The Overseas Investment Office faces an unprecedented public examination of its process for approving sales of New Zealand farmland to foreign investors if it approves the bid by China’s Shanghai Pengxin Corporation for the 16 farms formerly run by the Crafar family.
A rival New Zealand consortium, involving merchant banker Michael Fay and including Maori investors, threatened today to seek a judicial review if the OIO recommends in favour of the NZ$210 million from Pengxin, a conglomerate with extensive Chinese and international holdings, including in agriculture.
In receivership since October 2009 with debts to Westpac, Rabobank and PGG Wrightson of about NZ$216 million, the Crafar farms became a bellwether for New Zealand’s foreign investment regime, after the OIO rejected a NZ$230 million initial bid from another Chinese bidder in 2010, on the basis that they failed the “good character” test.
The OIO has been examining the Pengxin bid for nine months so far, while the Crafar receivers, KordaMentha, have set a deadline of Jan. 31 for Pengxin to make its bid unconditional. So far, KordaMentha has declined to examine the Fay bid because it already has the better offer from Pengxin.
“The legal approach seems to be the only avenue to bring some transparency to the application information and the process behind the approval,” said Alan McDonald for the Fay bid. “Without legal action we will never know how the OIO reached their recommendation to approve the sale of the farms.
The Fay bidders intend to argue that since Pengxin doesn’t run dairy farms, it cannot meet the Overseas Investment Act requirement that the bidder “must have business acumen and experience relevant to the investment,” McDonald told BusinessDesk.
Pengxin appears to intend circumventing that requirement by having state-owned farmer Landcorp manage the Crafar properties for them – an approach already permitted under OIO guidelines and approved for other non-farming foreign buyers.
The Fay consortium has retained law firm Bell Gully, which last week advised the OIO of the “commitment” to seek judicial review and asking for a copy of the Shanghai Pengxin application for consent or other relevant information.
The OIO has yet to respond, Bell Gully partner David Cooper said.
The OIO confirmed to BusinessDesk that no judicial review has ever previously been launched against one of its decisions, since its re-establishment as a division of Land Information New Zealand in 2005.
15 Comments
The problem is that a lot of 'Crafar farms' should have been left as sheep farms. However the banks lent and the deal got done. Now its back to returns, if the Chinese pay 230 mil then what return do they want? Figures of landcorp paying 18 mil for the lease have been discussed. That would be what about %8 , more than likely landcorp have done the figures and can only afford %3-4 or about 8 mill, and thats optimistic. Then the Chinese start to think what the hell are we doing, the returns stink we must be doing something wrong run the figures through the calulator again, we all know kiwi farmers are rich, look at the big houses, swimming pools, new cars, winter in the islands ,how do they do it, oh wait ,how much debt did you say they had, oh Mary!
Jeez AJ keep your voice down...say nout about the game...we wanna enjoy the fruits of our debts before the system implodes...best you write to Bollard encouraging him to keep the game going....
Chinaman not yet wake up to fact that he sets milk powder price and so is screwing own scrum...
Chinese very inscrutable. Very smart. Buy business, pay no tax on earnings (dairy industry pay no tax in 2009 and 2010 and 2011), and pay no capital gains tax on eventual sale (capital gains tax in china 20%) We like. Whoopee NZ here we come. How many you got for sale. New Zealand very good place do business. How much you want? We got cash. Immmediate settlement. You give discount for cash? How much? 50%? Yes.
It's easy to play the politically correct card and drop in words like xenophobia to scare people off making a sensible argument for retaining New Zealand ownership.
Of course we should protect our key assets and ensure they stay under New Zealand ownership. To do anything else is to sacrifice our children’s inheritance as the profits and opportunities leave our shores.
Most countries do this when it comes to significant national assets and China is one of the worst so drop the xenophobia comments and come up with a sensible argument.
And now this from the SFO: A third person associated with an attempt to purchase the farm assets of the Crafar family (the Crafar farms) has been charged in Hong Kong and appeared in court yesterday.
Yee Wenjye (40, also known as Eric Yee), a Singaporean national and New Zealand resident, was charged with one count of conspiracy to defraud by the Independent Commission Against Corruption (ICAC) in Hong Kong.
