Guilty pleas a surprise in Powdergate case

In a surprise move, six of the defendants in the so-called Powdergate case pleaded guilty yesterday to six representative charges related to the illegal export of dairy products.

The goods, worth more than $3.2 million, were shipped abroad to get around the then Dairy Board's monopoly on milk exports.

The six who pleaded guilty - Paul Marra, Malcolm McCowan, Terence Walter, William Cottee, Stephen Wackrow and William Winchester - were convicted by Justice Rodney Hansen at the High Court in Auckland. He remanded them on bail till next Thursday for sentencing.

A seventh defendant, Sean Miller, pleaded not guilty to the charges and was remanded on bail to appear on May 17.

David Jones QC, for the Crown, said after the hearing that no jail terms would be sought for those who had pleaded guilty and the maximum fine they would face for each charge was $10,000.

This contrasted with a provision allowing a fine of three times the value of the goods involved, he said.

Before pleas were taken, Paul Davison QC - counsel for Marra - told the court his client was entering his pleas on the basis the maximum penalty available was $10,000 per charge.

Mr Jones and Gus Andre Wiltens, assistant director of the Serious Fraud Office which took the case to court, both declined to comment afterwards on the guilty pleas.

The six charges under the Customs and Excise Act related to the accused in May 2001 producing false documentation to Customs which described export dairy goods as "other protein substances".

Mr Jones described to the court the Dairy Board's monopoly on dairy exports prior to the formation of dairy giant Fonterra in October 2001.

Before Fonterra, the industry was dominated by Kiwi Group and the New Zealand Dairy Group.

There had been serious concerns "in the higher management echelons of Kiwi" that Fonterra's establishment would disadvantage Kiwi.

"The offending stems from this background and occurred between some of the management within Kiwi [Marra, McCowan and Wackrow] and others outside Kiwi [Winchester, Walter, Cottee]."

A non-Kiwi entity, SPD, was established with Walter as director.

The sole purpose for this was so dairy produce intended for export could apparently be sold domestically by Kiwi to SPD.

SPD then repackaged and relabelled the product which was exported using documents describing it as "other protein substances" to circumvent the Dairy Board Act, Mr Jones said.

"The use of Customs documents containing a misdescription of goods was undertaken to avoid detection at the border that dairy produce was being exported and so as to avoid the matter coming to the attention of the [board]. Each of the accused was fully aware of that and acted in accordance with that."