Carter Holt plays down profit-share legal claim

By CHRIS DANIELS

Forestry giant Carter Holt Harvey is playing down the risk of any big payout stemming from a union legal claim for a bigger slice of profits.

The claim relates to a profit-sharing arrangement that started at the Tasman Pulp and Paper Mill at Kawerau in the mid 1990s.

Norske Skog bought the plant from Fletcher Challenge Paper in 2000, then sold the pulp part of the mill to Carter Holt Harvey a year later.

At the heart of the multi-million-dollar legal action are disputed claims over what liability travels with the new owners of the Tasman plant, or if it remains with the previous owners, Fletcher Challenge Paper.

The union claims that incorrect accounting methods were used to work out what payout workers would get as part of a profit-sharing agreement.

This amounted to a breach of the collective employment contract with workers.

Carter Holt general counsel Nic Short said the dispute was about accounting practices and Carter Holt's liability, if it lost the action, was extremely small.

"Any issue we have relates to our employees from the date that we took them on in 2001.

"Since we have some employees there and they are part of the action, whatever the result was they would have an entitlement if there is any from us.

"But the balance, on the face of it, would rest with [the previous owners]."

Short said he did not know what kind of deal Norske Skog had with Fletchers when it bought the mill.

"They say the accounting methodology being applied is incorrect.

"We dispute that, we believe it is correct.

"That's what Norske is saying and what Fletchers said before that.

"There is a profit-share plan there, you have to apply accounting principles to the facts for the year as to whether there's a payout or not."

Andrew Little, secretary of the Engineering, Printing and Manufacturing Union, said the questionable accounting practices related to the assigning of costs to the mill.

Costs from Fletcher's head office operations, unrelated to mill operations, had been put on to the mill's accounts in a totally arbitrary fashion, he said.

"There's a couple of years since 1997 where we think the way they've calculated it has been questionable."

Little said it would not be until during the discovery process that the effect of ownership changes on the liability to make any payment could be determined.

He said the exact figure of how much money was due to come to workers was not known, but it would be in the millions, possibly as much as $10 million.

The Employment Court is due to hear the union's claim later this year.