The consequences of unethical business practices

Posted: 31 July 2019

Samuel Chandra (BP110064) was found to have brought the LBP regime into disrepute by subcontracting a build against the conditions of his contract (CB24416).

This led to a range of problems for the owner, including negligent building work, for which Mr Chandra was also disciplined.

Unethical subcontracting

Mr Chandra was contracted through his company, Axcel Construction Limited (now in liquidation), to build a new residential dwelling. The contract Mr Chandra signed stated he would both carry out and supervise the building work. It also stated he would not subcontract the work out without written consent – a condition which he ignored. Using a fake contract, Mr Chandra subcontracted the work for $100,000 less than what the client had paid.

When Mr Chandra’s company went into liquidation, the subcontractors refused to complete the house and demanded additional payments they claim they were owed by Mr Chandra. Suppliers and contractors also threatened to repossess materials as a result of non-payment by Mr Chandra.

Workmanship issues

Building work commenced in January 2017 but progress was slow. Foundations were completed in April and the roof was installed in November. A council inspection noted the frames were no longer compliant as a result of prolonged exposure to the elements. When the issue was raised with Mr Chandra, he took no action.

As a result of Mr Chandra’s subcontracting, a different person took over the build. They worked from the wrong plans, which led to the build substantially changing from what had been consented.

The complainant stated that Mr Chandra was paid $469,000 for the project but that he ignored phone calls and texts. The only contact from him was forwarding stage-payment invoices. When the complainant approached Mr Chandra at his residence to discuss matters, he denied recognising the complainant and was said to be very abusive.

Board decision

Given the gravity of the offending, the Board decided to cancel Mr Chandra’s licence for six months. The Board considered this was not only a necessary outcome for Mr Chandra, but that it also served to protect the public and deter other LBPs from similar conduct. The decision has been published for these reasons. In addition, Mr Chandra has been ordered to pay $2,000 towards the costs of the inquiry.

What we can learn from these decisions

There is more to being an LBP than just technical competence. The way an LBP conducts business affects whether they should keep their licence and stay in the LBP scheme. The Board’s decision shows that unethical business dealings can have serious consequences for an LBP – for Mr Chandra they were so serious they led to him losing his licence.

This decision and other past decisions can be read in full on the LBP website.

This information is published by the Ministry of Business, Innovation and Employment’s Chief Executive. It is a general guide only and, if used, does not relieve any person of the obligation to consider any matter to which the information relates according to the circumstances of the particular case. Expert advice may be required in specific circumstances. Where this information relates to assisting people: