Sharechat Logo

Foreign buyers to pay $3 mln over unlawful rural land purchases

Friday 5th July 2019

Text too small?

Foreign buyers will end up in the red after agreeing to pay almost $3 million in penalties for purchasing rural land north of Auckland without Overseas Investment Office consent. 

The High Court yesterday ordered Chinese businessmen Zhongliang Hong and Xueli Ke, and IRL Investment and Grand Energetic Company to pay $2.95 million for breaching the Overseas Investment Act when they bought two properties in 2012 and 2014. They paid about $4.5 million for one of the sites and stood to gain $2.3 million when they sold it for $10.1 million in June this year. The other site was bought for almost $2.6 million and is due to be sold for about $3.3 million in September at no gain after deducting expenses. 

After the penalty, that will mean the businessmen will be in the red by about $600,000. At the time of the breaches, the law allowed for a maximum penalty of $300,000 or the quantifiable gain made on the sale of the property, whichever is higher.

"Our rural land has special protections under the Overseas Investment Act to ensure that overseas investors meet certain requirements to be able to buy it," OIO group manager Vanessa Horne said in a statement. 

"The OIO will continue to investigate people and companies that do not respect the safeguards the act provides for this sensitive land."

Hong, Ke and the companies admitted their liability, and the settlement shows the businessmen will each pay $307,500 and IRL $2.3 million. Hong and Ke will also each pay $10,000 to help cover the regulator's monitoring and enforcement costs. 

The OIO began its investigation in October 2016, but the settlement was delayed when the businessmen changed their lawyers three times. 

Hong and Ke applied for retrospective consent to buy the properties but were rejected as the OIO didn't deem their investment would provide enough benefit to New Zealand under the rural land test. 

(BusinessDesk)



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

MARKET CLOSE: Blue-chip stocks Meridian, A2 lead market lower
NZ dollar rises on Brexit hopes, rate cut reassessment
Three not failing, just needs a new owner - MediaWorks CEO
Major investors back new CBL class action targeting directors
Rip Curl purchase a done deal on Kathmandu proxies alone
Comvita chair Neil Craig eyes the exit once he finds a new CEO
Mercury raises guidance on increased storage, high spot prices
Eroad reports strong 3Q sales growth, eyes ASX listing
MediaWorks puts TV business on the block
NZ dollar benefits as preliminary Brexit deal improves risk appetite

IRG See IRG research reports