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Posts Tagged ‘Shanghai Pengxin’

Doing ‘the business’ with John Key – Here’s How (Part # Rua)

25 April 2013 19 comments

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Continued from:  Doing ‘the business’ with John Key – Here’s How

Once upon a time, at the bottom of the world, there was a small country that prided itself on being a fair, open, and uncorrupted society.

I’m no longer sure about the last bit.

Last year, Transparency International ranked New Zealand as the #1 least corrupt nation on Earth. We ranked above Denmark (#2), Finland (#3), Sweden  (#4), Singapore (#5),  and  Norway (#6).

I’m no longer certain we deserve that top ranking, either.

The further that the Sky City/Convention Centre and Crafar farm deals are  scrutinised – the stronger the odour of something unpleasant fills our nostrils.

To recap, let’s start with the Crafar farms deal with Shanghai Pengxin.

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Tahi: Crafar Farms/Shanghai Pengxin/National Government

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The timetime of the Crafar deal runs something like this,

5 October 2009: Crafar Farms placed into receivership, owing $216 million to creditors.

22 December 2010: Government  blocks  bid by Natural Dairy to buy the 16 Crafar farms on ‘good character’ grounds.

27 January 2011: KordaMentha accepts offer from Shanghai Pengxin International Group Ltd to buy Crafar Farms.

13 April 2011: Shanghai Pengxin lodges application with the Overseas Investment Office (OIO) to buy the Crafar farms.

26 September 2011: Crafar farms receiver KordaMentha  rejects a conditional NZ$171.5 million offer for 16 central North Island dairy farms from a group led by controversial former merchant banker Michael Fay.

27 January 2012: Government ministers approve Shanghai Pengxin’s application to purchase 16 Crafar farms.

15 February 2012:  High Court delays sale of Crafar farms to Shanghai Pengxin.

20 April 2012:  Government ministers , Land Information Minister Maurice Williamson and Associate Finance Minister Jonathan Coleman  approve the Overseas’ Investment Office’s (OIO) new recommendation to allow the sale of the 16 Crafar farms to Shanghai Pengxin.

At least, that is the version for public consumption.

Recent revelations indicate that much more was taking place behind the scenes. If we take that timeline and add the revelations that have come out in the last few months, the picture takes on a murkiness and a hint on something decidedly shady,

5 October 2009: Crafar Farms placed into receivership, owing $216 million to creditors.

2 December 2009: KIWI DAIRY CORPORATION LIMITED registered. (Then changes to ORAVIE LIMITED, 20 December 2010. Then changes to ORAVIDA LTD, 20 January 2011. Then changes to ORAVIDA NZ LIMITED, 13 May 2011. ) Shareholders: Jing Huang, Julia Jiyan Xu, and Deyi Shi.  (Source)

11 June 2010:  National Party receives $50,000.00 donation from Susan Chou. (Source)

30 July 2010:  National Party receives $150,000 donation from Susan Chou. (Source)

18 November 2010: MILK NEW ZEALAND CORPORATION LIMITED* registered. Directors: Terry Lee and Jiang Zhaobai. (Source)

22 December 2010: Government  blocks  bid by Natural Dairy to buy the 16 Crafar farms on ‘good character’ grounds.

27 January 2011: KordaMentha accepts offer from Shanghai Pengxin International Group Ltd  to buy Crafar Farms.

31 May 2011: National Party receives $100,000 donation from Susan Chou. (Source)

22 July 2011:  ORAVIDA LTD registered. Shareholders: Jing Huang, Julia Jiyan Xu, and Deyi Shi. (Source)

27 July 2011:  ORAVIDA PROPERTY LTD changes name to  KIWI DAIRY INDUSTRY LTD.  Shareholder: Deyi Shi (Source)

13 April 2011: Shanghai Pengxin lodges application with the Overseas Investment Office (OIO) to buy the Crafar farms.

26 September 2011: Crafar farms receiver KordaMentha  rejects a conditional NZ$171.5 million offer for 16 central North Island dairy farms from a group led by controversial former merchant banker Michael Fay.

22 November 2011: National Party receives $50,0000 donation from Citi Financial Group. Shareholders: Yan Yang and Qiang Wei. (Source) (Source)

22 November 2011: National Party receives $1,600 from Oravida NZ. (Source) (Source)

26 November 2011:  NZ General Election

30 November 2011: National Party receives further $55,000 donation  from Oravida NZ. (Source) (Source)

27 January 2012: Government ministers approve Shanghai Pengxin’s application to purchase 16 Crafar farms.

15 February 2012:  High Court delays sale of Crafar farms to Shanghai Pengxin.

20 April 2012:  Government ministers , Land Information Minister Maurice Williamson and Associate Finance Minister Jonathan Coleman  approve the Overseas’ Investment Office’s (OIO) new recommendation to allow the sale of the 16 Crafar farms to Shanghai Pengxin.

