Zespri is the main culprit in an import duty avoidance scam in China a former importer claims, according to a report in The New Zealand Herald.
Lawyers acting for Liu Xiongsie, who is appealing a 13-year prison sentence and NZ$7m fine in relation to tax evasion, reportedly said Zespri had more to gain by understating the value of kiwifruit for customs duty purposes.
According to The Herald, Liu's legal team told the Shanghai People's Higher Court that his company, Shanghai Neuhof Trade Ltd, enjoyed no direct benefit by having the amount of tax reduced. They claim the original court mistook the import arrangement between Neuhof and Zespri to be a 'buy-sell' transaction, whereas the true relationship was that of an agent receiving a commission on sales volume. That meant Neuhof would benefit only if the declared price was higher; it had no motivation to lower the price.
Prosecutors should have regarded the case as several corporations engaged in joint smuggling and Liu should be seen as a nominal player, Liu's legal team is understood to have told the hearing.
All documentation including sales invoices, packing lists, and bills of lading were supplied by Zespri, which should be identified as the prime culprit, they said.
The scam centred on the issuing of pro-forma invoices by Zespri for tax and customs purposes, significantly understating the value of shipments into China. The company later invoiced the importer for the final sales value and was paid in full.
Zespri's China subsidiary, Zespri Management Consulting Corporation, which acted as a kiwifruit marketing agent in China, was found guilty as an accessory in the sting.
China Customs is seeking NZ$10m in reimbursement from Zespri, whose own appeal has yet to be heard.
Zespri spokesman Dave Courtney told the Herald that the company would not comment until its own appeal is heard. He referred the Herald to an earlier backgrounder on the case where it told growers that it relied on representations made by the importer that a deemed value arrangement was acceptable to China Customs. It had also attempted to verify that such agreements could exist but may not be committed to in writing.
The appeal court reserved its decision.
