Zespri let down by importers

Kiwifruit marketer Zespri says it is rethinking its business partnership arrangements in its export markets now ''it is clear its trust and confidence in its China importers was misplaced''. 

The marketer, which has a statutory exporting monopoly, stated its intention in a paper backgrounding a current court trial in China in which a Zespri subsidiary pleaded not guilty to charges of criminal smuggling.

The charges, being heard in a Shanghai court, are related to alleged under-declaration of customs duties by independent importers.

Zespri said a judgment is expected in the next two or three months.

The Bay of Plenty-based company yesterday said a mid-level Zespri employee, an American citizen, also pleaded not guilty this week to the same charges. 

The trial follows a Chinese Customs investigation which began in 2011 and saw Zespri's former Shanghai-based independent importer, Liu Xiongjie, plead guilty to charges of criminal smuggling in May 2012. 

The investigation also resulted in Zespri's China subsidiary,  Zespri Management Consulting Corporation (ZMCC), last month being charged with customs offences alleged to have occurred between 2008 and 2010.  

Zespri said the allegations against ZMCC related largely to invoicing practices and the manner in which the pro-forma invoice price was reached by  importers.

Liu was one of three importers who worked with ZMCC on the promotion and distribution of kiwifruit. The three had primary responsibility for a specific region but worked together and were known to each other,  Zespri said.

The court has rejected Liu's mitigating defence that he was not responsible for meeting customs obligations on the importation of New Zealand kiwifruit. He is appealing the 13-year sentence he received.  He has repaid 37 million RMB (about NZ$7 million), which was the amount of the underpaid customs duties, Zespri said.

Zespri's paper said it never had intent to facilitate or engage in under-declaration of customs duties ... ''and it appears clear now that Mr Liu did under-declare customs duty and misled Zespri as to the existence of a deemed value for import purposes''.

China is Zespri's third-largest market. Last year sales to China were a record $110 million. Zespri's total sales revenue was $1.62 billion.  Zespri said neither the Zespri Group nor Zespri International had been charged with any offence. 

Zespri said it was reviewing its arrangements in China and other markets to avoid a repeat situation. 

Waikato Times