*   “Milk New Zealand Holding Limited”  is the official applicant and purchaser of the 16 Crafar farms. It is supposedly a subsidiary of Shanghai Pengxin,

” Applicant

3. The Applicant is Milk New Zealand Holding Limited (“the Applicant”), a Hong Kong incorporated company which is an overseas person under the Act.

4. The Applicant will register as an overseas company under the New Zealand Companies Act 1993 prior to acquiring the Investment. The Applicant does not have any current interests in New Zealand as at the date of this Application.1

1 The 99% ultimate owner of the Applicant, Zhaobai Jiang, has a [redacted]% interest in a company ([redacted*])that has applied for consent to acquire development land at [redacted] . No decision has yet been made on this application.” – Source

(*Note: Despite OIO redacting the second company, this blogger has  found that it is actually “NATURE PURE LIMITED“.  Terry Lee and Zhaobai Jiang are both listed as Directors.)

Despite numerous company name changes; newly registered companies; and a lengthy trail of shareholders, the one link that does stand out between Shanghai Pengxin and financial donations to the National Party is Terry Lee.

Mr Lee, along with Deyi Shi and  Xing Hong, registered KIWI DAIRY CORPORATION LIMITED on 2 December 2009, which, after several name changes, ended up as ORAVIDA NZ LIMITED  on 13 May 2011. Xing Hong was also a one time Director of ORAVIDA NZ LIMITED and ORAVIDA PROPERTY LIMITED.

Deyi Shi is still a current Director of both  ORAVIDA NZ LIMITED and ORAVIDA PROPERTY LIMITED.

On 22 and 30 November, 2011, the National Government received donations totalling $56,600 from Oravida NZ Ltd.

A further $300,000 was donated to National by Auckland businesswoman, Susan Chou, who, through her husband Zhaowu Shen, had a connection with Jack Chen and NZ Natural Dairy Ltd – the first unsuccessful attempt by Chinese investors to gain control of the Crafar farms.

Two months later, on 27 January 2012, National approved the sale of 16 Crafar farms to Shanghai Pengxin subsidiary, Milk New Zealand Holding Limited.

Readers are invited to draw their own conclusions from the facts presented.

Continued at:   Doing ‘the business’ with John Key – Here’s How (Part # Toru)

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Sources & References

OIO:  Decision required under the Overseas Investment Act 2005: Milk New Zealand
Holding Limited

CAFCA:  December 2010 decisions

NZ Companies Office

Elections NZ: Returns of party donations exceeding $30,000

Elections NZ: Returns of party donations exceeding $20,000

Interest.co.nz: Govt Ministers rubber stamp Overseas Investment Office approval of Shanghai Pengxin’s Crafar farms bid

Acknowledgements

Adam Bennett, NZ Herald: Chinese cash flows to Nats

Adam Bennett, NZ Herald: China link to Nats’ $200,000

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First blogged 28 April 2012

Another of John Key’s lies – sorry – “Dynamic Situations”

21 June 2012 2 comments

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An  email sent to Dear Leader, last year,

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from:    [email]
to:    john.key@parliament.govt.nz
date:    Sun, Sep 11, 2011 at 12:32 AM
subject:Purchase of farmland

Sir,

At a recent public meeting in the Hutt Valley, in answer to a question from
the audience, you responded that purchases of farmland, by overseas buyers,  
would be restricted to ten farms per purchaser.

Can you confirm that this restriction is in place, and when the regulation was
enacted?

Regards,

- Frank Macskasy

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No response (or even acknowledgement)  was ever received from the Prime Ministers office.

The issue arose during a public meeting in Lower Hutt, organised by Hutt Grey Power,  on 24 May last year. People were concerned about the sale of 16 Crafar farms to overseas investors. The audience were most clearly unhappy at the prospect that foreign investiors were buying up vast tracts of our productive land.

Key made reassuring noises and said that his Party were “looking” at putting a limit at the number of farms a foreign investor could buy. He proposed a cap of ten farms. (Though even that  was not well received by the audience.)

In media reports though, he was somewhat less specific,

Prime Minister John Key says the Government would look at changing the law to limit foreign ownership of productive land if there is growing public concern.

However, he says such a change in response to the sale of the Crafar farms would a knee-jerk reaction.”

See:  Law change possible over foreign land buyers – Key

See:  PM: Change to foreign ownership law possible

Nothing ever happened, of course.

