Carmaker Ford is being investigated by the National Consumer Commission for allegedly contravening the National Consumer Act — and could be fined 10% of its an nual turnover.
The company — and its dealerships — will face a Consumer Tribunal hearing that could levy a fine that experts say could be in the billions.
The company's revenue from its Middle East and Africa region was $4-billion in 2015.
The launch of the investigation follows about 50 Ford Kuga SUVs catching fire and the consequent recall of the vehicles. Ford submitted a report to the commission on its investigation into the cars bursting into flames in South Africa, Swaziland and Botswana.
But Ford's report, said a commission source, left “much to be desired”.
“To say it was flimsy would be an understatement. To say it resembled an actual investigation would be questionable.”
The claimed inadequacy of its report is believed to have been the final nail in the coffin for Ford, which has been trying to stave off an investigation by the commission and the imposition of penalties by the tribunal.
Commission spokesman Trevor Hattingh confirmed that Ford had been notified that it was under investigation. He said Ford was compelled by law to co-operate with the investigation.
“The investigation will see Ford having to give our investigators full access to all its plants for site inspections, making all personnel deemed of importance to the investigation available and seeing to it that any and all necessary documents are handed over.”
The commission has the power to demand to see whatever documents it deems relevant.
“Nothing is off limits. We can demand to see both internal and external e-mails, as well as the Kuga manufacturing specifications.”
Ford SA spokesman Rella Bernardes said: “We have received the notice from the NCC and will continue to fully co-operate with it on all fronts.
‘‘At all times we operate in line with the safety recall guidelines in terms of the Consumer Protection Act.”
There has been a deluge of complaints to the commission by Ford customers since January, when the company announced a safety recall of 4556 1.6litre Kugas built between 2012 and 2014 in Spain.
Reshall Jimmy was burned to death in his 2014 1.6 litre Kuga while on holiday in the Wilderness, in the Western Cape, in December 2015.
Since January the commission has received 134 complaints about Kugas, including about electrical faults.
Complaints extend to fires in Ford cars other than Kugas, and to the loss of trade-in value and poor customer service.
Commission spokesman Hattingh declined to comment on Ford‘s report but said the commission‘s decision to proceed with its investigation followed its receipt of the Ford document. He said that, for now, the investigation would focus on the “combusting cars”.
“This is about a critical safety matter, with people's lives potentially in danger. We want to get to the bottom of this.”
Asked if the commission would look into reports by insurance companies, that had for years warned Ford about the Kuga fire hazard, Hattingh said the commission would gather evidence from all sources.
A source close to the investigation said investigators would look to bring in cyber experts.
“It's about finding the paper trail, specifically e-mails that warned Ford of the dangers that Kugas posed to drivers, and the warnings Ford chose to ignore.
“There is a possibility that someone might do something stupid and delete certain files.”
Consumer protection lawyer Janusz Luterek said Ford could not avoid the investigation.
“For Ford this is severe. The commission can push for a maximum sentence, which is 10% of a company‘s total annual turnover.
“This turnover, in Ford‘s case, would not only be through the sale of its Kuga brand, but all other models, which could cost the company hundreds of millions of rands, if not billions.
“Even if it were 5% it could easily wipe out their profits for several years.”
Renisha Jimmy, sister of Reshall Jimmy, welcomed the news that the commission would be investigating.
“We were concerned that the commission was going to bow to pressure from Ford.
“Ford must be held liable not only for Reshall‘s death but for all the heartache so many of these fires have caused other owners.”
Neville Melville, the Consumer Goods and Services Ombudsman, said the commission adopted a cautious approach to such investigations.
“For them to go this route must mean they have strong grounds, especially if there are plans to go to the Consumer Tribunal.”
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