Secret meeting with official turns China meat contract from ‘no’ to ‘go’

A large Australian meat company defied government advice and met secretly with a top Chinese customs official in an ultimately successful attempt to overturn a multi-million-dollar export licence ban.

The revelation of the unusual steps taken in 2019 by lamb producer Southern Meats to end a 13-month suspension of its export licence opens a rare window into the complex and murky world of meat exports to China as diplomatic and trade relations between Canberra and Beijing remain fraught.

David Zhu, Eddie Zhi and Craig Newton at the Chang Fu Gong hotel in Beijing in October 2019.

In the past year China has stepped up its efforts to target Australia’s primary producers by banning or imposing high tariffs on exports of beef, wine, timber, lobster and barley – acts the US government recently described as “economic coercion”.

Southern Meats and the men who helped arrange the 2019 meeting, who are involved in supplying foreign labour to Australian abattoirs, deny any payments or inducements were offered to the Chinese official, Wang Gang, or any other third parties to overturn the suspension. The Age and The Sydney Morning Herald are not suggesting otherwise.

But a cache of emails and WeChat messages show how Southern Meats’ licence suspension was overturned seven weeks after the meatworks’ general manager, Craig Newton met Dr Wang, who is the certification director of China’s General Customs Administration food safety bureau, in a luxury hotel in Beijing. Also present was labour hire contractor David Zhu and his then business partner, Eddie Zhi, who is widely known in the Australian meat industry as “Fast Eddie”.

The pair arranged the meeting with Dr Wang, whom Mr Zhu described as a “friend of a friend”. Mr Zhi and Mr Zhu had just supplied Southern Meats with more than a dozen skilled Chinese workers and were arranging to send more to the company under a labour agreement.

Wang Gang, the certification director of China’s General Customs Administration food safety bureau, who met with executives from Australian meat company Southern Meats.

‘A mix-up’

The suspension of Southern Meats’ exports to China began in December 2018 after a box of frozen mutton leg bones was labelled with a production date different to that on the accompanying health certificate.

The company and the Australian government had initially hoped the labelling mix-up would be viewed by the Chinese as a minor problem and quickly resolved. But 11 months later its licence remained suspended and Australian government officials were getting nowhere with their Chinese counterparts in their attempts to get the ban overturned. Industry sources estimate it cost Southern Meats several million dollars in lost export earnings.

The meeting with Dr Wang took place at Beijing’s Chang Fu Gong hotel in October 2019 even though, according to a July 2019 email from Mr Newton: “We are unable to send any direct correspondence to the Chinese officials … DFAT will not allow any interference from us.”

The Southern Meats abbatoir in GoulburnCredit:Nick Moir

Mr Zhi, who attended the meeting, said Dr Wang came alone and dressed in plain clothes rather than the military-style uniform of China’s customs.

Dr Wang did not respond to questions from The Age and The Sydney Morning Herald. His decision to hold the private meeting with an executive from a foreign company whose licence was suspended could attract the attention of China’s anti-corruption authorities.

WeChat messages about the secret meeting in Beijing.

Seven weeks after Mr Newton’s meeting with Dr Wang, in early December 2019, China lifted the ban on Southern Meats licence. WeChat exchanges show that Mr Zhi was extremely confident the meeting with Dr Wang would deliver.

“Hopefully we will get a good result”? asked another Southern Meats manager in Australia via WeChat a day after Mr Newton’s meeting with Dr Wang.

“We will … 4 to 6 [weeks] if not sooner,” Mr Zhi replied.

The messages show the lamb producer was pinning its hopes on Dr Wang being able to convince his Chinese customs colleagues to lift the licence suspension.

“We agree that all of us keeping quiet for a little bit is best. Let Wang Gang work however he can,” the Southern Meats manager messaged Mr Zhi on October 25, 2019.

Corrective actions

Southern Meats is owned by Western Australian farmers co-operative, WAMMCO, whose chief executive Coll MacRury told The Age and The Sydney Morning Herald that the abattoir had turned to Mr Zhi and Mr Zhu after it became clear Australian officials in Beijing were having no influence.

Eddie Zhi

“Southern Meats was told right throughout its suspension that Australian government officials
had little to no contact with Chinese officials and that there was nothing more that could be done by them that had not already been done,” he said.

“Southern Meats was proactive in its endeavour to find an intermediary person that could assist in putting forward our case for licence reinstatement.”

Mr MacRury said no payments or inducements had been offered to Dr Wang or any other third parties. The Age and The Sydney Morning Herald are not suggesting otherwise.

Federal Liberal MP David Coleman and Chinese labour recruiter David Zhu.

“At the meeting Craig Newton put forward our case to the contact who agreed that Southern Meats had served a long enough suspension and that the corrective actions that had been implemented were sufficient to ensure that the issue did not happen again,” he said.

Mr Zhu, who is also known in Australia as Steve Chu, said Dr Wang was a “friend of a friend” and he had agreed to a request from Mr Zhi to set up a meeting where some “very general consulting” happened.

Mr Zhu said he offered no money to Dr Wang and doubted that the Chinese official had much to do with Southern Meats’ licence being reinstated.

Mr Zhi said he had helped arrange Mr Newton’s meeting with Dr Wang because he was concerned the lengthy licence suspension could lead to the loss of Australian and Chinese jobs at Southern Meats’ Goulburn-based abattoir in regional NSW.

Spotting opportunities

But Mr Zhi and Mr Zhu also had a commercial interest in helping Southern Meats. They had recently supplied the company with 15 Chinese workers and were in talks to provide more.

Overseas labour is an increasingly important part of the workforce in the meat industry, and Chinese workers at other Australian meatworks have told The Age and The Sydney Morning Herald that the price to secure a job varied between $15,000 to $40,000, which was paid to the labour hire companies that recruit them.

Demand among Chinese workers for jobs in Australian meatworks is high, despite the cost, because it can lead to permanent residency in Australia and a better life for their families.

Mr Zhu denied he had been paid by any of the Chinese workers that he placed at Southern Meats. Mr Zhi said he was simply a person who liaised between Australian meatworks and Chinese labour recruiters such as Mr Zhu because he could “spot opportunities”.

The good relations between Mr Zhi, Mr Zhu and Southern Meats soured shortly after the licence was reinstated.

Mr Zhi has accused Southern Meats and Mr Zhu of cutting him out of a labour supply deal after he helped arrange the meeting with Dr Wang.

Know more about Australia-China relations in the meat industry and the recruitment and treatment of foreign workers? Contact Richard Baker @ [email protected] Signal ​+61 421 322 140 or WeChat wxid_2v9xb8ysxbfg12

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