15 June 2010

Chief Reporter

BLATANT POLITICAL ADVOCACY & NONE TOO SUBTLE IMPLIED THREAT FROM OIO

Since When Did NZ's "Image Overseas" Become Any Of Its Business?

These below two quotes are both from actual (separate) monthly Decisions of the Overseas Investment Office, both from February 2010. Note the sentences in each which I've highlighted in bold. The first Decision relates to the global takeover of Cadbury by Kraft (with NZ assets involved); the second one to an Australian takeover of SkyCity Cinemas.

"The Applicant manufactures and sells packaged food and beverages worldwide. The Applicant has made an unsolicited offer to Cadbury Plc shareholders to acquire all the shares in Cadbury Plc. The Application relates to an international transaction of which the New Zealand component is just one element. As part of the transaction, the Applicant will purchase Cadbury Limited in New Zealand, which has assets in excess of $100 million, and also owns sensitive land. The Asia Pacific region has been identified by the Applicant as a region for growth potential. If this ambition is realised, jobs will likely be created or retained. New Zealand is likely to benefit from improved relations with the United States as a result of the Investment. Declining consent would also likely result in New Zealand 's international business image being adversely affected"..

"The Applicant has agreed to purchase the SkyCity cinemas business, which has an interest in sensitive land in Queen Street, Auckland. The cinema division of the Applicant's group is currently the largest cinema exhibitor in Australia and Germany. The Applicant intends to maintain and develop the Queen Street property as a multi screen cinema complex. The investment will benefit New Zealand by introducing new technology and business skills into New Zealand. The Applicant is a key person in the cinema industry, and declining consent would likely adversely affect New Zealand's image overseas. The Applicant's group has a history of successful previous investment in New Zealand through the Rydges hotel chain".

In all the many years I've been reading the Decisions of the OIO and its predecessor, the Overseas Investment Commission, this is the first time that I can recall seeing this language used. It is blatant political advocacy and reads as a none too subtle implied threat.

At whom is this language aimed? The Ministers who have nominal "oversight" of transnational corporate takeovers in NZ? Does this mean that the rubberstampers of the OIO think that the National government needs to be reminded about, or even threatened with, the alleged international consequences if these takeovers were declined?

Since when did the preservation of NZ's "international business image" and its "image overseas" become part of the job description (or mission statement) of the Overseas Investment Office? That task rests with those who make the laws and policies, not those tasked with "oversight" of them.

What business is it of the OIO to assert that allowing Kraft to take over Cadbury's NZ assets will lead to "improved relations with the United States as a result of the investment"? That is straying very far into the political realms of foreign policy and trade. Has this obscure office morphed into a political lobbying body now, funded by the taxpayer? If so, the taxpayers are entitled to know.

Anyone who continues to have illusions about the OIO in any way acting in the national interest - and that includes the Ministers and MPs who attempt to mollify the public every time there is a particularly contentious foreign takeover - needs to explain these politically loaded phrases routinely embedded in its core workings. And the OIO needs to explain itself. Just who does it think it is?

Murray Horton
Secretary/Organiser