Mr Yee is accused of conspiring to defraud Natural Dairy (NZ) Holdings Limited, its directors and shareholders, by falsely representing that the 22 farms owned by the CraFarms Group had made a profit of NZ$18.5 million for the year ending May 2009. It is alleged that the company had in fact made a significant accounting loss for the year of around NZ$30 million.
SFO Chief Executive Adam Feeley said that the further charge by Hong Kong authorities was consistent with the evidence SFO investigations had uncovered.
“The further charge reinforces our initial view as to the best options for law enforcement. We concur with the additional action being taken by ICAC, and believe that our law enforcement efforts can be most effectively applied to supporting the ICAC case through the evidence of SFO forensic accountants involved with the investigation.”
On 17 October 2011, May Hao (formerly known as May Wang), the former operator of UBNZ Assets Holdings Limited (UBAH), was charged by ICAC with one count of conspiracy to offer advantages to an agent and two counts of dealing with property known or reasonably believed to represent proceeds of a crime.
Chen Keen (also known as Jack Chen) was charged in Hong Kong on 21 October 2011 with one count of conspiracy to offer advantages to an agent and one count of dealing with property known or reasonably believed to represent proceeds of a crime.
May Hao and Chen Keen also re-appeared in court yesterday.
Mr Yee is alleged to have conspired with May Hao and Chen Keen in misrepresenting the financial strength of the Crafar farms.
Natural Dairy is listed on the Main Board of the Stock Exchange of Hong Kong but trading has been suspended since 7 September 2010.
The charges follow a joint investigation into the company undertaken by the Serious Fraud Office (SFO) in New Zealand and ICAC in Hong Kong.
The SFO commenced its investigation in September 2010 when the Natural Dairy bid to purchase the Crafar farms in 2010 was being assessed by the Overseas Investment Office (OIO). ICAC opened a separate investigation into Natural Dairy after receiving an allegation of corruption.
Mr Feeley said that the case underscored the increasing importance of sharing evidence and resources with overseas law enforcement agencies.
“I think it is unlikely either agency would have progressed this case as effectively without the joint investigative efforts which occurred, and it is likely to become an increasing feature of our cases in the coming years.”
Mr Feeley said that the SFO had preliminary discussions with a number of specialist overseas financial crime agencies last year, and hoped to advance those discussions into formal intelligence and information sharing arrangements in 2012.
The case against Mr Yee has been adjourned to 18 April 2012. The case against May Hao and Chen Keen has also been adjourned to 18 April 2012.
Charges against May Hao (Wang)
Three charges were laid by ICAC on Monday, 17 October 2011 against May Hao (formerly known as May Wang).
These include one count of conspiracy to offer advantages to an agent, contrary to Section 9(2)(a) of the Prevention of Bribery Ordinance and Section 159A of the Crimes Ordinance (Hong Kong); and two of dealing with property known or reasonably believed to represent proceeds of an indictable offence, contrary to Section 25(1) of the Organised and Serious Crimes Ordinance (Hong Kong).
Charges against Chen Keen (Jack Chen)
Two charges were laid by ICAC on Monday, 17 October 2011 against Chen Keen (also known as Jack Chen).
These include one count of conspiracy to offer advantages to an agent, contrary to Section 9(2)(a) of the Prevention of Bribery Ordinance and Section 159A of the Crimes Ordinance (Hong Kong); and one of dealing with property known or reasonably believed to represent proceeds of an indictable offence, contrary to Section 25(1) of the Organised and Serious Crimes Ordinance (Hong Kong).
An unstoppable trend - hardworking, clever Asia takes over - and many Kiwis become increasingly slaves in our own country.
http://www.stuff.co.nz/marlborough-express/rural/6281370/Japanese-buy-vineyard
I don't particularly like what Fay has done in the past............but....
th big issue here hs got to be why the heck this Govt Agency can make decisions in secret about selling the land beneath our feet. If Fay is prepared to fund a HC case then i support him....let's lift the veil and see how this outfit works and thinks...
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.