By Andrew Stone
AUCKLAND - A David and Goliath-type dispute has emerged among contractors who claim they have been short-changed over work promises by the gas company Enerco.
The underground service operators claim they were promised months of continual work by the Auckland gas distributor.
But after many small contractors had bought costly gear and taken on extra staff, Enerco cut back on the number of firms it had engaged to expand its residential gas network.
Though Enerco suggested that operators sign up with one of its three preferred contractors, the jilted service firms complained they would be left out of pocket with 50 per cent lower returns.
Some firms say Enerco's contract handling forced them to the wall and the company is understood to have settled with two contractors on secret terms without admitting any liability.
Others are looking at legal remedies, and are watching closely a court wrangle with close parallels - the $148 million claim by subcontractors who worked on Telecom's aborted suburban cable TV network. This dispute is back in the High Court at Auckland later this month.
Details of the two-year-old Enerco feud have just come to light with one contractor in bankruptcy proceedings. Fran Van Helmond blames his financial predicament on Enerco, though the company - now run out of Christchurch and renamed Orion - rejects this.
One Enerco letter to Mr Van Helmond said that by hooking up just one house a day "gross earnings should exceed $70,000 per annum. We would expect this to be the minimum earnings."
The pledge was sufficient for the Bank of New Zealand in Mt Roskill to guarantee a line of credit and for Mr Van Helmond to take on and train five staff.
Kevin Johnson, Enerco's chief executive at the time, said the company offered Mr Van Helmond mediation and work with a main contractor.
"He does appear to have made some bad business decisions and is coming at us to rectify that situation."
Mr Van Helmond lasted less than a year with Enerco, finishing in June 1997. He has been fighting the company ever since.
Other contractors, who would not be named, claimed some had been forced to sell homes put up as security to finance the purchase of equipment.
Construction lawyer Chris Booth said he had been approached by several contractors who alleged they were promised more work than did eventuate.
Mr Johnson said Enerco's advice was that there was no claim against the company.
The firm rejected claims of guaranteed work commitments, and he pointed out that a number of contractors had accepted new terms.
Contractors line up against gas company
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