Sheep deal reminiscent of Robert Muldoon - David Seymour

Murray McCully (Getty)
Murray McCully (Getty)

A free trade agreement with Saudi Arabia and the Gulf states is back on track because of the $11.5 million sheep farm deal, Foreign Minister Murray McCully has told Parliament.

The agreement he made to invest the money in a farm owned by wealthy Saudi sheep farmer Hmood Al Ali Al Khalaf has caused years of controversy and accusations of bribery and corruption from opposition parties.

Auditor-General Lyn Provost on Wednesday issued an inquiry report saying it wasn't corrupt, didn't involve bribery and didn't break any rules. She wasn't happy about the way the Government went about it, however, and said there was a serious lack of transparency.

Mr Khalaf lost millions when the previous Government banned the export of live sheep for slaughter in 2007, and the issue soured diplomatic relations with Saudi Arabia. Free trade negotiations were put on hold, but Mr McCully says the problem has been resolved.

"The objection has been removed and the issue of the free trade agreement is back on the rails and will take a proper course," he told Parliament. "This is a very important market for New Zealand producers now, and it is going to be a much more important market in the coming years."

Mr McCully said that wasn't just because the Gulf states themselves were important.

"It's also because it is the gateway for the African continent where there is going to be an explosion of trade opportunities in the years ahead.

"For any New Zealand Government to simply walk away from a frozen FTA negotiation because it was difficult to resolve would not have been a responsible course of action, one I was not prepared to contemplate."

Mr McCully said he accepted the Auditor-General's criticism of the process of the sheep farm deal.

"To the extent that there is credit in the future through the completion of the FTA... I hope some of that credit will come my way as well."

ACT Party leader David Seymour says while Mr McCully was cleared of corruption, he sailed pretty close to the wind.

Mr Seymour says the lesson in this is that politicians should stay away from business deals.

"We want them to be accountable and set clear rules with a good regulatory system and low, flat taxes so that real businesspeople can get on with doing business - not politicians pretending to be businesspeople with other people's money."

Mr Seymour called Mr McCully's approach "old school".

"This is a guy who came in as a mate of Robert Muldoon, and he comes from a different era of politics. Most of New Zealand's moved on, and he's perhaps given us a wee glimpse backwards."

The Greens are taking a harsher line, saying just because Mr McCully's actions weren't "legally corrupt" doesn't mean his actions weren't "rogue".

"The Minister may not have financially benefitted from this deal, but he covered up many of the dodgiest aspects from the public and his colleagues in order to push it through," says co-leader James Shaw.

The Greens want Mr McCully sacked, but Mr Seymour doesn't go that far.

"Anyone who's called him corrupt should apologise to him, because the finding is that he's not corrupt."

NZN / Newshub.

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