5 Aug 2015

Labour rejects PM's claims on Saudi deal

7:15 am on 5 August 2015

A former trade minister has rejected the Prime Minister's claim that responsibility for the Saudi sheep trade debacle rests with a former Labour government.


Photo: 123RF

After months of controversy over its decision to spend $11 million setting up a farm in the Saudi Arabian desert, the Government yesterday released hundreds of pages of official documents dating back to 2007.

The Government has justified the deal, saying the former Labour Government misled Saudi businessman Hamood Al-Ali Al-Khalaf over live sheep exports resuming and it faced possible legal action.

Prime Minister John Key said the papers showed all the responsibility for the problems with trade with Saudi Arabia rested with the former Labour-led Government.

"They were the people who put in the initial ban - they were the people who made, I think, assurances to the Saudis that they were going to find a response to that, they were the people who dispatched Phil Goff to talk to the Saudi ministers saying that they would find a way through.

"And they were the people who deliberately, and I say deliberately, having changed their position, decide to do a complete 180 and not find a decision, made sure that the Saudis did not find out about it until they had made that decision public."

Phil Goff, former Labour minister of foreign affairs and trade, strongly rejects that, saying Labour was open and transparent with the Saudi government.

Labour MP Phil Goff.

Former Trade Minister Phil Goff. Photo: RNZ / Alexander Robertson

He said the Labour Government decided to suspend live sheep exports because of concerns about animal welfare and said at the time that if the issues were resolved then the trade could be resumed.

"We subsequently had our attention drawn to the appalling conditions of slaughter of those animals and in a very open and transparent way made a cabinet decision that for both reasons the trade could not be resumed.

"The Saudis obviously did not like that but they accepted it.

"They were led to believe, under the subsequent National Government, that there would be a change in policy, and they were let down."

The documents show that in 2010, three National Government cabinet ministers met to discuss the restarting of live sheep exports two years later in 2012.

Ministers David Carter, Murray McCully and Tim Groser talked about a possible 15,000 to 25,000 live sheep being sent, as long as the shipment met World Organisation for Animal Health standards.

Those shipments never went ahead.

Mr Goff said that was when Mr Al-Khalaf started to make threats of legal action.

"There is no basis for legal action, that is not the cause for the facilitation payment or the bribe that National made, that was about trying to secure a trade agreement by talking to a private individual who had influence on the Saudi Government."

The facilitation payment Mr Goff refers to is how Labour has been framing a $4 million payment to Mr Al Khalaf which formed part of the $11 million spent on the Saudi farm.

In papers released yesterday, that payment was described as: "recognising the intellectual property the Saudi investor brings to the platform, the services and in-market networks he will contribute, as well as the settlement of the long-running dispute."

Caucus run 21/07/15

Prime Minister John Key. Photo: RNZ / Alexander Robertson

Mr Key defended the decision to set up the farm, saying it was in the best interests of New Zealanders.

"Yeah, it's a creative solution - we all said it was reasonably creative, but there's a very big market there and it's a great way of showcasing New Zealand.

"I mean, yes, we are putting in some money, $11 million or whatever it is, but he's putting in $80 million."

The papers also showed that the Auditor-General warned that the business case for the Saudi farm was weak and that she repeatedly raised her concerns over whether the deal made economic sense, and if parts of it were legal.

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