Zespri has avoided having criminal charges laid against the company following an investigation into allegations of criminality arising from the practice of dual invoicing.

The Serious Fraud Office has closed the investigation having determined the 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 subsequent efforts by it to distance itself from the importer's offending in the form of letters written to Chinese investigation and prosecution agencies, says SFO director Julie Read.

Dual invoicing is not necessarily illegal, but the SFO advises that New Zealand exporters should approach the practice with extreme caution as it is 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,” says Julie.

'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.”

Zespri is pleased the Serious Fraud Office has publicly confirmed the end of its investigation into historical issues relating to the import of kiwifruit into China before mid-2011.

Zespri Chairman Peter McBride notes the lengthy investigation, which recently entered its fifth year, has had Zespri's full cooperation and extensive work in providing the SFO with the information it requested.

'As we have always been clear, we relied on our former importers to comply with their legal obligations under local customs laws and, based on our own internal investigations, we know that we did not benefit from their customs fraud.

"It is satisfying to finally have the SFO confirm that its investigation of Zespri has closed and that there are no further actions.”

Since Zespri became aware of the offending of its former importer in China in 2011, it has significantly changed its operating model in that market.

'China continues to be a market of tremendous opportunity and, as in many of our fast-growing emerging markets, also has a unique set of challenges in which to do business.

"We will continue to invest in robust systems to protect our reputation and brand.”

Zespri has incurred costs over $7 million on the SFO investigation over the past five years.