corporate criminals

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.

The union which represents retail workers is angry that some stores are again flouting Easter trading laws.  Among those which opened illegally today were 13 Bunning's Warehouses, said National Distribution union national secretary Laile Harre.

The hardware chain did not have an exemption to be open and had been fined in the past following complaints from union members, she said.

Bunning's Warehouse security guard Glen Vickery, who is spending time with his two children in Coromandel, today called on Bunning's to follow the law.

"You don't have many days in the year when families can get together," he said.  "Easter should remain a holiday that everyone can enjoy, including Bunning's workers."

Ms Harre said that Bunning's and other retail companies were "taking the law into their own hands" and taking workers away from their families for commercial gain.

"If one of our retail workers decided to take a day off with their family on a normal trading day, Bunnings or any other company would bring the whole force of the law to discipline and even fire the worker.

"But here we have a corporate citizen quite blatantly breaking the law and facing a paltry $1000 fine per breach. If we're serious about saving Easter, the fine should be much higher."

Ms Harre said that many New Zealanders did not realise that Easter Sunday was not protected under the Holidays Act, meaning staff were not automatically entitled to time and a half and an alternative holiday (day in lieu).

The union has joined forces with a number of church groups and other unions under the Council of Trade Unions to oppose two bills currently before parliament aiming at liberalising Easter trading.

Bunning's Warehouse general manager Brad Cranston told Radio New Zealand that 13 of the chain's stores were entitled to open because they contained garden centres, which he believed were exempt from the trading laws.

However, Mr Vickery said staff were rostered to work and not asked if they wanted to.  They felt obliged to work because if they did not, the pressure would go on other staff to do so.

On Good Friday, Department of Labour inspectors visited a number of retailers, mostly garden centres, which opened for business in defiance of trading laws.  Nationally, 25 retailers were visited. Of these, 19 were trading illegally.

The Shop Trading Hours Repeal Act 1990 allows only certain shops which provide essential supplies to open on Good Friday and Easter Sunday.  These include shops providing food ready to eat, souvenir and duty-free shops, pharmacies and shops in premises where there are bona fide shows or exhibitions.

Restrictions also apply on Christmas Day and half of Anzac Day.

A former Carter Holt Harvey executive faces fines of more than $1 million after yesterday admitting 17 breaches of the Fair Trading Act in the Auckland District Court.

Maurice Reid pleaded guilty to the charges which each carry a maximum fine of $60,000, the New Zealand Herald newspaper reported. He will appear for sentencing on the fine-only matters next month.

Carter Holt was fined $900,000 last October after the Commerce Commission launched an investigation into whether the company's Laserframe branded timber marketed as meeting an MGP10 standard was as strong as advertised.

The timber was found to be under strength. Documents seized by the Commission showed the company knew about the problem since 2001.

Reid retired from Carter Holt in 2003 and is a former general manager of the company's wood products division and former chief executive of its timber and plywood business Ecopine.

Carter Holt is now wholly owned by New Zealand's richest man, Graeme Hart.

The weaker than advertised structural timber is expected to result in floors squeaking and roof lines deflecting.

The prosecution is one of the most serious cases taken by the Commerce Commission under the Fair Trading Act.