Market Advisory: Infinity Cables Recall Cost
Australian Advisory on Infinity Cable Recall - September 2014
Following last month's annoucenment of the ACCCs official product recall of the Infinity branded cable, comes an estimate on the total replacement cost. Full story below.
THE “cable girl” scandal that has left time bombs in 40,000 Australian homes and businesses will cost at least $80 million to fix.
The estimate comes from a giant taskforce working feverishly to ensure 4000km of the potentially deadly cable is identified and replaced before becoming a fire or electrocution hazard.
The dodgy wiring was imported from China by a company run by Sydney woman Lu Luo. Her husband, Sam Jedari, was the sales manager.
She is facing criminal charges and the company, Infinity Cable Co, is now in liquidation. That’s left the sellers of the Infinity and Olsent-branded cable with the bill for the recall, the biggest of its type.
News Corp Australia can reveal Woolworths-owned hardware stores are up for about $35 million, having sold at least 40 per cent of what has been recalled.
Most of that was through the troubled Masters chain, which is already operating deep in the red. Woolworths recently reported Masters lost $176 million last financial year — nearly $20 million more than the year before — as it struggles against Bunnings, which did not sell the cable.
The cable was about half the price of alternatives, a source said.
In total, hardware chains sold 85 per cent of the cable, mainly to small-time electricians and other trades — plus people doing their own wiring illegally. The rest was sold by electrical wholesalers.
It was on the market in:
* NSW from 2010 to 2013;
* Victoria, Queensland, South Australia and Western Australia in 2012 and 2013; and
* Tasmania in 2013 only.
It was not sold in the Northern Territory.
The cable was used in a range of electrical and communication wiring work. While good-quality cable will last decades, Luo’s wares could become brittle any time from 2016. The insulation may then break and expose live conductors, creating the risk of electrocution or fire.
When the cable was first supplied to hardware chains and electrical wholesalers it came with papers saying it met Australian standards. But later testing by NSW Fair Trading found that it did not.
ACCC deputy chair Delia Rickard said the taskforce obtained an initial estimate indicating that the recall will cost about $80 million.
It’s understood the ACCC considers that figure to be conservative. It is leading the national recall, which began last month, and is co-ordinating the taskforce. The taskforce comprises 21 consumer agencies and regulatory bodies, the largest ever assembled.
Luo is defending a charge for selling electrical articles in breach of NSW Electricity (Consumer Safety) Act 2004. She did not respond to a request for comment for this story. Previously, in her only public comment, she told News Corp Australia: “We are also an (sic) victim of the source company’s faulty product.” Mr Jedari did not respond either.
Woolworths would not comment.
On Sunday Metcash said Mitre 10 took one delivery of Infinity cable in September 2013. It wouldn’t say how much Mitre 10 bought. The cable was sold in 80 stores for a month. All but 11.7km had been confirmed as destroyed.
* More information is available at www.recalls.gov.au.