The Building Commission's Building Services Board has imposed conditions on two Diploma Group subsidiaries, limiting their ability to carry out work, after the parent company fell into the hands of administrators just before Christmas.
The BSB has targeted Diploma subsidiaries DGX Construction and Diploma Construction by imposing conditions that prevent the two companies from entering into building work contracts where contractor registrations are required.
The conditions are not restrictive on the completion of work under existing contracts.
It follows news in late December that Diploma had appointed partners from Grant Thornton as administrators of the company, as well as Ferrier Hodgson representatives as receivers and managers of the business.
Building commissioner Peter Gow said Diploma’s appointment of administrators cast further doubt over the company’s ability to meet its registration obligations, and justified the action taken by the BSB.
“Registered building contractors are required to meet financial requirements, specifically to maintain the capacity to pay debts as and when they fall due,” he said.
“The board’s action will limit the risk to the public while the Building Commission completes its investigation into Diploma’s conduct.
“Further action will be taken if Diploma is found to have engaged in conduct in breach of its registration obligations. Penalties for misconduct may include the suspension or cancellation of a registration.”
The Building Commission began an investigation into Diploma in September last year, following allegations by more than 50 suppliers and subcontractors that the company was refusing to pay them without justification.
Diploma had reported a $600,000 profit for the first six months of the 2015-16 financial year.
However, as the year progressed, the company ran into a number of issues, including its Diploma Construction subsidiary lodging a $32.5 million loss in FY16 on the back of a $20 million impairment.
Diploma is also embroiled in a dispute with TRG Properties over a residential project in Perry Lakes.
Diploma shares haven’t traded since August.
