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SFO ends six-year Zespri investigation with no charges

Author
NZ Newswire,
Publish Date
Tue, 7 Nov 2017, 12:03PM
Zespri. (Photo / Getty Images)
Zespri. (Photo / Getty Images)

SFO ends six-year Zespri investigation with no charges

Author
NZ Newswire,
Publish Date
Tue, 7 Nov 2017, 12:03PM

Zespri's chairman admitted relief and satisfaction after a four-year investigation by the Serious Fraud Office cleared the kiwifruit company of any wrong-doing relating to invoicing with its Chinese importer.

On Tuesday the SFO announced that evidence gathered did not meet a high enough standard to lay charges, after investigating allegations Zespri facilitated tax evasion by providing false invoices to its importer to use in declarations to Chinese officials.

Zespri chairman Peter McBride said the company had always given the SFO its full co-operation in the case, which had cost it over $7 million since 2013 through legal advisors and providing "significant volumes of data".

"As we have always been clear, we relied on our former importers to comply with their legal obligations under local customs laws and, based on our own internal investigations, we know that we did not benefit from their customs fraud," he said.

"It is satisfying to finally have the SFO confirm that its investigation has closed and that there are no further actions."

Since Zespri became aware of the offending of its former importer in China in 2011, it had significantly changed its operating model in that market, he said.

"China continues to be a market of tremendous opportunity and, as in many of our fast-growing emerging markets, also has a unique set of challenges in which to do business. We will continue to invest in robust systems to protect our reputation and brand," he said.

SFO director Julie Read says dual invoicing was not illegal but New Zealand exporters should approach the practice with "extreme caution" as it is a warning flag for duty evasion overseas.

""In this case the practice of dual invoicing facilitated criminal offending in China," she said.

"The lower valued invoice was used by Zespri's importer to evade duty and resulted in him being convicted for the Chinese offence of smuggling."

A Zespri subsidiary was found guilty of being an accessory to under-declaring customs duties by a Chinese court, which fined the unit $960,000, sentenced its employee to five years imprisonment, and ruled gains of some $11.6 million should be repaid.

Ms Read said the gathering of evidence in this case took much longer than usual due to the "complex and unusual arrangements" between Zespri and the Chinese importer.

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