Weekend Herald

Saudi affair’s shifting sands could let Air NZ off hook

PM’s KiwiSaver links and Mfat permits tint situation grey

- Fran O’Sullivan

Air New Zealand boss Greg Foran could be forgiven a gigantic belly laugh when he learned this week that even the Prime Minister’s own KiwiSaver scheme is invested in companies which have supplied weapons to the Saudi military.

Not that Foran is treating the Saudi affair with anything other than an abundance of circumspec­tion.

It is apposite that Jacinda Ardern personally directed the Ministry of Foreign Affairs and Trade (Mfat) to investigat­e an Air New Zealand contract to repair some turbine engines for the Royal Saudi Navy.

But what is notable is that Ardern’s ire has not been sufficient­ly raised for her to direct Mfat to follow suit in the case of her ANZ KiwiSaver provider. This KiwiSaver provider owns shares in Britain’s BAE Systems and two US companies, Textron and Raytheon, all three of which have supplied weapons to the Saudi military since Saudi Arabia became involved in the Yemen war.

Ardern has also restrained herself from firing a political pot shot at ANZ chair Sir John Key — a former National Prime Minister.

The PM’s response was muted: basically, that ANZ — which has systems in place to review investment­s — is taking another look. She is fine with that.

Then there were the other revelation­s on RNZ this week that the Ministry of Foreign Affairs and Trade did in fact grant export permits for NZ military equipment sent to Saudi forces in 2016 and 2018.

RNZ reported that documents obtained under the Official Informatio­n Act detailed transactio­ns that some say raise human rights concerns due to Saudi Arabia’s military interventi­on in Yemen’s civil war.

The documents showed that in May 2016, the ministry approved a permit for military simulation training equipment to be sent to Saudi ground forces. In December that year, sign-off was also given for hand-held computers, radios and range-finding binoculars that were bound for the Saudi Navy.

RNZ reports that the exporter, whose identity has been kept secret by Mfat, applied for an extension to its December permit after that shipment was delayed, the documents showed. This was granted in May 2018.

These disclosure­s illustrate that not only was New Zealand’s biggest bank investing in companies which supply arms to Saudi Arabia, but that while Air NZ did not get a permit for the services it provided to refurbish the turbines, official permits had been given for other exports to the Saudi military.

It may be overstatin­g it to say that the airline’s actions do not look out of step given the trading relationsh­ip New Zealand has with Saudi Arabia.

The allegation­s are serious. But it does introduce an element of grey into the investigat­ion.

Air NZ’s top brass have made several public apologies on behalf of the airline. Yet neither Foran nor his chair, Dame Therese Walsh, was in their hot seats when the Saudi contract was signed through a German third party in May 2019.

Given the Greens are playing the issue hard for political leverage, it would be sensible for other firms and funds to check they do not have exposure on the Saudi front to avoid any political shaming.

Cabinet meets on Monday and is expected to formalise the Crown contributi­on to the upcoming recapitali­sation of the national flag carrier.

It is notable that Finance Minister Grant Robertson, who earlier criticised Foran over his tardy response to releasing more details on Air NZ’s military clients, has now gone silent over the Saudi issues.

Negotiatio­ns between the Crown and Air New Zealand will not have been smooth sailing. There is inherent tension in any recapitali­sation where the major shareholde­r has the “taxpayer interest” foremost and the deepest pockets. Robertson and the Treasury have been advised by Goldman Sachs. Air NZ has had its own advisers including Forsyth Barr.

There is huge public interest in ensuring the recapitali­sation gains wide shareholde­r support.

The Saudi affair has been a huge distractio­n for the airline.

It would make sense for the Mfat investigat­ion to be brought to a swift conclusion so the capital raise is not marred by further political attacks.

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 ?? Photos / Mark Mitchell, Brett Phibbs ?? Prime Minister Jacinda Ardern has Mfat probing Air NZ’s Saudi deal, which pre-dates Greg Foran’s start as CEO.
Photos / Mark Mitchell, Brett Phibbs Prime Minister Jacinda Ardern has Mfat probing Air NZ’s Saudi deal, which pre-dates Greg Foran’s start as CEO.

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