Govt 'wasted millions' on Saudi farm – Labour

  • 05/08/2015
Foreign Minister Murray McCully (File)
Foreign Minister Murray McCully (File)

The government made a "dodgy" $4 million payment to keep a noisy Saudi businessman quiet and has now backed a questionable farm in the middle of the desert, says Labour leader Andrew Little.

Papers dumped yesterday reveal details behind the deal in which the government invested $11.5 million in Hmood Al Ali Al Khalaf's farm so it could showcase New Zealand farming.

Mr Khalaf got $4m in cash after he lost out when the Labour government banned the export of live sheep for slaughter in 2007.

That was negotiated in 2013 after the Saudis suggested they could sue for commercial compensation of up to $30m.

But Mr Little says there are still huge questions about the $4m payment, which he blamed on Foreign Affairs Minister Murray McCully.

There was no legal risk of the government being sued for $30m, he said.

"This was a payment to shut up a noisy opponent to conclusion of the GCC (NZ-Gulf Co-operation Council) trade deal."

It was unacceptable for a government to make a dodgy payment to shut someone up, Mr Little said.

"I don't know how paying $4m to shut up a businessman in Saudi Arabia is in the best interests of New Zealand."

Mr Little said he also remained unconvinced setting up an agri-hub in the middle of the desert was a good idea and the high rate of lamb deaths there showed that.

But Prime Minister John Key says he stands by the deal.

Today Mr Key said he hadn't read all the released documents but maintained they backed his earlier claims the whole thing was Labour's fault.

"Labour is totally responsible. They were the people that started this issue, they were the people that put the live export ban on, they carried on negotiations with the Saudis afterwards.

"They were wanting to restart live exports... they also didn't tell the Saudis that they then changed that position.

"They are up to their eyeballs in it and it was this government that had to sort it out."

The documents also show Auditor-General Lyn Provost wasn't happy with the deal.

Mr Key said there was "a lot of back and forth" with the auditor-general but in the end officials advised cabinet the deal was lawful.