25 Mar 2013

Independent inquiry launched into Zespri case

9:30 am on 25 March 2013

The official body for kiwifruit growers has launched an independent inquiry into how a China-based subsidiary of Zespri was found guilty of evading customs duties.

Zespri Management Consulting Corporation is facing millions of dollars in fines and penalties after being convicted in a Shanghai court.

An employee was sentenced to five years in prison and another official was earlier jailed for 13 years.

The company was fined almost $1 million and the court ordered it to repay what it called "ill-gotten gains" worth about $10 million.

Kiwifruit Growers Incorporated says it is very concerned about the situation and the effect the prosecutions will have on the Zespri brand and continued trade with China.

Chief executive Mike Chapman says growers need to have full confidence in Zespri's activities and are seeking assurances that continued exports to China will not be affected by the case.

He says Zespri is fully co-operating with the inquiry, which is expected to report back late next month.

Growers concerned at impact of Zespri case

Independent growers fear they might end up paying some of the bill from the court case.

The spokesperson for the Independent Kiwifruit Growers Association, Marcus Wilkins, believes it could rebound on growers in New Zealand, as Zespri might not have enough money in its system to meet the costs.

"The growers ultimately pay the price, whether they're shareholders of Zespri or not. The cost of this sort of thing comes right back to the grower - not just the fine, it's the question of what's this going to do to Zespri's market access into a large and significant market."

Mr Wilkins says growers are worried about standards of governance in Zespri and he is not impressed with how the subsidiary was run.

"I think the evidence speaks for itself - they weren't working very well.

"We'd like to see some transparency and accountability around that particular issue and I guess you could say responsibility in the way this system works."