Construction and engineering company Group Five on Thursday said it suspected "certain" potential irregularities involving some of its employees at the Nova Vida housing project in Angolan capital Luanda.

In a move likely to spur other construction and engineering companies with foreign contracts to tighten their own management controls, Group Five yesterday said there was "a reasonable" suspicion that some of its employees assigned to the Luanda project engaged in irregular activities.

In a statement to shareholders, chairman Dennis Paizes said management had received information from a number of sources about possible abuse of customs, immigration and licensing exemptions.

Paizes said the irregularities had occurred before the company reviewed and tightened its risk management practices and management controls in 2003.

The project, on the outskirts of Luanda, started in 2001 and was completed last year.

"Although no charges have been laid and no firm evidence has yet been found to enable Group Five to take further action against the suspects, the group felt that, under the Prevention and Combating of Corrupt Activities Act of SA, it was prudent to report suspected illegal action," said Paizes.

The company had reported the matter to the South African Police Service, and its own investigations were under way. It was negotiating with Angolan authorities with a view to settling outstanding payments.

"All unpaid customs duties and other taxes are being negotiated and settled," said Paizes.

Group Five said the Nova Vida project involved the construction of 2 448 residential units for the Angolan military as well as all civil works, roads, earthworks, and electrical installations.

Valued at $100m, the Nova Vida project was the largest cross-border contract awarded to Group Five at the time.

The project was based on Group Five's patented industrialised precast concrete building system, Goldflex.