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Natural Dairy directors face SFO probe despite denials in Hong Kong

Tuesday 2nd November 2010

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The confusing saga of Natural Dairy (NZ) Holdings’ tilt at dairy farms in New Zealand has taken another twist with the Serious Fraud Office scotching claims its probe doesn’t affect the Hong Kong company. 

The SFO announced on Oct 21 that it was “looking into transactions” between Natural Dairy and the UBNZ group of companies after the Overseas Investment Office passed on information stemming from its review of the proposed purchase of the Crafar farms. 

Last week, Natural Dairy told the Hong Kong Stock Exchange that its New Zealand legal adviser had been advised that the probe “does not relate to Natural Dairy.”

The interpretation may come down to semantics as the SFO typically targets individuals (who can be jailed) not companies. 

“I do not understand how they have come to this conclusion,” SFO director Adam Feeley told BusinessDesk. “The SFO investigation does involve persons who are connected with the companies mentioned in our original media release. Beyond that we are not commenting further.” 

Natural Dairy and Auckland-based businesswoman May Wang’s UBNZ hit the headlines in March after announcing plans to buy dairy farms from the failed Crafar family business as part of a $1.5 billion investment in the New Zealand dairy sector, including processing plants.

Demand for dairy products is soaring in China, where a surging population of discretionary consumers is gaining a taste for western-style foods. 

Since then, Natural Dairy has dropped references to an investment on that scale and the purchase of the 22 farms has been called in for consideration by the Overseas Investment Office because of suggestions Wang is merely fronting for overseas interests.

The case has provoked a public backlash against foreign investment in farms even while deals such as the sale of shares in Synlait to China’s Bright Dairy have passed unscathed. 

UBNZ’s Wang and Natural Dairy said last month they have “nothing to hide” from the SFO, with both parties confident the investigator won’t find any wrongdoing, and will let the transaction continue.

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