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Yealands receives fine for inaccurate records and false statements

Published:  11 December, 2018

Yealands Estate Wines has been fined $400,000 in relation to inaccurate internal wine records and the making of false statements in export eligibility applications under the Wine Act 2003.

The fine follows the New Zealand winery pleading guilty to five charges, all of which relate to EU rules about how wine can be sweetened, with the practices followed by the winery ruled to be “usual and proper practices” for most countries, but contravening the EU rules and therefore the export certification requirements of New Zealand.

The issues relating to the charges date back to some wines destined for EU markets between 2012 and 2015 and the way in which these were dealt with by the (former) staff involved, including the company’s founder and director at the time of the offending, Peter Yealands, former general manager winery operations, Jeff Fyfe and former chief winemaker Tamra Kelly.

On top of the company fine, Fyfe and Kelly were each fined $35,000 and Yealands was fined $30,000.

Relating to records of more than 6.5 million litres of wine, none of the wine in question was sold under the Yealands brands.

The company was issued the fine on the basis that it was legally responsible for the actions of those former members of staff.

"The charges relate to all parties being complicit in making false statements regarding export eligibility applications and material omissions in wine records relating to the use of added sugar," a breach of EU regulations, said New Zealand’s Ministry for Primary Industries (MPI) - the prosecuting agency.

"These are the first convictions for offending under the provisions of the Wine Act in New Zealand," said Gary Orr, MPI's manager of compliance investigations.

"It is common knowledge in the wine industry that you can't add sugar post-fermentation to wine destined for the EU market, yet the parties convicted were well aware of what they were doing," he said.

The MPI investigation took almost two years to complete and revealed that one of New Zealand's leading wine companies "engaged in deliberate deception through the use of falsified records that were designed to receive routine audit”, he added.

"As a general rule, the wine industry is compliant and law-abiding. That's why this offending is very disappointing.”

Yealands said it had “co-operated fully” with iMPI’s investigation as soon as the errors were brought to the company’s attention in early 2016, with current CEO Adrian Garforth saying “immediate and decisive action to remedy the issues well before any charges were laid” had been taken.

“Systems we have introduced, training and comprehensive audits mean that our wines are fully compliant, and breaches of this kind will not happen again. These events, which predate my appointment, do not reflect our company values and our desire to do everything to the highest possible standard,” he said.

Electricity lines company Marlborough Lines bought a controlling stake in Yealands Wine Group in 2015. It acquired the last 14% in July from Peter Yealands, who quit as a director the same day.

The case was heard in the District Court Of New Zealand and the fine was imposed by District Court Judge, Bill Hastings.