Fishery offending a flagrant case of putting profits ahead of common good

Monday, 25 February 2019

If you like eating seafood, or enjoy fishing, or have an interest in ecological sustainability then you should be interested in the offending by Hawke's Bay Seafoods.

It cut to the heart of all three, and involved a flagrant case of a company and individuals putting their own interests, and profits, ahead of everything else.

On Monday, after years of investigations and court cases, a massive fine of $1.08 million  was ordered against Hawke's Bay Seafoods, its related companies, directors and manager.

The story began in mid-2014 when staff at the Ministry of Primary Industries noticed the number of Bluenose landed by commercial boats fishing around the Chatham Islands was increasing.

Someone at the Ministry decided to look into where it was all going. Because the Ministry, formed just two years earlier, included various agencies that had previously operated independently, this sort of cross-checking could be carried out much easier than previously. 

**READ MORE:

* Massive fine of $1.08million

* Fine in under-reported fish catch should be much less than $1.5million

* Sentencing for HB Seafood company starts

* Convictions after long trial

* Massive trial on underreporting fish catches begins**

And that was what put the Napier-based Hawke's Bay Seafoods in the firing line, because it soon became clear that the amount of Bluenose the company was exporting was significantly greater than the amount it was catching.

So began 'Operation Marquise', which on September 24, 2014, involved early morning raids in Wellington, Tauranga, Gisborne, the Chatham Islands, Christchurch and Hawke's Bay. The targets were offices, boats and houses connected to Hawke's Bay Seafoods.

The nature of the raid, involving nearly 100 officers, surprised many, but wasn't a complete shock. 

Companies associated with brothers Antonino ('Nino') and Giancarlo ('Joe') D'Esposito were certainly no strangers to the courts. Hawke's Bay Seafoods was established after they moved from Wellington in 1997, the year they and their companies paid a record fine of $989,395 for making false statements in quota reports and possessing fish illegally.

Fisheries legislation statute of limitations meant investigators could only pursue offending within two years prior.

After months of gathering evidence and poring over 22,000 documents, the Ministry discovered 20 instances between October 2012 and July 2014 where HBS and associated companies and individuals had lied about the amount of fish caught.

Bluenose, also known as Antarctic Butterfish, is a great-tasting fish, similar to Groper and prized by anglers. Like all breeds, it's covered by the Quota Management System which determines the amount of fish that can be taken in order for it to remain sustainable.

Each operator holding a quota is told how much it can catch in a given year under this quota system.

Hawke's Bay Seafoods' offending came down to a simple case of lying about how many Bluenose were caught. Essentially the companies under-reported 27 tonnes of Bluenose at a value of $253,404.62.

John Butler, the skipper operating one of the company's 14 vessels, the Mutiara II, mis-reported the amount he caught. Once fish was landed, Marcus D'Esposito (Nino's son) recorded the weight as stated by Butler, despite knowing it was less than what was caught. 

Nino D'Esposito would often talk to Butler while he was at sea, and should have known an offence was occurring, but he did nothing to prevent it. He also failed to see that the company had no system in place to ensure this sort of offending couldn't occur.

Joe D'Esposito was the one responsible for monitoring the amount of fish the company caught against what it was allowed to catch, and he failed to prevent the sale of the fish caught illegally.

When interviewed after the raid the three D'Espositos denied that any under-reporting had occurred.

A seven-month trial - believed to be the nation's longest at 140 working days - ended abruptly in December, 2017, with guilty pleas to 130 charges related to the misreporting and making false statements. Marcus D'Esposito and Joe D'Esposito pleaded to 38 charges each. The permit holder Esplanade No.3 (the former Harbour City Seafoods) pleaded to 22, Hawke's Bay Seafoods pleaded to 15, the fish receiver Ocean Enterprises pleaded to eight and Nino D'Esposito pleaded to nine.

The Ministry regarded Marcus D'Esposito as the most culpable as he played such an integral part in the mis-reporting. Joe D'Esposito had control of financial affairs and should have known about the mis-reporting. He was less culpable than Marcus, but more culpable than his brother Nino, which the Ministry said had failed to take all reasonable steps to stop the offending.

Butler and the 22.5metre Mutiara III were involved in five of the 20 offences. The other offending involved the 30m Pacific Explorer, the 16m Lady Ruth and the 16m Trial B

Butler pleaded guilty and was convicted and fined $25,000 in May, 2015.

Over the past 10 years the various D'Esposito companies have been convicted for a number of matters, including the under-reporting of the amount of fish caught, going to sea without an observer, taking crayfish from a Māori customary fishing area, trying to sell undersized crayfish, and most recently for failing to protect seabirds.

Not long after the raid the company expanded with a $3m two-storey coolstore and offices erected beside their shop in Ahuriri, Napier.

The company employs close to 200 people, nearly all of whom would have had no idea of the offending.

Of those 200 some 80 are from the local iwi, Ngāti Kahungunu. Since 2010 HBS had an agreement to purchase the iwi's annual catch entitlement of about 1000 tonnes of various species in return for providing employment and training for iwi members.

After the raid Ngāti Kahungunu Iwi Incorporated chairman Ngahiwi Tomoana said he held concerns for the dozens of iwi members working at the company, but said it and the D'Esposito family had been 'a valuable contributor to the economy and to the welfare of our people.'

 Tomoana, when asked last year on his thoughts on the convictions and what the iwi's ongoing relationship with the company would be,  declined to comment.

In 2017 the iwi announced it was entering a joint venture with the Tainui iwi and had paid $3.5 m for the 34 metre Glomjford vessel, which it bought in Norway, with the intention of fishing its own quota.

But the ties between the iwi and HBS continue in the company Pania Reef Fisheries (GP) Ltd, formed in late 2016, a partnership between HBS Tuna Ltd and the Ngāti Kahungunu Asset Holding Company, with directors from the boards of both companies.

The rules around sustainability of New Zealand's fish stocks are complex and involve no end of acronyms and processes. They're enough to make most people's eyes glaze over.

But simply put, the whole thing is very reliant on trust.

Trust that those catching the fish stick to the limits, informed by science, that allow the various breeds to continue to flourish so we can all eat (and catch) the fish we like.