Saudi sheep deal finally over

The Saudi agrihub sheep deal initiated in 2013 by the Government became very controversial and embarrassing for National, and in particular Murray McCully. It has finally put out to pasture.

NZ Herald: Government axes Saudi sheep deal

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

The deal was made to set up an agribusiness hub in the Saudi desert for Saudi businessman Hmood Al Ali Al Khalaf, which would be used to showcase innovative New Zealand farming operations.

Taxpayer spending on the agrihub was approved by the previous National Government in February 2013, and the following year 900 sheep were flown over on Singapore Airlines.

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

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

Opposition parties at the time called it a bribe to set up a free trade agreement.

It wasn’t only opposition parties.

The deal was made partly as an effort to secure a free-trade deal with the Gulf States.

Al Khalaf had lost millions of dollars after New Zealand banned live sheep exports for slaughter over animal welfare concerns in 2003, and ill-feeling over his treatment was identified as an obstacle to an FTA 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 or bribery.

No evidence of corruption or bribery perhaps, but plenty of indication of a shonky deal by McCully, approved by the National Cabinet, and swept under the political carpet when exposed.

James Shaw on the Saudi sheep deal

From RadioLive: JAMES SHAW: Things you need to know about the dodgy Saudi sheep deal

The Auditor General’s report into the Saudi Sheep deal, released on Wednesday, is the first step towards us actually understanding how this shabby, sorry saga played out.

This report is a damning indictment of Minister McCully’s rogue behaviour and his total disregard for transparency, due process and the respectable use of public funds.

But that’s only half the story.

Where to begin?

As many people will recall, public outrage began when in 2015 it was revealed that the Government paid a Saudi businessman $6 million to help set up a model farm in the desert.

The businessman, Sheikh Hamood Al-Ali Al-Khalaf, was frustrated after successive New Zealand Governments refused to restart the export of live sheep to Saudi Arabia.

His grievance was getting in the way of the Government’s desire to get a trade deal with Saudi Arabia over the line. Minister McCully had a plan. It involved appeasing Hamoud through a ‘partnership’, allowing him to avoid “a plethora of lawyers and bureaucrats”.

(Someone should tell him that running a country generally involves working with people who know what they are talking about).

This plan involved an AgriHub in the Saudi desert to showcase New Zealand expertise; one that neither the Government nor the New Zealand Government has formal access to.

It got worse: we later learned that apparently to secure the trade deal with Saudi Arabia, the Government also needed to pay Al-Khalaf another $4 million.

According to Minister McCully and the Prime Minister, the “contract” with Al-Khalaf’s business was required because, amongst other things, he had discussed the possibility of a law suit in the $20-30 million ballpark.

This at least is what the Minister told Cabinet, who signed off on the deal.

Three days later, the Ministry of Foreign Affairs and Trade paid $4 million into a bank account, before the company had provided any of the services they were supposedly being paid for.

As the Auditor General herself says, Minister McCully’s plan to pay out Al Khalaf with this contract was a ‘convenient mechanism’ to achieve objectives that the Minister did not clearly identify.

The Prime Minister and Minister McCully have both repeatedly used the legal claim to defend their deal.

It’s unbelievable that, according to the Auditor General, no-one actually stopped to ask whether this claim had a leg to stand on.

On Thursday I asked the Minister why he still refuses to explain how a potentially baseless claim for legal compensation prompted him to spend millions of dollars on a deal that as of today, has produced 700 perished lambs and no Free Trade Agreement.

He was not forthcoming.

Beyond the fact that the Minister misled the public and the Cabinet, he has also set a dangerous precedent.

On the basis of this deal, what’s to stop any other well-connected, millionaire businessmen from demanding a payout to secure a FTA?

Certainly Minister McCully doesn’t know, or refuses to tell us.

The Prime Minister seems happy to stand behind Minister McCully because the Auditor General’s report says he isn’t corrupt (although of course he hadn’t actually read it when he said this).

I think people deserve a higher standard of their Ministers than “didn’t break the law”. We deserve better than three years of cover-ups, misuse of public funds, and rogue behaviour.

John Key needs to let Minister McCully go.