Kiwifruit giant Zespri has been dealt a legal blow tonight after its China-based subsidiary lost an appeal against smuggling charges.
Zespri Management Consulting Company was found guilty of smuggling in March and ordered to repay illegal gains as well as a fine of $960,000.
A mid-level employee was also found guilty of being an accessory to smuggling and was sentenced to five years in prison.
The kiwifruit company said in a statement that in the appeal, Zespri had provided evidence that no benefit was gained from the duty evasion and had no intent to facilitate the under-declaration of customs duty.
A Shanghai Court ruled the reconciliations provided were not relevant and that Zespri's employee had the intention and objective act of smuggling.
Zespri CEO Lain Jager said the company accepted the court's decision and acknowledged Zespri's monitoring of its imports into China between 2008 and 2010 failed to ensure that its partners were compliant with local customs laws and regulations.
"Since the arrest of the importer, 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," Mr Jager said.
The CEO said it was critical the company learnt from its mistakes and moved forward in relation to its operations and relationships in China.
