Pengxin still hopeful on Crafar farms

By Pattrick Smellie

Feb. 15 (BusinessDesk) – The would-be Chinese buyer of the 16 Crafar dairy farms remains optimistic it will still get to own the properties, with the Overseas Investment Office expecting to make a new recommendation on the bid “in a matter of days”.

“It’s eminently possible that the OIO will come up with the same recommendation and that the ministers will accept that,” Prime Minister John Key said in Parliament as a political furore erupted over the High Court’s order setting aside the original permission granted to Shanghai Pengxin to buy the farms.

The judgment does not rule out the sale going ahead, but found the tests applied by the OIO “materially overstated” the economic benefits to New Zealand of Pengxin’s bid, since the farms were in poor condition and any buyer could be expected to upgrade them.

Asked on Radio New Zealand whether Pengxin still expected to be allowed to buy the farms, which have been in receivership since 2010, a spokesman, Cedric Allan, said: “Yes I do.”

“There has never been a purchase subjected to such rigorous scrutiny.”

Allan said Pengxin was “quite astonished” by the decision.

However, Green Party leader Russel Norman used the court’s decision to claim the Pengxin deal had only been approved after lobbying by Chinese government officials who had made it clear the deal was important for diplomatic relations between China and New Zealand.

The judgment was a surprise and appeared to require foreign bidders and the OIO in future to second-guess what another buyer might do to improve a farm’s output.

Key’s initial response to the judgment was that the government was “highly unlikely” to appeal the decision, but Land Information Minister Maurice Williamson was more circumspect.

In a statement this evening, Williamson and the other consenting Minister, Associate Finance Minister Jonathan Coleman, said the judgment of Judge Forrest Miller was “a new judicial interpretation of complex legislation”, which the OIO would now apply.

They pointed out that the judge had rejected arguments by a consortium of New Zealand bidders, led by merchant banker Michael Fay, that Pengxin should be rejected because it did not have relevant business experience and acumen.

“The court’s decision potentially affects only 4 of the 21 factors for assessing benefits to New Zealand,” said Annelies McClure, manager of the OIO. “We will apply the approach directed by the court in a new recommendation to ministers.”

“The OIO considers that the judgment may be relevant to other current and future applications. What affect the judgment will have will need to be considered on a case-by-case basis by the OIO,” McClure said.

“The judgment does not affect consents that have already been granted.”

(BusinessDesk)

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