The British firm Hanson, the world's No. 1 producer of crushed rock for the construction industry, denied on Monday that it stole sand from San Francisco Bay -- days after being sued for $200 million by California over sand dredging royalties.
The company defrauded the state by mining outside leased areas, underreporting the amount of sand taken and making prices appear low to avoid royalty payments, according to a claim filed Friday by California Atty. Gen. Bill Lockyer. Hanson said it would fight the suit.
"We would never condone the practices alluded to by the attorney general in any of our operations," said Justin Read, a Hanson spokesman. "The issue is one of lease interpretation, not of fraud or deception."
California leases sandbanks in San Francisco Bay, near the former Alcatraz penal colony, to Hanson and other mining outfits, which dredge sand and sell it to builders. The U.S. is the company's largest market, with sales of $3.1 billion last year.
"It's not good news, but context is needed," said David Taylor, an analyst at Teather & Greenwood with a "hold" rating on Hanson stock.
The case may involve about $102 million worth of sand, Taylor said.
Lockyer filed the lawsuit against three of Hanson's Californian units: Hanson Building Materials of America, based in San Ramon, Moe Sand Co. of Oakland and Olin Jones Sand Co. of Martinez.
"This isn't ordinary dirt we're talking about," Lockyer said. "Most construction projects couldn't be completed without sand."
Hanson knew of the improper activities when it bought the Moe and Olin Jones units in 1999, Lockyer said in the claim, adding that the activities continued after the purchases were completed.