Govt axes contentious Saudi sheep deal

The controversial Saudi sheep deal has been shut down, which the Government says will save about $1 million.

The deal was made to set up an agribusiness hub in the desert for Saudi businessman Hmood Al Ali Al Khalaf, using it to showcase innovative Kiwi farming operations.

The previous National Government approved taxpayer spending on the agrihub in February 2013, and the next year Singapore Airlines flew over 900 sheep.

But Trade Minister David Parker says the deal has now been axed.

“We’re not spending any more money on its installation or delivery,” he told TV’s 1 News last night.

“We have managed to bring it to an end, saving the last million dollars or so. But I’m afraid the other $10 million that has already been spent has been flushed down the drain by the prior Government.”

It means a $2.5m kitset abattoir, in the Hawke’s Bay and intended for the hub, will no longer be sent abroad.

About $1.17m had been identified for abattoir delivery and installation.

The then-National Government had paid about $10m, including a $4m payment to Al Khalaf, for the deal.

The deal was made partly as an effort to secure a free-trade deal with the Gulf States. Opposition MPs at the time called it a bribe to get the deal.

Al Khalaf had lost millions of dollars after New Zealand banned live sheep exports for slaughter over animal welfare concerns in 2003, and illfeeling over his treatment was identified as an obstacle to a free trade agreement progressing.

Former Foreign Minister Murray McCully also said there was a risk Al Khalaf could take legal action.

As a result, the deal saw a $4m facilitation payment made to the Al Khalaf Group, and a further $6.5m allocated to create a farm on his land.

The Auditor-General criticised the deal, but found no evidence of corruption. Progress on a free trade agreement with the Gulf countries has stalled after fallout with Qatar.