Cape Town gangs are going to war over construction deals worth 'millions for doing nothing'

• Gangs have turned their sights on the Cape Town construction sector, clamouring for financial gains from the embattled industry.
• Insiders told News24 recent gang violence could be connected to a looming turf war over extortion in the construction sector.
• An expert said gangs have experience in extortion, having targeted nightclubs for years.

A spate of recent shootings on the Cape Flats could be the side effect of increasing extortion activity in the construction sector, insiders have told News24, as gangs gear up for an all-out turf war.

Key figures in the Cape Town underworld told News24 a war was being waged, with rival gangs setting their sights on the construction industry.

While some have started their own companies to exploit government contracts, others are using protection rackets to muscle in on the sector.

Well-placed insiders said gangs, such as the 28s and 26s, were actively competing for contracts, often using family members with clean criminal records as fronts.

"There's no question on the application forms that asks if you are a gangster or have links to gangs. So, they end up getting these tenders but in fact government signed a deal with the devil, or in this case known gangsters," one insider added.

'It’s easy money'

"It's purely a matter of greed. It's easy money. All you do is show muscle, punch a few people, grab someone's relative and hold them hostage and it's money in the bank. "

Areas on the Cape Flats such as Valhalla Park and Delft, in particular, have borne the brunt of the ongoing war, with an array of shootings targeting role players in the construction mafia.

Four shootings took place in Cape Town and surrounds over the last two weeks, with many targeting high-ranking gang members.

While the police have insisted the murders were being investigated individually and have not been linked, underworld sources told News24 they were all linked to the construction mafia.

READ | Bloody start to the week as 5 people shot dead in Cape Town

On Thursday, 2 March, a 49-year-old man was shot dead on the corner of Symphony Way and Erica Drive in Belhar.

On Friday, 10 March, two men - aged 48 and 49 - were injured in a gang-related shooting in Somerset West. On Monday, 13 March a man was killed in Delft on the corner of Symphony Way and Hindle Road. Another gang shooting took place on Wednesday, 15 March when a 35-year-old man was killed in Bishop Lavis after being shot multiple times in the face.

Police spokesperson Sergeant Wesley Twigg said:

These cases are being investigated on [their] own merits. There is no information at our disposal that indicate that the cases are linked to each other.

Another gang insider told News24 it was a turf war, with "gangs fighting over construction sites in Cape Town".

"As a gang, for your effort you likely will gain 30% of a lucrative construction tender by going after a construction site because people are too scared to take on armed gangs. You're making millions for doing nothing and policing the issue is close to impossible," another source said.

"These gangs want the cash, so you pay the cash and you all good. You don't pay, you will feel pain," another underworld figure warned.

New opportunities for extortion

Jenni Irish-Qhobosheane, who is a senior analyst at the Global Initiative Against Transnational Crime, said "extortion is a textbook form of organised crime operations".

Irish-Qhobosheane added in Cape Town specifically, the closure of the nightlife economy during Covid-19 also created an impetus for gangs to look to new opportunities for extortion.

"The construction sector provided them with just such a new opportunity."

Irish-Qhobosheane said extortion in the construction sector could play out in two ways.

First, gangs mirror the extortion tactics seen in the nightclub industry by demanding security contracts for construction sites. This form of extortion will often require the business to pay a protection fee and hire a specific company to provide security services.

READ | Growing concerns over 'construction mafia', extortion at City of Cape Town sites

One nightclub owner told News24 while protection fees could start at as little as R600 for the smallest establishments, it could quickly climb to a few thousand rands per month for more established nightclubs.

"That fee is just to get the racketeers off your back. You're then looking at R500 per doorman per night as a minimum," he said.

The business owner added nightclubs have little alternative but to pay the protection rackets or risk the safety of their staff.

The second way extortion takes place in the construction sector is when gangs invade construction sites and seize equipment, effectively halting operations.

They will then demand either a portion of the contract value being paid out to the gangs in cash or ensuring the developer employs businesses linked to the gangs.

Irish-Qhobosheane said often gangs operated formal businesses - both as a way of money laundering and increasing their income - and these may be used. Alternatively, the extortionists may work through an entrepreneur who is affiliated with the gang.

Tactics and threats

Either way, the extortionists would often resort to "strong-arm tactics and threats of violence to ensure compliance of their victims", she added, and failure to comply could result in "serious consequences".

"Gangs in areas like Cape Town have long been involved in extortion both in the nightlife economy and local initiatives and businesses where the gangs operate.

"It is not surprising that as extortion in the construction sector started to expand beyond the boundaries of KwaZulu-Natal that gangs, which have historical experience in running extortion rackets and always have an eye out for new criminal opportunities, would seize the opportunity to become players in the extortion in the construction sector."

Irish-Qhobosheane said a similar trend was playing out in parts of Johannesburg and Gqeberha.

Politicians have been implicated in several construction mafia scandals, she added, saying they often relied on local government officials and politicians to protect their interests and influence the awarding of tenders.

'Government crooks'

According to sources close to key figures in the construction mafia, it was no secret the government and city officials were on the payroll of gangs.

"The rot is deep, people you would never suspect are involved, officials are taking money and doing favours for criminals. It's been going on forever."

On Thursday, the City of Cape Town's human settlements mayco member, Malusi Booi, was suspended after the police conducted a search-and-seizure operation at his offices on Wednesday.  

Cape Town Mayor Geordin Hill-Lewis said the raid was linked to alleged fraud and corruption and he had placed Booi on suspension with immediate effect. 

READ | Cape Town says its housing head will have hell to pay if fraud claims pan out – after a police raid

Irish-Qhobosheane said extortion often led to the closure of construction sites, sometimes for considerable periods of time.

She estimated, based on the South African Forum of Civil Engineering Contractors reports, disruptions could impact around 200 projects a year, and losses could be in the region of around R40 billion.

"Extortion in both the construction sector and the nightlife economy has pushed up the cost of doing business, and both have squeezed out small business operators," Irish-Qhobosheane said.

The chairperson of the Western Cape Property Development Forum, Deon van Zyl, said there "definitely has been an increase in security costs on construction sites".

He added most of the sites in which additional security had been employed were government-led projects. In the cases, the burden of financing the additional security falls to the private contractors on site.

"These are costs that ultimately end up back with the municipal or regional authorities in claims from the contractors, and this means that ultimately it is the taxpayer who pays dearly."

The City has approved a R15 million top-up in its January 2023 adjustments budget for additional security for housing construction sites.

The municipality's R500-million Delft Symphony Way housing project has been repeatedly targeted in what is believed to be violence linked to extortion in the construction sector.

Earlier this year, a City official was murdered at the site, and three contractors were injured in another shooting.

The City previously said extortion and other forms of criminality threatened around R1 billion in projects across the metro.

In addition, the added security costs and the costs of delays on-site impacted the economy, said Van Zyl.

He previously told News24 the construction sector had shrunk by 25% over the last five years, largely due to delays in the tendering and procurement of public sector projects, as well as the shrinking economy.  

A slowdown in construction industry

The director and chief economist at Econometrix, Dr Azar Jammine, said the economic impact of extortion in the construction company was extensive.

He added the construction sector had been one of the weakest performing sectors over the last few years and believed the poor performance could, in part, be attributed to the construction mafia.

Jammine said among the reasons why capital investment had fallen to around half of the average amount for emerging markets was ongoing corruption and increased crime in the sector, including from organised crime syndicates.

The construction industry is one of the most labour-intensive sectors, he added, and a slowdown in this industry had a significant impact on the country's unemployment rate.