NZ: Serious Fraud Office closes investigation into Zespri

November 07 , 2017

After a four-year investigation New Zealand’s Serious Fraud Office (SFO) has cleared Zespri of any criminality arising from the practice of dual invoicing in China, but the case has served as a warning for exporters to approach the practice with “extreme caution”.

SFO Director Julie Read has closed the investigation having determined the kiwifruit marketer’s conduct did not meet the high evidential standard for laying criminal charges.

The allegations investigated by the SFO were that Zespri facilitated tax evasion while exporting kiwifruit to the People’s Republic of China (PRC) until mid-2011 by providing false invoices for its importer to use when making duty declarations to PRC Customs Officials.

The SFO was concerned about both Zespri’s dual invoicing practice and its subsequent efforts to distance itself from the offending importer in the form of letters written to Chinese investigation and prosecution agencies.

The office emphasized dual invoicing is not necessarily illegal, however it advised exporters shippers to take care as it can be a warning flag for duty evasion being committed in foreign jurisdictions.

“In this case the practice of dual invoicing facilitated criminal offending in China. The lower valued invoice was used by Zespri’s importer to evade duty and resulted in him being convicted for the Chinese offence of smuggling,” Read said.

“The instrument of that offending was created by Zespri in New Zealand. For that reason the matter properly came to the attention of the SFO.

“The Zespri investigation has been lengthy and reflects the fact that we were required to review complex and unusual arrangements between Zespri and their Chinese importers. The gathering of documentary and witness evidence took much longer than usual in this matter.”

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