By Alex Tarrant
Following the final act in the sale of the Crafar Farms to a Chinese company last week, our politicians were given the chance to debate the saga one last time in Parliament on Tuesday.
And the owner of the farms before they were put into receivership in 2009 owning NZ$216 million mainly to Westpac and Rabobank (and about NZ$9 million to PGG Wrightson Finance), Allan Crafar, was not exempt from criticism dished out by one of the Ministers responsible for approving the sale.
Defending the business experience of Shanghai Pengxin, who had been criticised for not having a dairy farming background, Land Information Minister Maurice Williamson said cow milking expertise was no guarantee of business success.
"He (Crafar) knew how to milk a cow, and was it a successful operation? I'm not so sure," Williamson said.
The High Court judge who threw out the government's first approval of the sale to Pengxin was also not immune from criticism by Williamson.
An urgent debate requested by the Labour Party on the Court of Appeal's decision last week to dismiss a final bid to stop the sale, was granted by Speaker Lockwood Smith as being an issue of recent occurrence involving Ministerial responsibility.
That responsibility belonged to Williamson and Associate Finance Minister Jonathan Coleman, who defended their actions under the Overseas Investment Act to grant the sale of the 16 farms not once, but twice to Shanghai Pengxin.
Williamson and Coleman's original approval in January 2012 for the sale to go ahead was thrown out by High Court Judge Forrest Miller in February. Justice Miller ruled the Overseas Investment Office (OIO) had made the wrong considerations when determining 'economic benefit' factors set out in the Overseas Investment Act, and ordered the OIO to reconsider its decision.
Rather than applying a 'before and after' test to foreign investment, the OIO was told to apply a 'with and without' test, meaning it had to consider what it thought a hypothetical New Zealand buyer would invest if allowed to buy the farms.
The economic benefits promised by the foreign investor would then have to be identifiably and substantially higher than those potentially offered by the hypothetical local investor.
In April, the OIO again recommended Ministers approve the sale under the more stringent criteria. Following that, a final appeal in the Court of Appeal by a rival bidder, a New Zealand consortium led by merchant banker Michael Fay, sought to argue Pengxin did not have the necessary business acumen to run the dairy farms.
That appeal was dismissed last week. And while the two Iwi involved in the consortium said they were still interested in buying some of the farms off Pengxin, they, and Fay, have ruled out taking their case to the Supreme Court.
Que urgent debate
...Which meant the politicians responsible for the Overseas Investment Office, Williamson and Coleman, had one final chance to defend their actions on Tuesday in the face of attacks from the Opposition Labour, Green and NZ First Parties.
Following criticism from Labour's Parker over the sale (watch Parker in the video below), Williamson (video above) defended the decision to approve the sale.
He noted how the government turned down an initial Chinese bid for the farms by Natural Dairy in 2010 on good character grounds.
"But when my officials brought to me the advice about the Shanghai Pengxin bid, it's just impossible to go down the list of the criteria and not be impressed," Williamson said.
"First of all, what an incredibly successful company and companies Shanghai Pengxin is, and has run. What a number of various industries, including retail, and including construction, and agribusiness that company has run," he said.
"When I hear people like [NZ First leader] Winston Peters saying, 'oh well Shanghai Pengxin doesn't have any experience of dairy farming,' well let's have a look at it: Allan Crafar did, and how did he go running the place?
"He knew how to milk a cow, and was it a successful operation? I'm not so sure," Williamson said.
"Now, I agree that the principal owner of Shanghai Pengxin may not have...washed down the udders and put on the cups. I agree with that. But he has proven that he has a very successful track record in agribusiness, along with a number of others," he said.
"Then there was the good character test. Now in many cases it's quite easy. You've got someone who's got a bit of a dodgy background, or got convictions or whatever. This was a clean slate."
Williamson then turned his attention to the High Court ruling that the OIO reassess Pengxin's bid under stricter economic benefit criteria.
"In the past...Ministers, since the Act was put in place, have always used the before and after test," Williamson said.
"That is, what would be the value of this asset before the investment was made, and what will be the value of this investment after. That's the test that David Parker used over and over again [when he was Minister of Land Information under the Clark government]," he said.
"But somehow, a High Court judge told us we were wrong. Justice Forrie Miller said, 'no, Ministers have misdirected themselves, should not use a before-and-after. They should use a with-and-without test.' That is, what is the value of the asset with this investment, and what would be the value of this asset without the investment being made?
"Now it's quite difficult to do because the 'without' is billions of combinatorics. Who knows what would happen to the asset without the investment?" Williamson said.
"It could be the best dairy farmer the world's ever seen buy it, and it might be the most flourishing set of farms ever. Or, it might be another Allan Crafar that buys it, or anything in between," he said.
Ministers and the OIO took the advice of the High Court, applied the with-and-without test, and came up with the same result.
"And after being challenged again, in the Court of Appeal, I'm delighted to say the Court of Appeal found in favour that Ministers had acted properly, and had approved the sale under the Act," Williamson said.