Steel & Tube quietly pleads guilty to steel mesh misrepresentation charges
By Paul McBeth
Nov. 28 (BusinessDesk) - Steel & Tube Holdings has pleaded guilty to 24 charges of making false and misleading representations about its steel mesh products and will be sentenced next March.
The NZX-listed steel products maker faced 29 charges of breaching the Fair Trading Act in a prosecution brought earlier this year by the Commerce Commission. That followed a complaint laid in 2015 about mesh used in housing and driveway construction not meeting required standards. A spokeswoman for the regulator confirmed the guilty plea in an emailed statement.
Steel & Tube entered the plea on Aug. 15 in the Auckland District Court, three days before the company reported a 22 percent drop in annual profit, which acknowledged the prosecution and included costs, penalties and fines that could be imposed within its $4.8 million of provisioning.
At the time, then-chief executive Dave Taylor said the company was 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.
Steel & Tube representatives weren't immediately available for comment and the company hasn't made a statement to the stock exchange, which requires issuers to make public material information in a timely manner to keep market participants informed. The company's auditor PwC assessed group materiality to be $1.45 million, or 5 percent of pre-tax profit, in its 2017 audit report.
The shares fell 0.5 percent to $1.99, the first time the stock has closed below $2 since July 2016.
The regulator said two other firms facing prosecution - Timber King and NZ Steel Distributor - also pleaded guilty and will be sentenced on Dec. 8 in the Auckland District Court.
"Charges against another company have been filed. We cannot provide further information as the case has not had a first call in court yet and the company could still apply for name suppression," the spokeswoman said. "The commission expects to lay charges against one further company."