Fears water will profit foreign corporations

One of the world's largest companies is poised to increase profits from Canterbury's increasingly constrained clean-water reserves, politicians warn.

The giant Japanese Mitsui corporation is a major shareholder in dairy-processing company Synlait, which has signed an agreement with Central Plains Water Ltd (CPWL) over its controversial proposed irrigation scheme.

Synlait says it will buy shares in CPWL and transfer its existing consents to use water from the Rakaia River to a fully owned subsidiary to enable the building of a 4000-hectare irrigation project on the north bank of the river.

Central and local government politicians say that could turn what is supposed to be a community scheme benefiting the region into a cash cow for overseas interests. Mitsui owns 22.5 per cent of Synlait's shares.

There are also concerns that lack of information and debate about the agreement by the Christchurch City Council, one of two Central Plains Water Trust (CPWT) settlors, appears to breach the trust's "no surprises" policy.

The proposal is still being considered by commissioners, with hearings scheduled to resume in October on a reduced run-of-river scheme after the rejection of plans for a 55-metre-high dam in the Waianiwaniwa Valley this year.

The bill for the hearings has already reached $1.5 million.

Christchurch Central MP Brendon Burns, Labour's water spokesman, said the issue raised "critical questions" about foreign owners profiting from public water.

Overseas Investment Office consent is required where an overseas person or organisation wants to acquire 25 per cent or more ownership in "significant business assets" or "sensitive land". Those thresholds are being reconsidered in a review of the Overseas Investment Act.

Burns said foreign investment was a fact of life, but the Mitsui share of Synlait was close to 25 per cent.

"If this pans out, we could see an increasingly foreign-owned entity sucking up our water and repatriating profits overseas. I think people will be aghast at that," he said.

Christchurch City councillor Yani Johanson is concerned at the lack of information brought before the council and dissatisfied with the response from council staff.

He said there were two issues the level of foreign ownership in Synlait and how a charitable trust could make deals with a private company that would still benefit the public.

"This is transferring local benefit to foreign benefit," he said.

"Under the `no surprises' clause of the trust's statement of intent I'd have expected we would have had the opportunity to discuss it. The settlors have been left in the dark."

The CPWT statement of intent for the year to June 30, 2010, says trustees will "aim to ensure that the councils are informed of all major developments affecting CPWT's and group's state of affairs" and "endeavour to operate on a no-surprises basis with regard to all issues of relevance to settlors".

City council regulation and democracy services general manager Peter Mitchell said Johanson's questions were forwarded to CPWL, as it had the information to answer them.

The Synlait agreement was not an issue he would have expected the council to be consulted on, he said.

CPWT chairman Doug Marsh said the water in the initial part of the Rakaia scheme was from consents already held by Synlait, subject to appeal, and from other parties.

The deal signed with Synlait would have no material impact on the scheme or potential benefits to the community and region, he said.

"The Synlait land involved is within the scheme area and Synlait has the same rights to be involved as any other shareholder."

The council had not been involved as the issue was an operational matter still subject to contract, Marsh said.

Synlait managing director John Penno did not want to comment.

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