This was yet another example of John Key uttering vague reassurances with no intention of following through. And on 20 April, this year, Ministers Williamson and Coleman consented to foreign investor, Shanghai Pengxin, buying all 16 Crafar farms.

See:  Govt’s Crafar China sale decision slammed

No wonder that John Key’s reputation is becoming more tattered with each passing day. After a while, people start remembering these things.

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Three Questions to Key, Williamson, Coleman, et al…

22 April 2012 2 comments

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National released this media statement on Scoop.co.nz yesterday, when they announced their intention to proceed with the sale of the Crafar farms to Shanghai Pengxin,

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Ministers approve Crafar farms bid

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Friday, 20 April 2012, 11:22 am
Press Release: New Zealand Government

Hon Maurice Williamson
Minister for Land Information

Hon Dr Jonathan Coleman
Associate Minister of Finance

20 April 2012
Media Statement

Ministers approve Crafar farms bid

Land Information Minister Maurice Williamson and Associate Finance Minister Jonathan Coleman have approved the new recommendation of the Overseas Investment Office (OIO) to grant consent to Milk New Zealand Holding Limited to acquire the 16 Crafar farms

“New Zealand has a transparent set of laws and regulations around overseas investment,” Mr Williamson says.

“Those rules recognise the benefits that appropriate overseas investment can bring, while providing a range of safeguards to protect New Zealanders’ interests. They are applied evenly to all applications, regardless of where they are from.

“We have sought to apply the law in accordance with the provisions of the Overseas Investment Act and the guidance of the High Court.

“We have carefully considered the OIO’s new recommendation. The OIO sought advice from Crown Law and independent legal advice from David Goddard QC. The Ministers also sought advice and clarification from Mr Goddard.

“We are satisfied that on even the most conservative approach this application meets the criteria set out in the Act and is consistent with the High Court’s judgment.”

Dr Coleman said the consent came with stringent conditions.

“These 27 conditions have been imposed to ensure Milk New Zealand’s investment delivers substantial and identifiable benefits to New Zealand,” Dr Coleman says.

The conditions require Milk New Zealand to invest $16 million into the farms and to protect and enhance heritage sites

“The combined effect of the benefits being delivered to New Zealand as a result of this transaction is substantial.”

A copy of the OIO’s new recommendation is at: http://www.linz.govt.nz/sites/default/files/docs/overseas-investment/oio-recommendation-crafar-farms-20120420.pdf

A copy of the OIO’s decision summary is at: http://www.linz.govt.nz/sites/default/files/docs/overseas-investment/decision-summary-201110035.pdf

ENDS

Source

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Jonathan Coleman says that, ” The combined effect of the benefits being delivered to New Zealand as a result of this transaction is substantial. 

Maurice Williamson sez, ” Those rules recognise the benefits that appropriate overseas investment can bring…

And Our Dear Leader, John Key, smiles, waves, and said,

Ministers could have overturned that decision, but there were no reasons to do so. The OIO correctly interpreted the legislation, and had they turned it down simply on the basis of being Chinese, it would not only be unlawful but unacceptable and would have been overturned in the courts.” – Source

The questions I have for John Key, Maurice Williamson, Jonathan Coleman, et al in  National are;

  1. What possible benefit is there to  New Zealand when the Crafar farms owe a massive $216 million to predominantly Dutch and Australian  banks; the sale to Shanghai Pengxin is for $210 million; and the purchasers intend to invest only an addition $14 million in the 16 farms – $875,000 per farm? The proceeds for the sale of the Crafar farms will not stay in New Zealand – they will flow back to Australia.
  2. How can the sale of a revenue-earning asset (eg, farms) to overseas investors be ‘beneficial’ to New Zealand when the profits from those assets will flow overseas, to offshore bank accounts. Profits will  not be spent nor further re-invested in this country.
  3. Considering that New Zealand is a world leader in dairy production, what does Shanghai Pengxin – a company specialising in property development (the sixth largest in China; Appendix 5, para 42) and not dairying – have to offer us that the alternative New Zealand consortium, led by Michael Fay, and other local dairy farmers could not? Is this, effectively a vote of No Confidence in local farmers?

Several politicians have made several comments that the new Chinese owners will bring ‘new skills and innovation’ to our dairying industry.

This blogger finds that rather hard to believe. All of a sudden, New Zealanders are incapable of developing their own farms?

But perhaps the issues we should be most concerned out is a loss of revenue from those farms, as profits are repatriated overseas.

