4 Aug 2015

Case for Saudi sheep deal 'weak'

7:57 pm on 4 August 2015

The Government was warned by the Auditor-General that its business case for an $11 million taxpayer-funded farm in the Saudi Arabian desert was weak.

sheep

Photo: 123RF

Foreign Affairs Minister Murray McCully this afternoon released hundreds of pages of documents relating to the Government's controversial decision to give Saudi businessman Hamood Al-Ali Al-Khalaf $11 million in cash, sheep and agricultural equipment.

The Government has justified the deal, saying the former Labour Government misled Mr Al-Khalaf over live sheep exports resuming and it faced possible legal action.

The papers show that Auditor-General Lyn Provost raised multiple concerns about the deal, including questioning whether flying sheep to the agrihub was legal.

They show she repeatedly raised her concerns, which also included whether the deal made economic sense.

The Auditor-General said the sustainability of the agrihub would rely on further investment from New Zealand.

Labour trade spokesperson David Parker told Checkpoint the deal was unscrupulous.

He said people were right to be incredulous that New Zealand would spend millions of dollars building a farm in the desert and flying sheep on Singapore Airlines.

"It just doesn't make sense, and that's why people are right to be suspicious that this is not what it seems," he said.

"This wasn't good business sense, this wasn't settling a legal claim, this was to facilitate the - still - locked Saudi free trade agreement. It's just unprincipled."

Labour to blame - PM

Prime Minister John Key said the documents released today showed the people responsible for the deal were within the Labour Party.

Speaking to reporters in the Cook Islands, Mr Key said the documents were not embarrassing for the Government because it was Labour who created the problem.

"They were the people that put in the initial ban [on live sheep exports from New Zealand], they were the people that made - I think - assurances to the Saudis that they were going to find a response to that.

"They were the people that dispatched Phil Goff to actually talk to the Saudi Minister, saying that they were going to find the way through."

Mr Key said Labour did not resolve the problem, and the National Government did the best it could to tidy it up.

Get the new RNZ app

for ad-free news and current affairs