Zespri denies collusion

TONY WALL
Last updated 05:00 02/03/2014

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Zespri has admitted a controversial dual invoicing system that got it in trouble in China was also used in Taiwan, but denies colluding with importers to avoid duty on kiwifruit imports.

It was revealed last month that Zespri - already under investigation by the Serious Fraud Office over what it knew about duty avoidance in China - was facing a similar scandal in Taiwan, its seventh largest market.

The Government-mandated kiwifruit marketing monopoly said its three Taiwanese importers had been falsifying details on Zespri invoices in order to pay lower customs duty. Chief executive Lain Jager flew to Taipei last month to sack the importers.

Under the dual invoicing or "pro forma" system, Zespri would issue two invoices for kiwifruit shipments - one for the true value of the fruit and a second for a lower amount that was used for customs purposes.

The Sunday Star-Times revealed last year that senior Zespri staff and directors knew the scheme was likely illegal but pushed on with it in the false belief it had been okayed by Chinese customs. The Ministry of Foreign Affairs and Trade warned the company in 2008 that dual invoicing could lead to the arrest of its employees and "reputation risk" for New Zealand.

Subsequently Zespri's subsidiary company in Shanghai was convicted on smuggling charges and fined almost $1 million while a mid-level manager and an importer received lengthy jail sentences.

The Star-Times has documents which show that as far back as 2007 senior Zespri staff were discussing how pro forma invoicing was being used in Taiwan "to reduce the landed cost of Zespri kiwifruit and thereby reduce the amount of duty payable by the importer".

A sacked importer, Norman Tarng of Coverings Industrial, one of Taiwan's biggest fruit importers, told the Star-Times he had an agreement with Zespri not to comment but he could confirm that double invoicing had gone on for many years and "everybody knows about it".

He said after Zespri stopped pro forma invoicing in 2012 following the China scandal, his company had continued to declare lower prices to Taiwan customs. "We declared not the true price, that's a mistake."

Sources close to the importers say Zespri had led them to believe they could continue with the dual invoicing and Zespri would back them.

But Zespri said that was not correct. "Lain [Jager] specifically asked the importers if any Zespri employees knew of or had assisted with the importers' duty declarations. The importers said no Zespri employee was involved," a spokesperson said.

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Zespri insists that dual invoicing was a common, legitimate practice in fruit exporting when the final price was not known at time of sale. Two invoices were supposed to be submitted by the importer to customs, the pro forma one and the final invoice on which duty was paid.

The Taiwanese importers should have submitted the single, final invoice but "they took our sales invoice and changed details before submitting them to Taiwan customs".

- Sunday Star Times

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