Cement wars: Econo takes on regulator in court
Econo Cement has taken the fight to the national regulator for compulsory specifications and accuses it of having an ulterior motive after the watchdog withdrew a letter of authority for one of its most widely used products.
A dispute between the company and the watchdog erupted in July last year when it conducted tests of Econo’s product
— CEM V/A S-V 32.5 N, the most commonly used cement in SA — and found it was not compliant with safety regulations.
The regulator took samples from Econo’s plant and two of its customers in KwaZulu-Natal. The method will now become the epicentre of a legal dispute between the company and the regulator before the courts.
Econo has approached the court to set aside the regulator’s decision to withdraw its letter of authority, detailing evidence it says the regulator ignored when reaching its conclusions.
The crux of Econo’s case is that the regulator botched the testing guidelines by not homogenising the samples, and merely scooped the top of the cement in the bag. Econo said this was done both at its premises and at those of its customers in KwaZulu-Natal, one which has supplied a confirmatory affidavit to this effect. The rules demand that samples get homogenised so that the samples do not disaggregate.
Another leg of Econo’s case is that samples were not divided into subsamples, as required. This requirement is to allow subsamples to be tested in the event where there is a dispute or contradictory results.
While the samples taken by the regulator failed, two tests by independent laboratories, SA All Brothers Product and Systems Certification (SABPS) and Beton Lab passed muster. The samples were taken from the same batch of cement as those taken by the regulator, according to Econo. The difference, it said, was the independent laboratories homogenised the samples before taking them for tests, while the regulator did not.
Business Day has seen the SABPS and Beton results, which confirm Econo’s assertion.
Econo CEO Stuart Paget, in an affidavit filed with the high court in Johannesburg, said the regulator did not act in good faith when it issued the impugned directives, and most certainly did not act in good faith when it withdrew the applicant’s letter of authority.
“This is evident from the fact that the representatives of the first respondent approached two of the applicant’s clients, namely Brookstar Trading and Good One Hardware, to issue noncompliance notices and to advise them not to sell any cement product from the applicant until further notice,” the court document reads.
“This was done before any of the directives were issued to the applicant or its attorneys. It was also done before the applicant’s letter of authority was withdrawn. This is demonstrative of the first respondent’s ulterior motives to destroy and eradicate the applicant from the market.”
Econo through its attorneys Fairbridges Wertheim Becker has also challenged the regulator to prove that the inspectors who conducted the tests were properly qualified to undertake such tasks.
The dispute between Econo and the regulator went public in December after the regulator called a press conference informing the public that it had withdrawn the company’s letter of authority.
At the press briefing, the regulator made no mention of two reports clearing Econo’s cement for meeting the required standards. The regulator did not respond to questions on why it ignored the tests that gave the thumbs up to Econo’s cement and why it did tell the public about them.
Econo, in its court papers, indicates that it plans to launch defamation proceedings against the regulator, particularly its acting GM Rhoda Masupye.
“The first respondent did not make the samples relied upon available for independent testing, as it is obliged to. This is the very purpose of the requirement to have subsamples available in the event of a dispute. This also provides an internal mechanism to resolve conflicting test results,” Paget said.
“The decision to hold a press briefing while the matter is being disputed and not providing information regarding the independent testing demonstrates the first respondents’ wilful intent to destroy the applicant under the disguise of protecting public safety.”
Business Day has also seen a dozen letters from Fairbridges Wertheim Becker attorney Darryl Reece to the regulator warning that it was in breach of the regulations.
The regulator did not respond to questions.