Two construction firms fined $4.6m for rigging tender bids to upgrade community clubs

Two construction firms have been fined a total of $4.6 million by the competition watchdog for rigging tender bids called by the People's Association (PA).

The Competition and Consumer Commission of Singapore (CCCS) said on May 23 that Trust-Build Engineering and Construction and Hunan Fengtian Construction Group Co had rigged bids for three tenders in 2022 for upgrading works in the Bukit Batok, Cheng San and Eunos community clubs.

The tenders had a total value of around $56 million. They were for major upgrading works that included repair works, piling and scaffolding.

CCCS' investigations, which began in July 2023, found that both companies colluded on their bid prices and tender submissions, giving one of them - Trust-Build - a better chance of winning the projects.

Hunan Fengtian had prepared Trust-Build's tender submissions and proposed its bid prices for each of PA's tenders, CCCS said. Trust-Build's bid prices were lower than Hunan Fengtian's to make the former's bids appear more attractive.

PA had noticed that similar words, diagrams and photos were used in the tender submissions from the two companies before the tenders were awarded, and reported the matter to CCCS.

"CCCS found that the bid-rigging conduct eliminated the competitive pressure between the parties to submit their best offers to PA, even though none of the PA tenders were awarded to either of the parties," said the competition watchdog.

"Such bid-rigging conduct has the potential to give the false impression that the bids received from the parties were genuine and competitive."

At the time, the two firms were able to undertake high-value construction contracts - up to $50 million for Hunan Fengtian and $105 million for Trust-Build.

On May 23, Trust-Build was fined $4.29 million, while Hunan Fengtian was fined $349,000.

In a media briefing on May 23, Mr Caleb Tan, deputy director of legal and enforcement at CCCS, explained that the difference in fines for the two firms was because the penalties took into account the turnover of the company in the year the infringement took place as well as the year the infringement decision was issued.

"The absolute figure doesn't indicate the relative seriousness or culpability of the parties," he said.

An Accounting and Corporate Regulatory Authority search showed that Trust-Build is a local company, while Hunan Fengtian is a Chinese firm registered in Singapore.

Mr Tan, who was the team lead for the investigation, said that representatives of the firms had met at a conference and remained in touch.

Hunan Fengtian had intended to wind down its business in Singapore, and its general manager, Mr Xing Hongyun, agreed to help Trust-Build in this scheme as a means to get future business for his own company, Mr Tan said.

The director of Trust-Build, Mr Wang Jian Jun, also wanted to learn from Hunan Fengtian's experience in bidding for public tenders, added Mr Tan.

CCCS had obtained WhatsApp messages between Mr Xing and Mr Wang, who are both Singapore citizens, that showed them discussing the bid prices they would submit.

In one instance in October 2022, Mr Wang asked what if they were awarded two tenders.

In response, Mr Xing said: "PA can award three projects, what do you worry? You and me have two companies, can do two projects same time."

In October 2024, both companies were issued legal notices, known as proposed infringement decisions, by the competition watchdog. They were able to make individual representations or provide other information in support of their case.

CCCS said it had received written representations from each firm and took these into consideration in deciding to issue the infringement decision.

Bukit Batok Community Club's tender was eventually awarded at $17.59 million, while Cheng San's was awarded at $21 million, CCCS had said in October.

The tender for Eunos Community Club was discontinued for reasons unrelated to this case. The club, which had been closed since August 2022, is slated to open by the end of 2025.

CCCS chief executive Alvin Koh said it will continue to take a more active enforcement stance, and take decisive and firm action against businesses that are found to have engaged in anti-competitive conduct.

"In the context of public procurement where public funds are used, taxpayers are the ones who ultimately pay the price of such infringing conduct," he said.

Mr Koh added that CCCS offers a leniency programme for businesses currently involved in anti-competitive agreements. If these businesses come forward with information about such agreements, they can receive a full waiver or substantial reduction in financial penalties.