The Commerce Commission's attempt to claim three further scalps in the Carter Holt Harvey mislabelling of timber controversy has begun.
CHH and the former general manager of its wood products division, Maurice Reid, have already pleaded guilty to breaching the Fair Trading Act by mislabelling timber, used in the construction of thousands of homes. The company was fined $900,000, while Reid, now retired, was fined $20,000.
The commission is now prosecuting the former managers of three of CHH's sawmills, with the case starting yesterday in Auckland District Court before Judge Bouchier.
It alleges that Robert Boddington, Matthew Nant and Colin Richman - the former managers of CHH's Nelson, Kopu and Putaruru sawmills - were aware of what was going on but continued to mislabel the timber.
The case relates to timber produced by CHH between July 2000 and November 2003 and sold under the brand name Laserframe. The timber was marketed by CHH as being MGP10 - a premium grade that could be used in the construction of house frames and roof trusses - but was not actually up to that standard.
It is estimated that 20,000 houses were built with Laserframe during the period. According to CHH internal documents, seized by the commission, the forestry company took the view that to stop selling the timber in question as MGP10 would be financial suicide. Houses using the non-MGP10 timber sold as MGP10 may suffer defects such as deflections in the roof and squeaky floors, the commission said.
In its opening, the commission's lawyers alleged that because of Nant's involvement in a team set up by CHH to investigate the introduction of a new grade to replace the faulty timber he would have been aware of the problems with meeting the MGP10 grade.
As mill managers, Boddington and Richman were kept up to date with the team's progress, so would also have been aware of the problems. It is also alleged they were aware that an independent test carried out by the Forest Research Institute in 2001 had confirmed that the MGP10 timber produced by CHH was not up to standard.
Commerce Commission chairwoman Paula Rebstock has previously described the case as one of the most important and serious Fair Trading Act cases it has dealt with. The commission will call 23 witnesses.
