A disgruntled Taiwanese manufacturer has taken distributor Z-Tek to court seeking over $1 million in outstanding debts and asking for the controversial Melbourne-based white box assembler to be disbanded.
ARN has learnt Z-Tek owes Lite-on Technology US$504,249 in outstanding payments. The monitor manufacturer has since taken Z-Tek to the Victorian Supreme Court in order to receive payment or to have Z-Tek's operation wound up.
In session on Wednesday, Lite-on's barrister put forward a proposal to Z-Tek reportedly outlining a repayment scheme. Court adjourned until next Wednesday 8, where by that time Z-Tek has to decide whether it will accept the proposal or face further legal action which could see the company cease operations.
Should Z-Tek accept the proposal, the two parties will appear before court two weeks later to close the case.
Z-Tek has a colourful history in the Australian channel, with three of its directors going to jail last September for defrauding the Commonwealth out of $650,000 in sales tax.
George Guo Hong Zhou and Nelson Wei Zhou were sentenced by Judge Morrow of the Melbourne County Court to 12 months jail, with six months to serve immediately. They also faced a $1,000, three-year good behaviour bond upon release.
A third party in the Z-Tek tax evasion scheme, Sam Jin, was also sentenced after a guilty verdict, receiving the same penalty as the Zhous. In addition, Jin was ordered to pay reparations to the Commonwealth of $631,000.
Back in July 1997, the company had found itself in trouble. It faced the wrath of industry watch dog, the Australia Competition and Consumer Commission (ACCC). The ACCC alleged Z-Tek contravened sections 52, 53(e) and 53C of the Trade Practices Act by advertising the cost of various products without including the sales tax - thus failing to advertise the total cost.
This was followed by a $150,000 out of court settlement with Microsoft in 1998, when the vendor was tipped off regarding several purchases of counterfeit products.
When ARN contacted the accounts department of Z-Tek a woman, who refused to give her name, stated the company was "in good shape" and declined to comment further.
Lite-on was unavailable for comment at the time of press.