Auckland Federation fashion label owners fined over evading Customs fees

Nick Clegg, Federation Clothing designer, in 2006. Photo / Adrian Malloch

For more than three years, the pair behind Auckland fashion label Federation imported deliberately undervalued goods from China.

The scheme saw them evade Customs fees of $680,000, while products brought into New Zealand were undervalued by more than $2.8 million.

At least $190,000 is still owed to Customs, a court heard today.

Former company director Nicholas James Clegg, 43, appeared in Auckland District Court this afternoon after admitting nine charges, which amounted to 114 erroneous entries made under the Customs and Excise Act.

He was stung with a bill of nearly $9000 - made up of fines, court costs and ministry solicitors' fees.

His former business partner and ex-wife Jenny Joblin earlier pleaded guilty to charges stemming from the same operation and was fined $40,000.

Prosecutor Jennifer Harley said the offending was among "the most serious of its kind".

"[This type of fraud is] relatively easy to commit and difficult to detect," she said. "Customs relies on the integrity and honesty of the agents to provide correct information."

Judge Nevin Dawson agreed that the gravity of the offending was high and Clegg was fined almost the maximum of $1000 on each charge.

Clegg and Joblin started the label 15 years ago but the business was in the hands of liquidators in February.

Liquidator McDonald Vague, in a report filed with the Companies Office, said ASB Bank was owed just over $1 million of secured debt by Federation.

Joblin previously told the Herald she had sold her house to pay back the bank and creditors, and on April 1 the company belonged to her again.

She said the charges arose because documentation was going straight from the factory to the shipping agent.

With the new incarnation of the business there was more reporting and accountability, she said. And one of her first new appointments was a "really good" financial controller.

Joblin also admitted part of Federation's downfall may have been a determination to expand and grow the brand. "I'm not trying to take on the world any more," she said.

Now she was focusing on the two stores in Takapuna and Onehunga, as well as the 70 retailers around the country to whom they supplied garments.