Steel & Tube Holdings has been ordered to pay a record fine for misleading customers about the quality of its steel mesh products.
Auckland District Court Judge Warren Cathcart today fined the company $1.89 million on 24 charges under the Fair Trading Act after an earlier guilty plea. The charges, brought by the Commerce Commission, related to conduct spanning four years, where Steel & Tube sold about 480,000 sheets of steel mesh for $24 million from 482 batches.
Steel & Tube told customers the mesh met an Australia/New Zealand standard for reinforcing steel when it didn’t, and that the batches had been independently tested when they hadn’t.
The judge started at a $2.9 million fine for the company, discounted to reflect Steel & Tube’s cooperation and early guilty plea.
“Steel & Tube’s representations arose because senior management of a large company failed to put in place adequate procedures and oversight,” commission chair Mark Berry said in a statement. “The penalty imposed today demonstrates that this is unacceptable and high-risk conduct that undermines the confidence of the public in construction products being sold into the market.”
The company pleaded guilty in August last year, three days before reporting a 22 percent slump in annual profit. The result acknowledged the prosecution and included costs, penalties and fines that could be imposed within its $4.8 million of provisioning.
At the time, then-chief executive Dave Taylor said the company was working with the Commerce Commission to reach an appropriate resolution and that “the expected costs of this prosecution have been accrued, as have any expected proceeds under the group’s insurance policies”, without explicitly stating that it had entered a guilty plea. Taylor stepped down a month later, ending eight years in charge of the company.
Under new CEO Mark Malpass, Steel & Tube has strengthened its balance sheet with a deeply discounted rights issue, fended off an opportunistic takeover bid by Fletcher Building, and now has its major supplier – New Zealand Steel – as a cornerstone shareholder.
Steel & Tube shares were recently up 1.5 percent to $1.38.