Computers, files searched in Zespri probe
Zespri has supplied more than 100 boxes of documents to the Serious Fraud Office as part of a wide-ranging investigation into the kiwifruit marketing company's dealings in China.
The Sunday Star-Times understands the inquiry is huge, involving thousands of documents, thousands more emails and other electronic data and that dozens of staff will have their computers and laptops examined.
The SFO inquiry, launched as a result of convictions in China of a Zespri subsidiary for smuggling, is likely to take many months.
The Star-Times has learned that, at the same time, Zespri's board has commissioned forensic investigators Beattie Varley to conduct an internal probe and has hired prominent Queen's Counsel John Billington to represent it.
The Beattie Varley investigators are going over documents relating to China exports to give Zespri executives a better picture of what was going on at the time.
But some growers still believe the inquiry is not wide-ranging enough because it is mostly focusing on documents held by New Zealand-based staff.
"Until they look at all the overseas stuff they're never going to get to the truth," one grower said. "A lot of the shenanigans we know have gone on overseas. It's easier to cover stuff up overseas. I suspect the audit of Zespri accounts never includes any of that stuff."
A Zespri spokesperson said the SFO had sent "two extremely broad requests for information from right across the organisation" and the company was co-operating.
"The SFO has not informed us about the purpose of its investigation, or a likely timeline," the spokesperson said. The SFO declined to comment.
The Star-Times has learned that lawyers and accountants from PwC are busy collecting a huge number of documents relating to the China business.
It is understood Zespri has already delivered more than 100 boxes of material. The SFO requested a broad range of documents, including the emails of staff who worked in certain areas of the business from 2007.
That includes more than 70 people whose computers will need to be examined.
It is understood Zespri expects several of its staff to be interviewed by SFO investigators over the coming months.
The SFO inquiry was launched after the Star-Times revealed last May that internal documents showed senior Zespri managers and directors knew a double invoicing system for kiwifruit shipments to China in order to reduce duty payments was likely illegal.
Leaked documents showed Zespri managers admitted among themselves the invoicing system "does not look good" and were worried New Zealand customs would discover the scheme and alert their Chinese counterparts.
A senior Kiwifruit industry source also described how Zespri's importer in China, Liu Xiong Jie, known as "Big Liu", would pass suitcases full of cash to friends and relatives to deposit into Zespri's offshore accounts to avoid the prying eyes of Chinese authorities.
After an investigation by Chinese customs, Liu was jailed for 13 years and ordered to repay $7.3m in tariff losses in relation to underpayment of customs duties on New Zealand kiwifruit from 2008-2010.
Zespri's subsidiary in Shanghai was convicted and fined almost $1m and a mid-level manager was jailed for five years. The court said more than $10m in illegal gains should be repaid. Zespri lost an appeal of the sentence in July.
It has consistently blamed Liu and its contracted importers for the underpayments, but Liu says he was only acting on instructions.
In December Kiwifruit Growers Inc said Zespri had decided not to release any further information to an industry inquiry because of the ongoing SFO inquiry, forcing KGI to put its inquiry on hold.
Sunday Star Times