The New Zealand Kiwifruit Growers’ organisation has announced that the independent inquiry it launched into the business operations of single-desk leading kiwifruit marketer Zespri in China is anticipated to continue for some months yet, according to a report by Radio New Zealand News.
The organisation’s president, Neil Trebilco, told Radio New Zealand that their own inquiry is intended to oversee that Zespri's dealings are both legal and ethical, and check that Zespri has altered its practices to ensure no repeat of this kind of incident.
"We recognise how important China is to us,” he said to Radio New Zealand. “As a country we cannot afford not to export to China despite the difficulties that we might face in that country."
The investigation by the grower organisation began in March this year following the Chinese subsidiary of Zespri being fined more than US$950,000 after a guilty verdict on charges of underpaying customs duties on kiwifruit imports.
An employee was convicted of the crime of smuggling general cargo and sentenced to five years imprisonment. Another Chinese importer employed by Zespri from 2008-2010 confessed to criminal smuggling charges and was sentenced to thirteen years imprisonment.
Both are appealing their sentences.
Zespri maintains the legality of its actions when operating under the dual invoicing system in China. Radio New Zealand reports that this system saw an accurate tax invoice sent by Zespri to China, but a second pro-forma (standard) document was simultaneously issued valuing the kiwifruit at a reduced price.
The kiwifruit marketer claims dual invoicing is common in the fresh produce business. However, the prosecution of its employees has resulted in it switching to a fixed price system.
Trebilco acknowledged to Radio New Zealand that double invoice systems can serve a practical purpose, as fresh produce sold overseas will not all reach the retailer to sell to consumers and growers want to avoid paying duty on wasted fruit.
"But there was an invoice at the end of season, for example, which was supposed to make the difference up, and the importer is supposed to have declared that and paid the duty on that revised invoice," Trebilco told Radio New Zealand News.
Trebilco stated that, as he understood it, Zespri had been informed that the amount on the second pro-forma invoice had been agreed by Chinese customs and the importer it employed. Zespri was subsequently unable to validate this amount and trusted the word of the importer.