Government accused of 'corruption' over the Saudi sheep deal

Labour's foreign affairs spokesman David Shearer says the Government has gone to extraordinary measures to get a free ...

Labour's foreign affairs spokesman David Shearer says the Government has gone to extraordinary measures to get a free trade deal in the Gulf.

Labour has accused the Government of "corruption" over a deal that has seen $4 million in taxpayer money thrown at an abattoir in Saudi Arabia, which it won't own. 

The Ministry of Foreign Affairs and Trade (MFAT) was grilled by Opposition MPs at select committee on Thursday over whether the $4m was a gift to appease a Saudi businessman.

This came after unconfirmed claims that Hmood Al Khalaf had threatened to sue the Government for $20m to $30m in compensation.

Labour's foreign affairs spokesman David Shearer said that in many jurisdictions the Government's handling of Al Khalaf, and the "extraordinary" lengths it has gone to for a free trade agreement, amounted to "corruption".

"What we've done is paid a facilitation payment to a businessman to try and get his favour to be able to persuade the Saudi government. That's an extraordinarily long way round, and cost to the taxpayer, to get a free trade agreement."

Al Khalaf was aggrieved following New Zealand's ban on live sheep exports for slaughter.

* What you need to know about the Saudi deal
* Government's $6 million investment into a Saudi farm 'dodgy'
* Sheep flight to Middle East cost $1.5m
* Saudis threatened to sue Government for $20m-$30m
* Accusations fly over Government's Saudi farm deal

Al Khalaf had invested heavily in a New Zealand farm and believed himself out of pocket for tens of millions of dollars as a result of the ban.

On Thursday MFAT acting deputy secretary Jeff Langley said the $4m hadn't been classified as a gift and it was an "opportunity to have a New Zealand model, a 21st century abattoir" in Saudi, which would create economic opportunities.

Langley said Al Khalaf was putting in two-thirds of the money, while New Zealand's contribution was around design and providing the technology.

While the money was being gifted to Al Khalaf, all abattoirs in Saudi are owned by the government and it was possible Al Khalaf would gift the abattoir to the government and then lease it back.

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Opposition MPs have questioned whether the New Zealand government funded the abattoir to help facilitate a free trade agreement with Gulf States.

Langley said MFAT had received "strong and direct signals from the Saudi government" that the efforts New Zealand had gone to with the abattoir had resolved some of the stumbling blocks caused by the live export ban.

The country's reputation had been "damaged" as a result of the fallout with Al Khalaf over the live sheep export ban but New Zealand was now closer to a free trade agreement, he said.

Shearer questioned how "imminent" court action from Al Khalaf was, given it led to $4m of taxpayer's money being spent.

MFAT chief executive Brook Barrington stepped in to exercise legal privilege and refused to answer any further questions on the possible court action.

Following the select committee meeting, Barrington also refused to answer media's questions.

Greens co-leader James Shaw said the briefing from MFAT only confirmed what the opposition had been claiming all along.

"It was a straight-out bribe. New Zealand gifted taxpayer money to a Saudi businessman to buy a free trade deal with Saudi Arabia," he said.

"It basically says, who do we need to buy off to get a trade deal?".

Both the Foreign Affairs Minister Murray McCully and Prime Minister John Key have previously said they're comfortable with the process that was followed in regards to the Saudi business deal.

 - Stuff

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