Leading kiwifruit marketer Zespri has lost its appeal against a ruling relating to incorrect declarations of customs import duties into Shanghai between 2008 and 2010, the Bay of Plenty Times reports.
A Shanghai court upheld the original ruling that found its China subsidiary guilty of smuggling, issued it a RMB5m (US$950,000) fine and sentenced its employee to five years in jail.This initial decision was originally handed down in March.
Zespri chief executive Lain Jager expressed disappointment, but acceptance of the decision, with the biggest concern its incarcerated employee.
'While we are disappointed, Zespri accepts the court's decision and acknowledges Zespri's monitoring of its import arrangements into China between 2008 and 2010 failed to ensure that its import partners were compliant with local customs laws and regulations,' he said.
'Our biggest concern remains for the welfare of our employee and we will continue to work with his family and legal representation to explore how we can support him personally and legally going forward.'
Zespri stated that the core of its appeal was producing evidence demonstrating its importers had provided shipment reconciliations that showed the full owed duty had been deducted.
This evidence showed the company had not intended to facilitate the false declarations and did not benefit in any way from the duty evasion.
However, the court found this evidence irrelevant and subsequently upheld the fine and jail sentence for Zespri’s employee in China, a US citizen.
Jager emphasised that ensuring this kind of incident did not occur again was a top priority. 'We have embarked on a significant overhaul of our China operations to minimise the risk of this happening again. That process continues, but we are working closely with China customs and other parties to ensure our operations are compliant.'
He added that the reputation of Zespri’s brand and business had not been damaged.
Kiwifruit Growers Association president Neil Trebilco expressed disappointment at the court’s decision, which he said would ultimately hurt growers.
'It's extremely disappointing from a grower's perspective because the shareholders of Zespri, who are all growers, will have to foot the bill,” he said.
'I understand they do have some time and another avenue by which to make a further appeal, so we will have to wait to see if they go that way.
'China is an important market and it goes to show we may still have things to learn about the frameworks around doing business there. We are not the only industry to have had issues.”
In seeking to find a positive message, Trebilco added that the incident had been an important learning experience for Zespri and other businesses operating in China.
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