Transparency set to increase for OIO

PATTRICK SMELLIE

OPINION: A little sunlight on the OIO, please

There's an intriguing coincidence between the arrest of alleged global internet pirate Kim Dotcom and the imminent decision on the Shanghai Pengxin bid for the Crafar farms.

Migrants and foreign investors are perennial hot button issues both here and everywhere, and both these cases are red hot.

They both also point up deficiencies in the way both foreign investment and migration by wealthy foreigners are handled, as well as the secrecy surrounding decision-making in both areas.

In Dotcom's case, New Zealand First leader Winston Peters can already smell scandal, while Labour's new leader David Shearer has moved out of the shadows to condemn the Pengxin bid.

Peters wants the papers released showing how Dotcom, a German national, gained New Zealand residency by investing $10 million in government bonds after first being refused permanent residence because of his criminal record.

There could be plenty of political scalps on offer. The Immigration Minister at the time, Jonathan Coleman is in the gun and, to make matters worse, he is now the Associate Finance Minister who has to sign off on the Pengxin bid, along with another of the Cabinet's lesser lights, Land Information New Zealand Minister Maurice Williamson. 

Talk about double jeopardy.

ACT's sole MP, John Banks, also looks exposed. He confirms he met Dotcom as Mayor of Auckland the larger than life founder of the Megaupload file-sharing website at his Coatesville mansion, the scene of the raid undertaken by another obscure of arm of government, the Organised & Financial Crime Agency, at the request of the FBI. Banks also advised him on his immigration application.

While Banks has been keen to play these down as fleeting moments, flamboyant gestures such as Dotcom's half million dollar fireworks display for Auckland clearly helped him buy respectability and connections in his South Pacific bolt-hole.

On this issue, the Overseas Investment Office has come out smelling of roses.

It declined Dotcom's application to own the Coatesville complex for failing its opaque ''good character'' test, even though he'd passed a similar Immigration Service test by putting $10 million in government bonds.  Just why two government agencies are examining the same issue separately is another issue.

The good character test was also the reason the OIO turned down the first two Chinese bids for the Crafar farms.

However, there should be no good character concerns with Pengxin, whose ''complex'' bid took the OIO nine months to assess. It's a serious investor with Chinese, African and South American interests, including agricultural holdings, albeit no dairy assets. Pengxin looks blue chip where the first rejected Chinese Crafar bidder, May Wang, was penny dreadful.

So why has the OIO taken so long to assess the Pengxin bid?

Close observers suggest it's because the office, under manager Anneliese McClure, lacks the necessary analytical expertise, and possibly because it is highly sensitive to political and media attention, and that it is used to the minimum of public transparency.

That may be about to change.

If Michael Fay proceeds with a judicial review of the OIO's recommendation on the Pengxin bid, he will create a rare opportunity for public assessment of OIO processes that have remained closed despite Official Information Act requests and Ombudsman's Office reviews. Information is often withheld because applications are deemed commercially sensitive.

The bar for non-disclosure has risen to new heights recently, with notification of permission for an unnamed foreign investor to buy unidentified New Zealand assets valued at a whacking $1.2 billion.

No matter how important foreign investment may be to New Zealand, that level of secrecy stinks.

However, no one until now has had the stomach to fund a judicial review in the six years since the OIO was hived off from the Reserve Bank and stuffed into LINZ, where it operates no governance structure beyond line management reporting to a LINZ senior manager. 

The Australians, by contrast, have a senior panel of experts in the Foreign Investment Review Board, which is also a separately constituted Crown entity, not unlike New Zealand's Takeovers Panel.

In the meantime, Pengxin has accepted a protracted process, based on another vague test requiring proof of net economic benefit to New Zealand from Pengxin owning the Crafar farms. At best a guess, at worst an unmeasured outcome, this is a big part of what the OIO's non-economist, non-commercial staff has been assessing.

To help meet that requirement and perhaps thinking government involvement of a kind would help its cause, Pengxin apparently proposes the farms be managed by state-owned farmer Landcorp - a plan that has enraged critics and led to claims of conflict of interest, since it makes the Crown both commercial player and regulator in the deal. 

Yet the charge is nonsense in any meaningful sense. If you want proof that state-owned enterprises operate commercially despite the politics, just look at power prices.

Landcorp also clearly knows how to run dairy farms, which incidentally, the Crafars didn't, so what's the problem?

If there are to be allegations of compliant government agencies, why not look at the OIO or the rules that make New Zealand residency status look as if it's for sale?

- © Fairfax NZ News