Auditor-General to probe Saudi model farm deal

Tuesday 18th August 2015

The Auditor-General is mounting a probe into the Saudi Arabian agri-hub created at a cost of $15.5 million to the taxpayer in 2013 as part of efforts to restore relations with Saudi Arabia after the New Zealand government confirmed a ban on live sheep shipments to the Arab nation.

Among the four broad terms of reference of the inquiry will be "whether the expenditure on services was within the appropriations of Vote Foreign Affairs and Trade, as authorised by Parliament."

Foreign Affairs Minister Murray McCully was able to advance the initiative without requiring a Cabinet decision because he was able to argue the spending could be allocated from MFAT's operational budget.

The contract for the Saudi Arabia Food Security Partnership, which was to establish a model farm showcasing New Zealand animal husbandry methods, included a $4 million cash component, which official documents described as a capital contribution. Opposition party politicians have called it a bribe to compensate a disaffected Saudi businessman, Hamood al-Khalafi, for the fact the government decided not to reverse the previous Labour government's ban on live sheep exports.

The inquiry announced today follows formal requests from Members of Parliament, a taxpayer lobby group, and a public petition that attracted more than 10,000 signatures.

Also in the terms of reference will be "the amount of public money budgeted and spent on this partnership, how it has been used, and the outcomes achieved with it," Auditor-General Lyn Provost said in a statement.

The "procurement and contract management practices used by the Ministry and New Zealand Trade and Enterprise to purchase services relating to the partnership" will also be probed, along with "whether the services received were in keeping with the business case and contract specifications" and anything else thought desirable to inquire into and report on.

There will be no further comment until the inquiry is complete.

MFAT has already released some 900 pages of heavily edited documents relating to the Saudi Arabia Food Security Partnership.

Those documents "may have provided enough information for people to make their own assessment of some questions," said Provost. "But other questions remain; some of which I may be able to answer; some I cannot.

"I have, therefore, decided to carry out an inquiry into the expenditure of public money on the partnership.'

The Office of the Auditor-General was itself asked by MFAT in 2013 to give advice on the indicative business case, which it found to be "weak".

"The letters setting out our comments have been released publicly. There have been significant developments in the execution of that business case since 2013, and the inquiry will focus mainly on that period."

BusinessDesk.co.nz

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