Auditor-General asked to investigate Saudi payout
The deal that saw millions of dollars spent on a businessman’s Saudi Arabian farm could be scrutinised by the Auditor-General.
Foreign Minister Murray McCully came under further pressure yesterday, with questions about whether a threat of legal action cited as a reason for the farm deal was genuine.
Green Party trade spokesman James Shaw revealed he had written to Auditor-General Lyn Provost, asking for the deal to be investigated, specifically procurement processes.
“Everyone knows lawyers throw around threats of big lawsuits to gain leverage for their clients,” Mr Shaw said.
“The fact the Government appears to have believed the hype and jumped at these threats is both remarkable and possibly in breach of proper process.”
A spokesman for the Office of the Auditor-General confirmed receipt of Mr Shaw’s letter.
In the deal almost 1000 breeding ewes were airfreighted from New Zealand to a Dammam farm, owned by businessman Sheikh Hamood Al Ali Khalaf’s Al-Khalaf Group.
The sheikh’s Sydney-based business partner, George Assaf, has said the taxpayerfunded farm fit-out was to “compensate” the pair for New Zealand’s ban in 2003 on live sheep exports for slaughter.
National has blamed Labour for antagonising Mr Al Ali Khalaf to the extent where the Government was exposed to a legal claim of up to $30 million.
Spending about $11.5 million on Mr Al Ali Khalaf’s farm in Saudi Arabia was a way to defuse that threat, Mr McCully argued.
It would also mend relations with the Saudis to make a stalled regional free trade deal more likely, and serve as a demonstration base for Kiwi agribusiness.
Labour has said the legal threat was clearly hollow from the start, and during media questioning yesterday Mr McCully confirmed it had been withdrawn by the time Cabinet signed off on the deal in February 2013.
“At the beginning of these events there was legal action being discussed amongst the parties, also a WTO [World Trade Organisation] suit being discussed amongst some of the parties as well.”
Mr McCully said legal action was off the table by the time Cabinet agreed to the farm, “because I had been dealing with the matter and tried to avoid the compensation claim and taken compensation out of the discussion”.
Prime Minister John Key said whether a legal threat was “live” or not at the time Cabinet was told of the deal was not critical. “Sometimes people say ‘I might take legal action’ ... sometimes what then happens is you try and find a way to resolve that issue, and therefore, because you are looking to resolve it, they put that legal action on hold. That’s a pretty normal practice.”
However, Labour’s export growth and trade spokesman David Parker said any legal claim had to be brought within six years to be valid. He said “it was perfectly within the power of the Government to extend the ban on the export of live sheep, and you don’t have to pay anyone for the purpose of governing New Zealand.”