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Chinese Authorities Release American Wine Importer

ASC partner Don St. Pierre Jr. released after officials investigate suspected falsification of reported wine prices

Mark Graham

Posted: Monday, April 21, 2008

One of the major figures in China's burgeoning wine industry—Don St. Pierre Jr., of the import-distribution company ASC—was detained by customs authorities in Shanghai in March and held without charges for nearly a month. He was released April 8.

According to media reports, officials have been scrutinizing several major importers, looking for evidence that their firms are understating the value of wines that they bring into the growing Chinese market in order to evade high customs duties.

St. Pierre, the company's managing partner, and ASC vice president Carrie Xuan were held while officials examined the company books, looking for irregularities. Neither St. Pierre nor Xuan were officially under arrest, however.

St. Pierre says he was detained in a holding center for foreign suspects. While there, he had no contact with family members. He was allowed only to exercise, watch television and meet with his lawyer.

The Shanghai Customs Bureau offered no comment on the St. Pierre case, but confirmed it was looking at wine-importing companies suspected of falsifying prices.

"We have not been charged, and we are not going to be charged," said St. Pierre. "We will have to pay when the customs findings are concluded. The maximum possible discrepancy between the duties we paid for the past two years and the amount that they think we should have paid is 220,000 euros."

St. Pierre claims the government decided to investigate ASC and other importers because officials believe the duties they have received in the past few years do not reflect the rise in the volume and value of imported wine.

News of the arrest spread quickly through the Chinese wine industry, which has seen a huge influx of importers and distributors in recent years, and there was widespread speculation on the timing.

Some believe the investigations are connected to the recent decision by Hong Kong's local government to abolish the territory's 40 percent wine duty, leading to a massive drop in prices and big sales increases. In mainland China, the total tax on wine, including duty and consumption tax, is 48 percent.

Whatever the cause, the investigation was a warning of the arbitrary nature of the Chinese legal system. "These are the laws of China," St. Pierre said. "Everyone needs to understand the laws in China."

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