Labour, National trade blows over Peter Thiel deal
Billionaire Peter Thiel, who controversially became a New Zealand citizen, has also made tens of millions of dollars with the help of the taxpayer.
The deal was done to encourage investment in New Zealand, but now both Labour and National are accusing each other of selling New Zealand short.
Mr Thiel is not only a Kiwi citizen and property owner, he's also an investor - and Labour says our Government's been suckered.
"They've twice now entered into deal with him in which he has gained significantly and New Zealand has gained absolutely nothing," Labour MP Iain Lees-Galloway said.
In 2012 Thiel, the taxpayer funded New Zealand Venture Investment Fund NZ VIF, and other investors set up Valar Investments.
Taxpayers put in $9 million, Thiel $6.8 million - the fund invested heavily in Kiwi accountancy firm Xero.
Four years on, Thiel exercised a buy-out option - which saw the taxpayer repaid its initial investment plus a little interest.
That was a great deal for Peter Thiel and the other investors. When the Valar fund was set up, Xero shares were almost $6. Now those shares have trebled, and Valar would get all the profit - a potential gain of tens of millions.
"This is a complete misuse of the Venture Investment Fund," Mr Lees-Galloway said.
Former Economic Development Minister Steven Joyce defended the Government's role in the deal.
"You can't stop individual deals - they are done by the investment fund. They do all the deals," he said.
In fact, the buy-out option was Labour's idea - and was described in the report as "a deliberate policy design to help attract private investors to invest into high-risk venture capital investment opportunities."
Eighteen months ago "the Government removed the requirement for the buy-out clause".
"We've a really good tech industry story to tell, and that's why we feel saying to NZ VIF that you do not need to do this any more," Mr Joyce said.
No more sweetheart deals, but Peter Thiel doesn't need one - he already has the money and the lifestyle.