance of extortion …

Chad Thomas, an organised crime investigator with IRS Forensic Investigations, said that construction mafias under the guise of so-called business forums have been a problem for some years now.

“The construction mafia has become emboldened due to little to no action being taken against them by the authorities,” he says.

“What we as investigators are finding disturbing is that companies are beginning to recognise the illegal activities of the construction mafia which is tantamount to extorting protection fees as now being something to be budgeted for should they want to complete a project, and that certain shortterm insurers won’t pay out claims associated with the illegal activities of the construction mafia citing that this constitutes a ‘civil’ dispute.

“How can an illegal act constitute a ‘civil’ dispute?” he asks.

“What these companies are doing is giving credence to unlawful behaviour perpetuated by the construction mafia and therefore emboldening these bad actors which will ultimately lead to even more extortion rackets manifesting themselves across different industries in South Africa.”

Source:Court to decide insurance dispute after construction mafia raid – Moneyweb