Murray McCully met Saudi businessman tied to a controversial farm deal

Foreign Minister Murray McCully spoke to Saudi businessman, Hmood Al Khalaf, at a function in Riyadh in April.

Foreign Minister Murray McCully spoke to Saudi businessman, Hmood Al Khalaf, at a function in Riyadh in April.

A deal the foreign minister struck with a Saudi businessman, which is being investigated by the Auditor-General, is back in the spotlight after the two recently met in the Middle East.

Murray McCully has been embroiled in controversy for more than a year over the Government spending $11.5 million on establishing a sheep farm in Saudi Arabia in partnership with influential businessman, Hmood Al Khalaf.

Treasury documents released under the Official Information Act reveal McCully met with Al Khalaf in Riyadh in April, where he also met with the Saudi Minister of Commerce and officials and hosted a function for interested New Zealand companies.

Labour's David Parker says the Saudi farm deal was "shabby" and "unprincipled".

Labour's David Parker says the Saudi farm deal was "shabby" and "unprincipled".

A spokesman for McCully's office said there was no scheduled meeting between the pair, "however the two spoke briefly at a reception and Mr Al Khalaf commented positively on the progress of the food security partnership".

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That's the same partnership Auditor General Lyn Provost announced in August last year she would be investigating, specifically, the public money spent on it.

At the time Opposition parties called for McCully to be stood down while the investigation took place.

The Treasury papers reveal the meeting between McCully and Al Khalaf was "very beneficial to the ongoing partnership".

McCully was in the Middle East as part of a trip to progress a free trade agreement with the Gulf.

The business deal with Al Khalaf, which included $4m to secure Al Khalaf to run the "agri-hub", about $6m on establishing the farm and $1.5m to fly 900 pregnant breeding ewes from New Zealand, was said to be offered to appease Al Khalaf and get a trade agreement across the line.

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Al Khalaf was said to be unhappy with New Zealand's ban on live sheep exports for slaughter, which had a negative effect on trade talks, leading to McCully's claims the agri-hub was to help avoid legal action over the ban.

But the papers show Treasury didn't interpret the agri-hub as a way to avoid legal action and didn't support the proposal either.

The Treasury documents reveal an email from senior analyst Becky Prebble on June 9, 2015, to another staff member seeking clarification as to why Treasury didn't support the Saudi deal.

"When we said we didn't support the proposal as it went through Cabinet, am I right in saying that it was just because we didn't have enough information about it? As opposed to, say, because we don't think we should be paying people not to continue with legal proceedings?"

An unnamed official said she had been "trawling through the information" and "at no time did any of our briefings refer to it being about pre-empting legal proceedings".

Those comments are contrary to both McCully and Prime Minister John Key who at the time specifically said a Cabinet paper showed "quite clearly that there was the threat, potentially, of legal action".

The papers also reveal in February this year Treasury officials were unhappy they hadn't been updated on the farm regularly, as set out in the Cabinet Paper, and it had been a "good six months" since they'd heard anything. 

Labour's shadow attorney general, David Parker, said the Treasury papers make it clear they weren't aware of any threat of legal action from Al Khalaf and the deal was "shabby and unprincipled".

"Foreign Minister Murray McCully and the Prime Minister have repeatedly claimed a $4 million payment was to avoid legal action following New Zealand's live sheep ban.

"The documents reveal that just a week after John Key claimed that payment was to avoid legal action, officials from Treasury couldn't find any reference to legal proceedings in their advice," he said.









 - Stuff

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