26 Apr 2018

Companies fined $400k for misleading customers about steel

4:35 pm on 26 April 2018

A judge says two companies created a fake certificate to provide false assurance to customers about the seismic steel mesh they were selling.

A worker spreads ready-mix concrete over steel mesh (file)

Photo: 123RF

The companies, NZ Steel Distributor - which imported the steel from China - and its related company, Timber King - which sold it - have together been fined $400,000 for misleading customers, in the first sentencing to result from the steel mesh scandal two years ago.

"The creation of the fake certificate can only have been deliberately carried out in order to provide an additional false assurance of compliance with the Standard," Auckland District Court Judge Robert Ronayne said in his judgement today.

The forged test certificate claimed the steel had been independently tested and complied with standards that allowed for its structural use in an earthquake zone.

"The use of non-compliant steel mesh, especially in the context of earthquake-compliant mesh, has actual and potentially enormous consequences for consumers, for competitors and for the reputation of the building industry," Judge Ronayne said.

The standard for mesh, which is used in most new house foundations and in some commercial buildings, was strengthened five-fold after the Christchurch earthquake.

"It is quite obvious in New Zealand, given our history of earthquakes and the consequences of them, that there is a vital need for consumers to rely on representations as to standard compliance," Judge Ronayne said.

The steps the two companies took to ensure the mesh was up to standard, were "grossly negligent", he added.

Large listed company Steel and Tube, which pleaded guilty to 24 charges, is among the other companies that await sentencing over steel mesh.

Brilliance Steel pleaded guilty to 20 charges and will be sentenced on 25 May.

The Commerce Commission filed 59 charges against Euro Corporation last December.

Fletcher Steel was issued with a warning, while the country's biggest mesh supplier United Steel, and Pacific Steel, were issued with compliance advice.

The testing regime was overhauled so that companies could no longer get away with presenting in-house tests as if they were independent, and to ensure all the accredited labs were testing the same things.

"False and misleading representations about building products are a priority area for the commission because of the serious harm they can cause consumers," the Commerce Commission said.

"Traders must be able to back up the claims they make and if they cannot, they should not be making them."

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