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A China-based subsidiary company of Zespri has pleaded not guilty to charges of criminal smuggling related to alleged under-declaration of customs duties by independent importers in a Shanghai court yesterday.
A judgment is expected from this trial in the next two to three months.
A Zespri employee who is not a New Zealand citizen also pleaded not guilty in court yesterday to the same charges. Zespri continues to offer support to him and his family, and his government is offering consular assistance.
This trial follows on from a China 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. In hearing his case, the court rejected his mitigating defence that he was not responsible for meeting customs obligations on the importation of New Zealand kiwifruit. Liu is appealing the 13-year sentence he received. He has repaid 37 million RMB (approximately $NZ7 million), which was the amount of the underpaid customs duties.
As a continuation of the China Customs investigation into the under-valuation of New Zealand kiwifruit imported into China, Zespri's China-based subsidiary – Zespri Management Consulting Corporation (ZMCC) – was charged with Customs offences alleged to have occurred between 2008 and 2010. The allegations against ZMCC relate largely to the invoicing practices and the manner in which the pro-forma invoice price was reached by the importers.
The legal obligation to meet all customs requirements sits with the importer. Zespri has always acted at the direction of the importer and in good faith, believing its processes were in accordance with Chinese law and regulations. There is no evidence that Zespri or New Zealand kiwifruit growers benefited from the customs under-declaration.
As a long-standing business in China, Zespri is committed to acting within China's laws and regulations. Zespri has cooperated with China Customs throughout its investigation, including providing key information and face-to-face meetings between senior executives and authorities.
China is a valuable market for New Zealand kiwifruit and Zespri remains committed to its China business. This case is not expected to impact on Zespri's sales in China in the 2013 season.
As this case remains before the court, Zespri will not make any further comment until after the court has issued its judgment, which is expected sometime in the next two to three months.
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