Governments have wanted the Overseas Investment Office to be useless

Kim Dotcom: A man of good character.
KIM DOTCOM / INSTAGRAM

Kim Dotcom: A man of good character.

OPINION: It should come as no surprise at all that the Overseas Investment Office (OIO) is pretty useless in ensuring potential foreign owners of NZ land are the sort of people we would like to invite home for dinner.

Under its legislation, the office, funded only by fees it charges, is required to check applicants are nice people (defined as good character in the act). The object is to keep the disreputable, the criminally-minded, the money launderers, and beneficiaries of graft and corruption from owning NZ assets.

Over the years the OIO has failed spectacularly.

The purchase of the Onetai Station in Taranaki, which was bought through a Panamanian trust company, did not ring any ...
Hougarden.com

The purchase of the Onetai Station in Taranaki, which was bought through a Panamanian trust company, did not ring any bells for the Overseas Investment Office.

In the latest of such shameful incidents, the office failed to fully brief ministers on a deal it approved in 2014 in which two Argentinian businessmen, brothers Rafael and Federico Grozovsky, bought the Onetai station in Taranaki.

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It's now alleged the brothers were found criminally liable in 2011 for polluting the Lujan River, on which they have a tannery.

Perhaps the OIO should have been alerted to the character of the brothers by the fact they were buying the station through a trust set up by that paragon of Panamanian legal virtue Mossack Fonseca. To be fair, the firm was then unknown to the wider world but the OIO, being in the business so to speak, should have been aware of its pedigree.

In 2011 the OIO recommended that another fine citizen from overseas should be granted approval to buy an extensive million-dollar Auckland property. His name was Kim Dotcom.

Despite criminal convictions for insider trading and hacking, the OIO assessment regarded the colourful German as of good character and it took then Justice Minister Simon Power to put a stop to the deal.

Then there was Tommy Suharto, son of corrupt Indonesian strongman President Suharto,  who in the early 1990s was cleared to buy Lilybank Station in the Mackenzie Country.

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In 2002 he was convicted of ordering the assassination of an Indonesian Supreme Court judge.To be fair, he did not, at the time he bought Lilybank, have to pass the good character test.

It's curious that it should be Labour's David Cunliffe to finally draw sufficient attention to the issue for the Government to order a review.

The tireless Murray Horton and Bill Rosenberg, at the Campaign Against Foreign Control of Aotearoa, have been making lack of good character complaints to the OIO, and its predecessor for nearly 20 years. Countless news stories have highlighted the inadequacies of the office. Various governments have known for a long time that the OIO had neither the resources nor the inclination to do thorough assessments of applicants to ensure they are of good character.

A few years ago I did a bit of research on the OIO process to see what sort of checks the OIO actually did on applicants.

I wondered, for instance, what the OIO did to ensure that applicants from opaque and graft-ridden autocracies like China and Russia were people of good character.

I thought it might be worth taking a close look when super-wealthy citizens from those regimes applied to buy NZ assets.

Perhaps the office asked our embassies in those countries to make some discrete inquiries or commissioned a local research firm to provide a report?

It turned out the OIO relied mainly on statutory declarations from the applicants in which they themselves affirmed their good character and occasionally OIO staff did an internet search. In one case it turned out the OIO had been satisfied with a declaration from a NZ director that his foreign friend was of good character.

I recently checked on some of the characters I looked at. Konstantin Malofeev, apparently a great friend of Vladimir Putin, has, according to the Financial Times and the Wall Street Journal, been involved in funding rebel groups in the Ukraine and Crimea and is on the EU sanctions list. Another has fulfilled few of his development promises and seems to be constantly in strife.

The real question is not whether the OIO is much more than a rubber stamp exercise to keep up the appearance we care who is buying our land. The real question is why the OIO has been allowed to be so useless for so long in both checking applicants and ensuring they fulfil their ambitious promises.

Sadly it seems the office is a mechanism for attracting more foreign investment and exchange without asking too many questions. And a grateful new owner can always be approached for a generous political donation later. A weak, understaffed organisation is exactly what various administrations have wanted.  

The arguments for and against foreign ownership of our land have been well traversed. If we are going to join free trade treaties and run an open economy we have to accept many of our residential properties, farms and businesses will end up in foreign hands. (Disclosure: I work for an Australian company.)

I can see that foreign owners are sometimes much better stewards of the land than local farmers and may in some cases even provide better access to the public. They also help keep rural land prices up so local farmers can expect a better price when they sell.

I still think foreign ownership on balance is a bad idea but if we going to sell off the country we should be very choosey about who we sell to.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 - Stuff

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