Retired Carter Holt Harvey executive Maurice Reid has been fined $20,000 for breaching the Fair Trading Act in the Auckland District Court today.

In March 2007 Mr Reid pleaded guilty to 17 charges of being party conduct that was liable to mislead the public. The charges relate to the period July 2000 and December 2002, when Mr Reid was general manager of the wood products division of Carter Holt Harvey.

In October 2006 Carter Holt Harvey was fined $900,000 for selling timber labelled as MGP10 when it knew the timber did not consistently meet that grade.

Mr Reid is one of six executives prosecuted for their involvement in the false labelling. Despite having access to detailed information that showed timber was not consistently meeting the MGP10 grade, he continued to oversee production of the timber for two and a half years, knowing that it was being sold as MGP10.

"The Commission considers that this is one of the most important and most serious Fair Trading cases we have dealt with," says Commerce Commission Chair Paula Rebstock.

Ms Rebstock says that individuals involved in the false labelling must bear responsibility for the role they played.

"Mr Reid knew that customers were not getting what they were promised, and what they were paying for."

"It is important that individuals in business take responsibility for their own actions," says Ms Rebstock.

Proceedings against other CHH executives are ongoing and the Commission will not be commenting further on the ongoing proceedings.

Background

MGP10

 is a high-strength timber used for trusses and framing in homes and buildings. It was marketed by Carter Holt Harvey as a superior and premium product. It is estimated that around 20,000 new houses were built with Laserframe MGP10 supplied by Carter Holt Harvey during the period. Carter Holt Harvey's MGP10 sales in the period were approximately $63.4 million annually.

Investigation.

The Commission investigated after concerns were raised by the New Zealand Timber Industry Federation. After testing the timber and finding some did not make the grade, the Commission searched the company's premises and seized documents proving Carter Holt Harvey had known about the grading problem since 2001 but continued to sell the timber as MGP10.

Consequences of using incorrectly graded timber.

The grade of timber may affect the design of a structural component of a building. Use of incorrectly graded timber in a roof truss could, for example, cause sagging or deflection. It is unlikely that using the non-MGP10 timber that was sold as MGP10 would cause failure of any particular house component, but the house may suffer performance defects such as deflections in the roof or squeaky floors.