COMMENT: OIO judicial review threat not a moment too soon

COMMENT: OIO judicial review threat not a moment too soon

By Pattrick Smellie

Jan. 19 (BusinessDesk) – Today’s threat to seek a judicial review of the secretive process the Overseas Investment Office has used to assess the Shanghai Pengxin Corporation bid for the Crafar farms is not a moment too soon.

It helps too that the deep pockets of Sir Michael Fay are committed to back such a review, which would be the first the OIO has ever faced.

Sir Michael’s tactics for trying to wrest the Crafar farms from the arms of Pengxin, the highest bidder, reeks of self-interest. He’d love to buy some farmland for less than another bidder, and success would help return him from pariah to hero status among New Zealanders.

The lack of challenges to OIO decisions since its establishment since 2005 has allowed this midget agency to become a virtually unaccountable law unto itself in the politically charged area of “sensitive” land sales to foreigners.

The suspicion has grown that it’s informally added political factors to the criteria it applies to controversial bids such as Pengxin’s, which has drifted through a general election and now is hard up against a Jan. 31 deadline from the Crafar farms’ receivers to make its bid unconditional – a hard ask without an OIO decision.

Meanwhile, it closely guards the detail of its assessments on such key questions as the applicant’s good character, relevant business experience, and plans to add net economic benefit to New Zealand.

Even appeals to the Ombudsman’s Office have failed to prise such information out of the OIO, because of the claimed commercial sensitivity of the information and the potential damage to foreign investor appetite for New Zealand from releasing it.

As a result, a government agency operating in one of the most sensitive areas of public policy has also become one of the least transparent and accountable. Unlike the Foreign Investment Board in Australia, it has no board or governance, beyond reporting through to senior managers at Land Information New Zealand, which has housed the OIO since it was taken out of the Reserve Bank nearly seven years ago.

Yet its budget has been increased substantially in the last two years, along with the fees it charges applicants, even though it apparently lacks in-house expertise in economic modelling, business strategy, or personal character investigations.

Asked why it has taken nine months so far to assess the Pengxin bid, it will say no more than that it’s “complex”.

At this stage, the path of least resistance for the OIO may be to allow the Jan. 31 unconditional bid deadline to lapse, having failed to make any recommendation on the bid at all.

That might open the way for the Crafar receivers, KordaMentha, to open discussions with the low-ball bid from the Fay consortium. If that happened, the judicial review would probably disappear.

While Pengxin might box on with its bid, it might equally decide New Zealand has a rigged regime that opposes politically “unacceptable” Asian investors and take its money elsewhere.

Other Asian investors would take the hint, to the long term detriment of New Zealand, which not only needs foreign capital to grow, but also deeper relations with the part of the world that’s not only on the rise, but also on our doorstep.

But best of all, from the OIO’s perspective, no one would have been able to look under the hood at the job they’ve been doing.

(BusinessDesk)

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