23 December 2010

Chief Reporter

REFUSAL OF NATURAL DAIRY BID FOR CRAFAR FARMS SETS PRECEDENT FOR OVERSEAS INVESTMENT OFFICE

The Campaign Against Foreign Control of Aotearoa (CAFCA) congratulates both the Overseas Investment Office (OIO) and the Government for having refused the application of Natural Dairy to buy the Crafar Farms. The grounds for refusing have not been spelled out by either the OIO or Ministers, but the OIO Decision says that it is not satisfied that the applicants meet all the requirements of sections 16 and 18 of the 2005 Overseas Investment Act. Those sections include the requirement that the persons owning and/or controlling the foreign applicant be of good character. There have certainly been plenty of characters in Natural Dairy's bid, on both sides of the proposed sale - indeed, scriptwriters for B movies would struggle to invent characters like them - but the lack of good character has been obvious from the outset. So the decision to refuse permission was an absolute no brainer, any other outcome would have been a travesty, and would have caused major public uproar and further exacerbated the political split within the highest ranks of the Government and its supporters on the issue of the sale of farms to foreigners.

CAFCA sees this as a breakthrough precedent for the OIO, as we're not aware of any previous refusals by it on the grounds of lack of good character (and if there have been, they were on nothing like this scale). We have been making lack of good character complaints to the OIO, and its predecessor the Overseas Investment Commission (OIC), since the late 1990s. One of the most recent involved the 2009 collapse of Cedenco, caused directly by the legal problems of its American owners. Every single one of our complaints was rejected by the OIO or the OIC. For the details on this see "Good Fellas: The OIO And The Nature Of Being A 'Good Character'" by Quentin Findlay, in Foreign Control Watchdog 124, August 2010 http://www.converge.org.nz/watchdog/24/02.htm and his earlier article in Watchdog 123, May 2010, "Monkeys With Rubber Stamps: The Overseas Investment Office ", http://www.converge.org.nz/watchdog/23/08.htm . Also in that same issue: "Waste Management: Another 'Good Character' Case From the CAFCA Archives", Murray Horton, http://www.converge.org.nz/watchdog/23/09.htm and "Tommy Suharto: One Who Was Never Put To 'Good Character' Test", Murray Horton, http://www.converge.org.nz/watchdog/23/10.htm ).  Nor was it only CAFCA that was getting the run around from the country's foreign investment rubberstampers. Back in 2000 Ministers in the Labour government overrode advice from the OIC and refused permission for Brierleys to sell its stake in Sealord to foreign fishing companies. We got the whole file from the OIC and Government, which revealed that the OIC consistently rejected advice and evidence from relevant Ministries that several of the applicants did not meet the good character provisions ("Sealord Sale: OIC Exposed", Bill Rosenberg , Watchdog 95, December 2000, http://www.converge.org.nz/watchdog/95/8sealo.htm ). So there is a long, long history of the OIC and OIO rejecting any complaints (which were always backed up with evidence) about the lack of good character of various applicants. In the early 1990s the OIC approved Tommy Suharto, a notorious criminal, to buy Lilybank Station in the Mackenzie Country. Whenever CAFCA raised this subject their only "defence" was that they approved him before the good character requirement was included in the Overseas Investment Act.

The Natural Dairy/Crafar Farms three ring circus highlights the fact that "lack of good character" is one of the only grounds for which an application can be rejected (and it only covers the "good character" of the individuals involved, not the company itself), and the OIO has fought tooth and nail to fight off any such complaints in the past, as recently as 2009. What is different this time is that this application became the hottest of political hot potatoes, with the Prime Minister saying that he didn't want to see New Zealanders becoming tenants in our own land (we're delighted that John Key has seen fit to appropriate a phrase that CAFCA has been using for years). How galling it must have been for Maurice Williamson, as one of the Ministers tasked with deciding on the application, to have to refuse it. As recently as September Williamson was denigrating opponents of foreign takeovers, specifically those involving Chinese companies such as Natural Dairy, as "racists". As far as that side issue is concerned, CAFCA wishes to make clear that our opposition to Natural Dairy's bid would be the same if it was owned by Americans, Australians or Britons (or any others of our "white kith and kin"). The fact that it is Chinese-owned is irrelevant to us.

CAFCA calls upon the Government to instruct the OIO to cast its net much wider than that of "lack of good character" (which really does just add insult to injury) and rigorously assess all foreign investment applications to see if they really are in the national interest. The precedent has been set now that a foreign bid to buy up a significant chunk of the current engine room of the NZ economy (namely, dairy farming) has been rejected. This sends the message that NZ is not just there to be looted by any passing opportunist. The Government now needs to demonstrate some political will, show some balls, and lay down some much tougher house rules for those who wish to be guests in our home.

In the meantime the decision to refuse Natural Dairy's bid is one to savour, a nice present to the New Zealand people, just in time for Christmas.

Murray Horton
Secretary/Organiser