Zespri company's smuggling appeal fails

Last updated 05:00 26/07/2013

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Zespri says it is disappointed after an appeal against smuggling charges in China failed.

A Shanghai court today upheld smuggling charges against the Kiwifruit exporter's Chinese subsidiary and one of its employees.

The subsidiary has been fined RMB5 million, about NZ$960,000, and the worker sentenced to five years in prison.

The charges related to under-reporting the import duties on Kiwifruit coming into China between 2008 and 2010.

Zespri had argued it had paid full duty but its appeal failed, with the court finding that the documents the company filed were not relevant to the smuggling charges.

Chief executive Lain Jager said the decision was disappointing and the focus was now on the wellbeing of the convicted employee.

"We will continue to work with his family and legal representation to explore how we can support him personally and legally," he said.

He said Zespri had failed to ensure its importer was working within the law and was now working with Chinese Customs to minimise the risk of that happening again.

In May, The Sunday Star-Times reported that Zespri was aware its invoicing system in China was potentially illegal from the start and some senior management were involved in trying to have it rubber-stamped by Chinese Customs.

The system that the Shanghai court has found to be illegal involved producing two invoices - one for the actual price of the fruit, and a second for a lower amount that would not appear on its books but would be used by the importer to pay lower customs duty.

Zespri has never denied the dual invoicing but says its importer misled the company by claiming to have ratified the deal with Chinese customs.

Customs duty was his responsibility as the importer, it says.

Zespri is a single-desk monopoly that controls New Zealand's $1.6 billion kiwifruit industry.

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- BusinessDay.co.nz

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