Zespri probe heads to Taiwan Tony Wall.

Rogue importers have cast another slur on Zespri’s reputation, writes

ZESPRI IS facing another tax avoidance scandal in Asia, with revelations that its importers in Taiwan were faking invoices to reduce customs duty on kiwifruit.

The crisis comes as the Serious Fraud Office continues a wideranging inquiry into Zespri’s invoicing practices in China, and has led to more calls for an industry-wide government inquiry.

The latest debacle also raises more questions about New Zealand’s business dealings in Asia, after a string of scandals including Fonterra’s food safety scares.

Zespri has blamed ‘‘ rogue’’ importers in Taiwan for the latest fraud, saying they were drawing up the false invoices without the company’s knowledge.

Zespri also blamed the importers in the Chinese case, although the Chinese insisted Zespri was responsible for duty and stood to benefit from lower payments.

Zespri’s chief executive, Lain Jager, said unlike in China, where the company had been doubleinvoicing thinking it was legal, the Taiwanese situation involved importers falsifying invoices to pay lower duty for their own benefit.

He had flown to Taiwan last week to terminate contracts with the three importers.

‘‘I’m angry,’’ he told the Sunday Star- Times yesterday. ‘‘ From a commercial perspective this means we have to go and find new importers in Taiwan . . . eight weeks prior to the season. It puts us under significant pressure.’’

However, he did not expect there to be any significant impact on grower returns.

Te Puke kiwifruit grower Rob Thode said the Taiwan situation showed there was no accountability or oversight at board level and the Government needed to launch an inquiry immediately.

‘‘It indicates to me that Zespri’s governance is appalling,’’ he said. ‘‘Zespri has now had two criminal convictions in two major markets and an investigation is under way in a third market.’’

The Taiwan fraud was exposed after a request in January from the Taipei Economic Cultural Office in Wellington to authenticate copies of invoices submitted to Taiwan Customs in October last year by the three Taiwanese importers.

The invoices had Zespri’s logo and details of company personnel but there were discrepancies when reconciled against genuine Zespri invoices.

Zespri provided the genuine invoices to Taiwan Customs and would co-operate with any further inquiries, Jager said. He did not expect Zespri’s staff in Taiwan to be caught up in any criminal inquiry, as they were in China.

‘‘This is not an issue of Zespri’s invoicing practices. We had no reason to think there was anything improper in Taiwan.’’

Asked why Zespri had not better monitored what was happening in Taiwan, he said: ‘‘I guess you could say ‘why didn’t we check they were paying the full duty’ but . . . we’re doing business in 54 countries. We have hundreds of customers and it’s not usual for a supplier to go to a customer and propose to audit their tax payments.’’

Jager said Zespri had reviewed its invoicing practices after the problems in China.

‘‘We’ve had a good, hard look at ourselves. Where we saw that there was potential vulnerability in our invoicing arrangements, we’ve changed those. We’ve ensured they are robust and vanilla.’’

Jager also revealed that cooperating with the SFO probe was likely to cost Zespri $1.2m-$2m.

Thode said that cost would ultimately be met by growers. He said growers heard some time ago that something was about to ‘‘explode’’ in Taiwan.

‘‘Clearly Zespri’s hand has been forced by what the Taiwanese authorities are doing. Zespri was on the record saying, including at last year’s shareholder meeting, that there were absolutely no issues. There is a lot more to come.’’