Commerce Commission investigates Fletcher Building subsidiary
More trouble has emerged for Fletcher Building in the form of a Commerce Commission investigation.
The Commerce Commission is investigating a competition issue at troubled building giant Fletcher Building after the company dobbed itself in.
The "issue" is unrelated to the massive construction losses which have seen the company's share price plunge from more than $10 in May last year to hover around $6.60 on Friday.
Fletcher said it had alerted the commission, and it was co-operating with investigators.
The company would not comment on what the commission was looking into, but it is understood to relate to the activities of two employees of Fletcher subsidiary Pipeworks.
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Pipeworks has been involved in fixing earthquake-damaged piping in Canterbury.
Fletcher chief executive Ross Taylor has been hired to turn the massive construction company around.
It has special expertise in repairing broken pipes without having to dig them up, by installing durable, leak-proof liners.
Fletcher Building said it became aware of a potential competition issue in relation to one of its subsidiary companies and notified the commission."
"Since then, Fletcher Building has, and continues to, cooperate with the Commerce Commission and is providing information."
The commission would not reveal anything about its investigation, except to confirm its investigators were at work.
Pipeworks' website shows how it fixes pipes by inserting a durable lining.
"The commission confirms it is conducting an investigation under the Commerce Act," it said in a statement.
"We will not be making any further statements given the ongoing nature of the investigation."
It is understood the case involves instances in which Pipeworks tendered for pipe remediation business, and centres around how Fletchers lost those tenders to a rival.
Pipeworks came under the spotlight internally last year as a result of a lack of workflow.
But Fletcher Building would not comment on the nature of the investigation.
Construction of SkyCity's International Convention Centre in Auckland has led to huge losses for Fletcher Building.
The investigation continues the woe for Fletcher, whose shareholders have had to swallow huge losses from large, high-profile construction projects including the international convention centre at Sky City in Auckland.
The losses resulted in Fletcher breaching its banking covenants.
It then raised more than $500 million in a massive share issue to inject capital back into the company.
Many of its employees are shareholders in the company, having bought shares in an internal share scheme, leaving bitter feelings among many staff.
The losses resulted in a change of chief executive, with Ross Taylor brought in to rebuild the company and sell off some of its businesses.
Chairman Sir Ralph Norris will leave the board when a replacement for him is found.
- Stuff
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