The New Zealand Herald

$170,000 fine over buy for foreigner

- Sophie Trigger

A New Zealand company has been fined more than $170,000 for not seeking approval for a sensitive land purchase made on behalf of an overseas investor.

A judgment at the High Court at Auckland this week found Clevedon Kawakawa Road Limited bought sensitive land near Auckland for overseas businessma­n Zhaorong Mai.

The company has now been ordered to pay $160,000 in penalties and $15,000 in costs — the first time a penalty has been considered against an associate of an overseas investor.

Mai agreed to buy two adjoining properties in Clevedon, together around 87ha and known as “the Clevedon properties”, in February 2013.

Before the transactio­n was settled, CKRL was appointed by Mai to complete the purchase.

The land was categorise­d as sensitive because it was non-urban with an area greater than 5ha. One of the properties also adjoined the foreshore at Kauri Bay and Auckland’s

Kahuru Point.

Under the Overseas Investment

Act 2005, foreign buyers must get consent from the

Overseas Investment Office (OIO) before buying sensitive land. It is also an offence for an associate of a foreigner to give effect to an overseas investment without such consent.

The judgment found CKRL was “subject to the direction, control or influence of an overseas person” in acquiring the Clevedon Properties, thus was an “associate” of the person.

CKRL admitted it had failed to seek consent when acting as Mai’s associate in buying the land, in breach of the Overseas Investment Act.

Justice Sarah Katz said its culpabilit­y was not “materially reduced” by the fact it had acted as an associate.

She said there was a strong need to deter breaches of the act by associates of people overseas, because such breaches could “alienate sensitive New Zealand land” in a way that was more difficult to detect.

OIO group manager Anna Wilson-Farrell said the regulator would pursue associates no differentl­y to overseas investors who directly made purchases. “It is a privilege for overseas people to invest in New Zealand and we will continue to investigat­e when investors fail to seek consent to buy sensitive land.

“This is the eleventh case in which the court has awarded penalties for the purchase of sensitive land without consent.

“We will continue to focus on the use of associate relationsh­ips as part of our ongoing compliance efforts, and we will take enforcemen­t action whenever we see a breach of the act. The court decision recognises this.”

It is a privilege for overseas people to invest in New Zealand.

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