Michael Fay estimates we could lose $15 million per annum once the farms are producing milk for export,

Sir Michael says at the forecast payout of $6.35 a share, the new owners would earn $30 million a year, half of which will go to state-owned enterprise Landcorp for farming the land.

“This transaction with Shanghai Pengxin is a very, very bad investment for New Zealand. It doesn’t stack up on any economic basis,” said Sir Michael.

“It’s hard to see that half of it going overseas constitutes an economic benefit to this country. It’s a cost, it’s hard to define it as an investment”. ” – Source

And Bernard Hickey wrote about our loss of income as we sold more and more assets into overseas ownership, steadily worsening our current account deficit,

For decades we have spent more than we earned as a nation and funded the difference by borrowing foreign money through our banks, or directly in the form of companies borrowing offshore or the government borrowing from foreign funds and banks. If we couldn’t borrow the money, we would sell assets, be it companies, land or state assets.

We’ve been kidding ourselves for decades that, like the L’Oreal ad, we were worth it. We have run chronically high current account deficits for most of the last 30 years. We believed, and have been encouraged by our leaders, bankers, and asset buyers, that New Zealand could afford it and we deserved it.

But in our bones we knew we couldn’t, and it’s great to see Justice Miller at the High Court now tell us in this decision it has to stop, even if the government can’t or won’t do it. His ruling that any foreign buyer has to prove a bigger benefit to the nation than a local buyer sets a very high threshold.

It effectively says that any buyer has to invest an awful lot more, create a lot more jobs and pledge to reinvest dividends here, otherwise there is an inevitable drain on the nation.

In the last decade we have reached the limit of how much we could borrow and sell. For any chronic overspender, there is a point where they can’t borrow any more because they can’t afford the interest payments and they don’t have anything left to sell. Just before that moment comes, they accelerate their asset sales and borrowing to pay the interest on the previously borrowed money and to pay the dividends on the previously sold assets…

… The government itself has been the heaviest borrower through the bond markets. It doesn’t matter who we have borrowed it off, but again China is the biggest creditor through its sovereign wealth fund. Our state owned enterprises have also been borrowing heavily overseas and the government is about to start selling the jewels in the crown, at least some of which will go offshore.

The irony is that this frenzy of last minute borrowing and asset selling accelerates the process of making our economy unsustainable, because it pushes up our economy currency and hampers our ability to export our way out of this mess.

Just in case you question the logic, here’s the chart showing how New Zealand’s Gross National Income per capita, which is what we get to keep after we have paid the interest and the dividends, has been falling since 2003.”

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Source

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Quite simply, the more we borrow from overseas; the more income-generating assets we sell to overseas investors – the more money we end up losing on every deal. The profits that used to stay in NZ to be re-invested, are now flowing out to other countries; other peoples’ bank accounts. Leaving us poorer and poorer year after year.

Selling farms after selling most of our profitable State Owned Enterprises will make things worse.

It’s also hard to see how any potential New Zealand purchaser can compete with the incredible wealth and access to funds, that nations such as China possess. Indeed, the Overseas Investment commission made this very point in Appendix 5, para 19/a when it stated,

“… 19. The purchase price for the farms is NZD $[redacted] m, plus payment for the stock, estimated to be NZD $[redacted] m. The Applicant is willing to pay this price because:

a) it has access to relatively low cost capital;”

We are in dire straights when an offshore investor can outbid a New Zealander because they have access to cheap funds to which we do not.

This is not a level playing field. The deck is now stacked firmly against us.

The deal with Shanghai Pengxin calls for further investments,

  • The Applicant must invest the higher of NZD $14m or the value agreed between the Applicant and Landcorp in
    clause 4.4 of the draft Property Management Agreement (see attachment “1”) on investment for development
    purposes on the Investment.” (ref Appendix 1, para 6)
  • The Applicant must establish an on-farm training facility for dairy farm workers in accordance with clause 5(c) of the draft Property Management Agreement (see attachment “1”). The Applicant must contribute a minimum of NZD $[redacted] m towards the capital cost of establishing this facility. (ref Appendix 1, para 7) We don’t know the value of this “training facility – the OIO has blanked out that information.)
  • The Applicant must give two scholarships of not less than NZD $5,000 each year to students of the on-farm training facility. The first two scholarships are to be awarded by 31 December 2013.” (ref Appendix 1, para 8)

Aside from some walking tracks and other contractual obligations (which we recently discovered are not followed up by anyone from the Overseas Investment Commission – so we cannot be certain that the OIO’s Conditions of Consent are followed through by Shanghai Pengxin, nor any other foreign investor) – what does New Zealand gain, financially, from this deal?

