Last updated 14:36, June 7 2018
TOM LEE/STUFF
Pacific Aerospace chief executive Damian Camp, left, leaves Manakau District Court with lawyer Emmeline Rushbrooke, right, after a previous hearing.
Pacific Aerospace chief executive Damian Camp, left, leaves Manakau District Court with lawyer Emmeline Rushbrooke, right, after a previous hearing.
Hamilton-based Pacific Aerospace has been fined $74,000 for breaking United Nations sanctions by exporting aircraft parts to North Korea.
The aircraft manufacturer sent $6700 worth of warranty parts to the hermit state in 2016.
Judge John Bergseng declined to issue the maximum penalty, describing the breach of sanctions as "reckless".
Hamilton based Pacific Aerospace has been prosecuted for sending aircraft parts for its P-750 XSTOL plane, pictured, to fulfill a warranty for one of its plane in North Korea.
Pacific Aerospace is thought to be the first company in the world to be prosecuted for such actions, with the Crown citing only one largely incomparable example from abroad.
In a reserved judgment dated May 29, Bergseng fined Pacific Aerospace $74,805 for three charges of indirectly exporting a specified good to the Democratic People's Republic of Korea, and one charge of making an erroneous export entry.
A New Zealand-made Pacific Aerospace P-750 XSTOL was spotted at a North Korean airshow in October 2016.
"[Pacific Aerospace's] breach of the Sanctions Regulations was best described as reckless. [Pacific Aerospace] was aware of the Sanctions Regulations but had chosen not to fully inform itself of its detail."
Customs laid the charges after a Pacific Aerospace P-750 XSTOL plane was spotted at the Wonsan Air Festival in North Korea in September 2016.
The direct or indirect supply of luxury goods to North Korea, including aircraft and related parts, is a violation of UN Security Council Resolution 1718.
The sentencing of Pacific Aerospace, a Hamilton-based aircraft manufacturer, is a first for New Zealand.
Under New Zealand law, a company can be fined up to $100,000 for breaching a UN-mandated ban, and fined up to $5000 for making an erroneous declaration under the Customs and Excise Act.
Pacific Aerospace provided aircraft parts – a banned luxury good under UN sanctions – to repair the aircraft in North Korea in three instances.
The parts were a flap actuator used in take-off and landing, two cockpit indicators that display propeller speed and a fuel ejector.
Prince William is given a tour of airplane manufacturer Pacific Aerospace, as chief executive Damian Camp looks in, on 2014.
The UN investigation into Pacific Aerospace's sanction breach led some countries to question New Zealand's implementation of UN sanctions, Bergseng said.
A victim impact statement from the Ministry of Foreign Affairs and Trade (MFAT) said there were significant resources required to manage criticisms received through diplomatic missions.
"Offending which impacts on New Zealand's international reputation will almost invariably be serious ... in this case, given the contents of the victim impact statement, catastrophic consequence appear to have been avoided," Bergseng said.
Pacific Aerospace now advises MFAT of all foreign aircraft sales, regardless of the country being exported to, and has appointed a sanctions officer tasked with preventing future breaches.
Bergseng said the company had some customer payments "disrupted" because of publicity around the case. Customers in the United States were particularly concerned, and it was unknown with US authorities will take any direct action.
Pacific Aerospace has been contacted for comment.
In a March sentencing hearing, Customs lawyer Jasper Rhodes said indisputable evidence showed Pacific Aerospace was aware of the plane's presence in North Korea and knowingly breached the sanctions regime to meet their warranty obligations for the plane.
Technicians to fix the aircraft were not sent, knowing that this would contravene sanctions, Rhodes said.
"When we look at the list of luxury goods, it's pretty extensive. It ranges from things like fountain pens to caviar … up to aircraft parts," he said.
"Aircraft parts must be, if not the most serious, near the most serious on that list. Bearing in mind military application."
In the same hearing, defence lawyer Emmeline Rushbrook stressed the exports were "indirect", which sat at the lowest level of sanction breaches.
The company admitted it knew the of the sanctions, but not the detail that included indirect exports, she said.
The parts were provided to a Chinese counterpart and the plane remained registered in China, although it was known to be in North Korea. This did not break Chinese law.
It knew the aircraft was temporarily in North Korea, which it understood was for tourism purposes.
Rushbrook asked that Pacific Aerospace be allowed to pay the fine in instalments.