18 Jul 2013

China court upholds Zespri subsidiary's conviction

10:17 am on 18 July 2013

An Appeal Court in Shanghai has upheld the conviction of Zespri's Chinese subsidiary and one of its employees for underpaying customs duties on kiwifruit imports between 2008 and 2010.

The Zespri Management Consulting Company in China was fined more than $950,000 and the employee sentenced to five years in prison.

Zespri says it provided evidence in the appeal that its importers provided shipment reconciliations showing they had deducted the full duty owing on the final settlement price.

Zespri says this demonstrated the company received no benefit from the duty evasion.

The appeal court ruled the reconciliations were not relevant to whether Zespri's subsidiary company or its employee had the intention and objective act of smuggling.

Zespri says it won't comment on the court's decision as further appeals may be considered.

However chief executive Lain Jager says says it's critical the company learns from the experience and the company has embarked on a significant overhaul of its China operations to minimise the risk of errors happening again.

Based on a number of face to face meetings in China with government and customs officials, Mr Jager says, it's clear that Zespri's business and brand haven't been damaged. He says with demand for kiwifruit outstripping supply in China, the future for the Zespri brand there is very bright.