Steel & Tube fined $1.9m over mesh claim

Steel & Tube Holdings has been ordered to pay a record fine for making misleading representations about steel mesh products that fell short of testing standards.

Auckland District Court Judge Warren Cathcart yesterday sentenced the company to a fine of $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 $24m from 482 batches.

Steel & Tube misled the public with representations that 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 $2.9m fine for the company, discounted to reflect Steel & Tube’s co-operation 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 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 per cent slump in annual profit. The result acknowledged the prosecution and included costs, penalties and fines that could be imposed within its $4.8m of provisioning.

At the time, then chief executive Dave Taylor said the company was

The penalty imposed demonstrates that this is unacceptable and high-risk conduct that undermines the confidence of the public in construction products being sold into the market. Mark Berry (left)

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 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 yesterday closed at $1.36.