21 Dec 2018

OIO reprimands PGG Wrightson shareholder

8:41 am on 21 December 2018

The biggest shareholder of the rural services company PGG Wrightson has been forced to reduce its stake and faces court fines after action by the Overseas Investment Office (OIO).

PGG Wrightson

The OIO had been investigating Chinese company Agria and its head - Alan Lai - the major shareholder of PGG Wrightson. Photo: Facebook / PGG Wrightson

The OIO said it had reached a settlement with the Chinese owned, but Singapore based Agria Corp firm, after an inquiry into whether it had breached the good character rules.

Foreign investors must meet and maintain standards of corporate and personal behaviour, which includes whether they have had legal or regulatory issues overseas.

The OIO had been investigating Agria and its head, Alan Lai, after they were involved with US regulators over alleged fraudulent accounting and market manipulation.

Earlier this month, Agria settled claims with the United States Securities and Exchange Commission over the allegations.

It resulted in the company paying $US3 million ($NZ4.4m), and Mr Lai $US400,000, ($NZ590,000) although there were no admissions of liability.

"The settlement agreement required Agria to sell down below its 50.2 percent interest in PGG Wrightson, which it has now done. The settlement also provided for penalty proceedings to be filed in the High Court," the OIO said in a statement.

Agria's stake in PGG Wrightson has fallen to 46.6 percent. Ngāi Tahu Capital, which was in a joint venture with Agria, has now become an independent shareholder with a 3.6 percent stake.

None of the allegations about Agria or Mr Lai involved PGG Wrightson, but the local independent directors said they had been keeping a watch on developments.

Agria first invested in PGG Wrightson in 2009 and took majority control in 2011.