11 Aug 2015

Labour calls for Saudi sheep deal investigation

7:51 am on 11 August 2015

The Labour Party has asked the Auditor-General and Treasury to investigate the Foreign Affairs Minister in relation to a payment to a Saudi businessman.

180714. Photo RNZ. Foreign Minister Murray McCully talking with media about the Mayalsia Airlines MH17 flight.

Foreign Affairs Minister Murray McCully (file photo) Photo: RNZ

Documents released by the Government show Murray McCully specifically asked for payments to a Saudi sheep importer not to be treated as compensation, because it would mean lawyers and more officials would become involved.

Labour trade spokesperson David Parker said, in doing so, Mr McCully deliberately misrepresented a $4 million cash payment to Saudi businessman Hamood Al-Ali Al-Khalaf, so it would not be questioned by Cabinet or the Auditor-General.

"But what is clear now is that Mr McCully deliberately misled his Cabinet, the Treasury and the Auditor-General in order to describe this $4 million upfront cash payment as being for 'value', when it wasn't," Mr Parker said.

However Mr McCully said he sought appropriate independent and internal legal advice on the deal.

"I was very clear in all my dealings with Mr Al-Khalaf that we were not prepared to enter negotiations on the basis of paying compensation," Mr McCully said.

"This is reflected in my reported comments at the meeting on 5 March 2012."

Last week, the Government released hundreds of pages of documents relating to the $11 million deal it struck with the businessman - who it viewed as a roadblock in the way of a free trade deal with the Gulf States.

The papers reveal Mr Al-Khalaf's representatives suggested he might seek compensation of $24 million - that figure was calculated on the income he had missed out on over the eight years that New Zealand had banned sheep slaughter exports.

Prime Minister John Key has repeatedly claimed that Mr Al-Khalaf had threatened to sue because the former Labour Government had misled him about sheep exports resuming.

Mr Key said today he remained totally comfortable with the deal, which he said was in line with official advice.

"Of course it was creative - yeah, everyone accepts that - but we were also put in a position by the previous government that was a very challenging situation, and as the papers quite clearly identify, there were legal risks."

Yet the documents make clear the Saudi's intention to seek compensation related to New Zealand's ongoing sheep slaughter export ban, a ban renewed by both the Labour and National Governments.

The Green Party has also called on the Auditor-General to investigate the Government's $11 million Saudi sheep deal.

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