Self-interest claims as ACT official pushes kiwifruit change

TONY WALL
Last updated 09:45 20/03/2014

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The ACT party president is lobbying for changes to regulations governing the kiwifruit industry that would benefit his own company.

ACT is open about its opposition to Zespri's government-mandated monopoly of kiwifruit exports, but what's not known by growers is that John Thompson, its president, is proposing a new structure that would give him and his associates an exclusive foothold in the China market that could return them tens of millions of dollars.

Thompson, an Auckland fruit exporter who was elected ACT president at its annual conference this month, wants to drastically increase the amount of kiwifruit exports to China by establishing a joint venture with Shanghai Neuhof Trade, the company at the centre of last year's Chinese smuggling scandal.

Liu Xiongjie, Neuhof's former chairman, is serving 13 years in jail for underdeclaring customs duty on Zespri imports.

Thompson is proposing setting up a new company, Southern Fresh Kiwifruit Exports (SFKE), with himself as managing director and Liu's nephew, Auckland-based Jhun Si, also a director.

Mark Bayley, a former Zespri director and currently electorate chairman for National's Tony Ryall, would be "commercial manager".

Thompson told Fairfax Media he had been working on the "China issue" for nearly three years, first meeting Zespri chief executive Lain Jager in 2011 to discuss his plans. When he was elected ACT president he wrote to Primary Industries Minister Nathan Guy disclosing his conflict of interest, he said.

He told Guy he had always endeavoured to keep his political and business interests separate.

It is understood Thompson proposes exporting 16 million trays of kiwifruit to China each year, which at current rates would earn US$200 million. The agents' commission on that could be as high as US$30m.

Thompson, an ACT list candidate at the 2011 election, has been meeting government officials in Wellington seeking the creation of a duopoly exporting structure, so that SFKE can export to China alongside Zespri.

A Ministry for Primary Industries spokesperson confirmed officials had met Thompson for "full and frank" discussions, which remained confidential.

It is understood Thompson's pitch is that there is a need to urgently change the industry because of Zespri's woes in China and the Serious Fraud Office investigation into its China dealings.

He shows copies of news articles, some of which he has been a source for, as support for his claim that Zespri has lost trust in China and is "too political".

But Guy appears to have already vetoed any deal, telling Fairfax Media there were no plans to change kiwifruit legislation.

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"The industry belongs to kiwifruit growers and the majority of growers support the single seller model," he said.

Neil Treblico, president of NZ Kiwifruit Growers, criticised Thompson's moves and said growers he had spoken to were incensed.

"This is definitely not in the interest of growers or the industry - this is purely about self-interest," he said.

He said growers had spent years building up the industry to a point where it held a premium spot in the market, and "sharks" were trying to leverage off that to line their own pockets.

More than 90 per cent of growers were happy with the single desk structure, he said.

Zespri said in a statement that Thompson and Bayley approached it last November proposing a collaborative marketing agreement for this year involving millions of trays of kiwifruit.

Zespri told them it was unlikely to support such a large-scale programme as the proposed volumes represented around 20 per cent of all kiwifruit grown in New Zealand and about 50 per cent of gold kiwifruit.

Putting such a large amount of product into China potentially exposed growers to "significant risk".

Zespri "did not have confidence in his choice of importer" given Neuhof's involvement in the smuggling scandal.

Zespri said Thompson had not formally approached it about his duopoly proposal and how it might work and "most importantly, has not approached New Zealand kiwifruit growers".

Zespri chairman Peter McBride warned that the proposal could see a small number of private interests including foreign entities gain a significant stake in the industry "and most likely result in the destruction of the tremendous amount of value New Zealand kiwifruit growers have built up over 17 years".

But Thompson was scathing of Zespri's performance, saying it had "continually abused their privileged position given to them under the regulations".

His proposed duopoly would benefit growers with more choice and the increased transparency that came from competition.

Thompson said Neuhof was an appropriate choice of partner and had been badly treated by Zespri. He had been supporting Liu's family.

ACT has long championed deregulation of the kiwifruit industry.

In 2010, former ACT MP Sir Roger Douglas submitted a private member's bill that would have allowed the owners of new varieties of kiwifruit to export overseas as of right. It did not proceed. Fairfax NZ

- The Dominion Post

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