The Southland Times

Saudi farm scandal back in spotlight

- JO MOIR

A deal the foreign minister struck with a Saudi businessma­n, which is being investigat­ed by the Auditor-General, is back in the spotlight after the two recently met in the Middle East.

Murray McCully has been embroiled in controvers­y for more than a year over the Government spending $11.5 million on establishi­ng a sheep farm in Saudi Arabia in partnershi­p with influentia­l businessma­n, Hmood Al Khalaf.

Treasury documents released under the Official Informatio­n Act reveal McCully met with Al Khalaf in Riyadh in April, where he also met with the Saudi Minister of Commerce and officials and hosted a function for interested New Zealand companies.

A spokesman for McCully’s office said there was no scheduled meeting between the pair, ‘‘however the two spoke briefly at a reception and Mr Al Khalaf commented positively on the progress of the food security partnershi­p’’.

That’s the same partnershi­p Auditor General Lyn Provost announced in August last year she would be investigat­ing, specifical­ly, the public money spent on it.

At the time Opposition parties called for McCully to be stood down while the investigat­ion took place.

The Treasury papers reveal the meeting between McCully and Al Khalaf was ‘‘very beneficial to the ongoing partnershi­p’’.

McCully was in the Middle East as part of a trip to progress a free trade agreement with the Gulf.

The business deal with Al Khalaf, which included $4m to secure Al Khalaf to run the ‘‘agri-hub’’, about $6m on establishi­ng the farm and $1.5m to fly 900 pregnant breeding ewes from New Zealand, was said to be offered to appease Al Khalaf and get a trade agreement across the line.

Al Khalaf was said to be unhappy with New Zealand’s ban on live sheep exports for slaughter, which had a negative effect on trade talks, leading to McCully’s claims the agri-hub was to help avoid legal action over the ban.

But the papers show Treasury didn’t interpret the agri-hub as a way to avoid legal action and didn’t support the proposal either.

The Treasury documents reveal an email from senior analyst Becky Prebble on June 9, 2015, to another staff member seeking clarificat­ion as to why Treasury didn’t support the Saudi deal.

‘‘When we said we didn’t support the proposal as it went through Cabinet, am I right in saying that it was just because we didn’t have enough informatio­n about it?

‘‘As opposed to, say, because we don’t think we should be paying people not to continue with legal proceeding­s?’’

An unnamed official said she had been ‘‘trawling through the informatio­n’’ and ‘‘at no time did any of our briefings refer to it being about pre-empting legal proceeding­s’’.

Those comments are contrary to both McCully and Prime Minister John Key who at the time specifical­ly said a Cabinet paper showed ‘‘quite clearly that there was the threat, potentiall­y, of legal action’’.

The papers also reveal in February this year Treasury officials were unhappy they hadn’t been updated on the farm regularly, as set out in the Cabinet Paper, and it had been a ‘‘good six months’’ since they’d heard anything.

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