A new report by the Construction Industry Development Board (CIDB) lays bare how some construction companies break the law to get state tenders.

Between 2012 and this year the CIDB, a statutory body reporting to parliament, has issued fines of more than R1.5-million and other sanctions to 43 small and medium construction companies for fraudulent activities.

The CIDB registers construction companies in the country. Government entities are bound to award contracts only to companies registered with the body.

CIDB spokeswoman Kotli Molise yesterday said the register guaranteed that companies were awarded contracts "according to their capability to ensure efficient and effective delivery of infrastructure projects and value for money to clients and society".

The construction industry is still reeling from findings by the Competition Commission that large firms colluded to inflate costs of building six 2010 World Cup stadiums by about R14-billion. These companies included Group Five, WBHO, Basil Read, Stefanutti Stocks, Aveng and Murray & Roberts.

In a bid to remain registered or improve their grades, the companies fined and sanctioned by CIDB submitted falsified financial statements and invalid tax clearance certificates and also misrepresented their track records.

Each slapped with a R100000 fine, Khumbula Properties and Pioneer Plus Engineering received the largest fines from the CIDB. Sowetan could not reach either of the two for comment.

Pioneer Plus was fined in April. The CIDB found the company guilty of four charges.

Applying to be upgraded by the board, its owners allegedly submitted false bank statements, purported to be from FNB, and also false annual financial statements.

The company has been deregistered from the board. Its two directors, named in the report, are banned from doing construction work with the state for 10 years.

Khumbula Properties was fined R100000 in 2012 after being found guilty of submitting forged financial statements and falsely claiming involvement in two projects.

Sankum Construction was fined R65000 in 2014 for submitting invoices "that had been forged and inflated".

Its owner, Sanku Molomo, told Sowetan allegations were brought against them by a disgruntled consultant. "We paid just to clear our name. The government did not lose any money [in the project]. As a small company, we felt the fine was too harsh."

Molise said only a few companies were breaking the law.

"Less than 5% of the registered contractors are willing to resort to fraudulent activities to claw their way up the CIDB register's system," she said.

"Most of the more than 80000 contractors registered on the register are honest business people who are prepared to comply with the rules and regulations of infrastructure procurement to do business with government."

But in April this year President Jacob Zuma mandated the Special Investigating Unit to probe fraud and corruption within the CIDB.

Molise said: "The CIDB is determined to root out these elements to protect the integrity of the register and, more important, of public infrastructure."

nkosib@sowetan.co.za