By Alex Tarrant
The New Zealand consortium wanting to buy the Crafar Farms has lodged a new appeal at the High Court over government Ministers' and the Overseas Investment Office's latest approval for Chinese company Shanghai Pengxin to buy the farms.
The Crafar Farms Independent Purchaser Group (GFIPG), led by merchant banker Michael Fay, announced on Friday it had asked the High Court to review government Ministers’ decision “on the grounds that Shanghai Pengxin fails the test of business experience and acumen relevant to the overseas investment.”
The Group’s lawyer, David Cooper of Bell Gully, said the new claim in the High Court was against the Government’s most recent decision announced on April 20th but the grounds were the same as the appeal already lodged by the Group with the Court of Appeal on February 20th.
“Technically the two court proceedings are separate. They concern the same grounds for challenge, but we have to lodge a new proceeding so that the challenge also applies to the second decision by the Government. It may be possible to expedite the process by having the two proceedings merged and heard together in the Court of Appeal, and we will be looking into that.” Cooper said.
Group spokesman Alan McDonald said the buying group had met in Taupo earlier today and were determined to pursue the appeal.
“The buying group is of the view that if there is a practical step to take to prevent this sale, then they will take that step. They want to keep these farms in local ownership and contributing fully to the local economy,” McDonald said.
The consortium has publicly said it would offer NZ$171.5 million for the 16 farms, which is well below Pengxin's rumoured bid of around NZ$210 million. The farms' receiver, KordaMentha, rejected the CFIPG bid as being too low.
After spending nine months at the Overseas Investment Office, Pengxin's application to buy the farms was initially approved in January this year. However, CFIPG appealed the decision.
In February the High Court upheld the appeal. Justice Forrest Miller ruled the OIO had not applied the economic benefits test in the Overseas Investment Act correctly, and ordered the decision to allow Pengxin to buy the farms be set aside and reconsidered under a more stringent set of criteria.
Pengxin had to demonstrate that the economic benefits stemming from its purchase would be substantially and identifiably more than what would be expected if a hypothetical New Zealand buyer purchased the farms. The offer price would not be part of the consideration.
The OIO initially said it would make its revised decision in just a matter of days. However, it has engaged heavily with Crown Law over its second recommendation in an attempt to ensure it has applied the Overseas Investment Act in accordance with Justice Miller's interpretation.
They gave their revised decision to Maurice Williamson (Minister of Land Information) and Jonathan Coleman (Associate Minister of Finance) at the end of March. Williamson and Coleman then sought outside legal advice on whether the OIO's decision was in accordance with Justice Miller's interpretation before releasing the decision today. In his initial ruling, Justice Miller heavily criticised the two Ministers' decision to rubber-stamp the OIO's recommendation.
Following the High Court decision, CFIPG sent the Overseas Investment Office a list of the economic benefits it claimed would be the result of it being allowed to purchase the farms, while taking aim at Pengxin's bid.
That prompted a strong response from Pengxin, which noted no one would be holding CFIPG to its investment and employment promises, whereas under the Overseas Investment Act, its bid would be constantly monitored to ensure it met the economic and environmental criteria placed on it by the OIO.
The Crafar farms group was put into receivership in October 2009 owing about NZ$216 million to its lenders Westpac, Rabobank and PGG Wrightson Finance after interest.co.nz revealed animal welfare issues at the farms.
Most of the debt was owed to Rabo and Westpac, with PGG Wrightson owed about NZ$9 million.
An initial Chinese-backed bid by Natural Dairy for the farms was rejected by the government in late 2010, which was denied on 'good character' grounds. Three of Natural Dairy's executives are now facing fraud charges.