Let’s re-cap:

  1. Sale price of $210 million – goes to foreign-owned banks in Australia and Netherlands. Benefit to NZ: nil
  2. Profits from export of milk from the 16 Crafar Farms – mostly remitted to China. Benefit to NZ: nil/negative ($15 million p.a. loss in overseas income)
  3. Additional investment required in farms – $14 million*. Benefit to NZ: nil. $14 million gain – wiped out after one year of profits ($15 million) remitted back to Shanghai Pengxin, in China
  4. Scholarships for two students, @ $5,000 per-person. Benefit to NZ: $10,000 p.a.

And that, folks, seems to be it: $10,000 per year.

In return, the new foreign owner gets,

  • $15 million p.a. in profits
  • 15 million Fonterra shares
  • dairy products exported to China (along with profits made)

Now, unless this blogger’s arithmetic is seriously out-of-kilter, it’s hard to see how Jonathan Coleman’s comment holds true that,

The combined effect of the benefits being delivered to New Zealand as a result of this transaction is substantial. 

What, precisely, are those ‘benefits’?!?  Because none are apparent to this blogger.

Some further matters that warrant comment:

Point 1.

Mr Key says that,

Ministers could have overturned that decision, but there were no reasons to do so. The OIO correctly interpreted the legislation, and had they turned it down simply on the basis of being Chinese, it would not only be unlawful but unacceptable and would have been overturned in the courts.” – Source

Let’s deal with that straight away.

It’s bullshit.

In 2002, when American millionaire, John Griffin purchased historically-significant Young Nick’s Head on the East Coast,  there was considerable anger and opposition from many locals, and throughout New Zealand.  Such was opposition that a hikoi to Parliament ended up with 200 people protesting on the grounds,

Around noon on Monday 5 August a group of about 200 protestors arrived at parliament grounds, Wellington. Many of them had been on the hikoi (march) from Young Nick’s Head, Gisborne, which left 11 days earlier. Most of the hikoi participants were from the Ngai Tamanuhiri iwi, who were dispossessed of the land around Young Nick’s Head in the 19th century.

The protest group asked to see finance minister Michael Cullen, who is to decide on Friday 9 August whether to allow the sale of Young Nick’s Head to the US millionaire John Griffen. Mr Cullen was not available, nor the prime minister Helen Clark. The Speaker of the House, Jonathan Hunt, told the protestors they could not stay on the grounds overnight, and were not to erect any tent or other structure. (The precedent was the tent embassy in parliament grounds after the Hikoi of Hope in 1999, which maintained a presence for four months before being broken up with arrests).   ” – Source

When Shania Twain purchased 25,000 hectares off South Island high-country near Wanaka, in 2004, there was considerable anger and resentment,

”  The contentious issue of foreign ownership of New Zealand land is flaring again following a government decision to allow Canadian singer Shania Twain to buy nearly 25,000 hectares (62,000 acres) of picturesque mountain farmland.

Foreign ownership of New Zealand land stirs high passions among the nation’s usually phlegmatic citizens.

Farmers in this primarily agricultural country argue wealthy offshore investors are pushing land prices far beyond their potential worth as productive property, while other New Zealanders argue their birthright is being sold to the highest bidder…

… Anti-foreign ownership groups estimate that between 6 and 7 percent of commercially viable New Zealand land is now owned by offshore interests.” – Source

New Zealanders have always opposed land sales. Ever since Pakeha colonisers came to this country and said to Maori, “Have we got a deal for you!!”, there has always been a scepticism toward the sale of land to foreigners. That feeling exists regardless of nationality, ethnicity, skin colour, etc.

In fact, John Campbell took Key to task on this very issue when the Prime Minister tried to play the “racism card” on his show, on 20 April,

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John Campbell Prime Minister interview Crafar Farms Sky City Casino

Source

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KEY:  “… let’s say you just want to say ‘no’ because they’re Chinese-“

CAMPBELL:  ” I don’t think anyone- Wait a second. I think that’s underhanded and disingenuous. I don’t think anyone is saying ‘no’ [because they're Chinese]. I think people are talking about 8,000 hectares of prime dairy country and it’s foreign ownership not Chinese ownership.”

Despite Campbell making that point succinctly, Key carried on with the same theme – as no doubt he had been instructed by his media advisors, to stick to a couple of core-points.

It suits John Key – as it did with Maurice Williamson – to attempt to paint opposition to the Crafar Farm sales to Shanghai Pengxin as “racism” or “xenophobia”.

No one likes to be called racist (except for for right wing extremists – but they’re deranged anyway), and to have that accusation thrown at the public is National’s shameful attempt to portray opposition to the Crafar sale as ‘irrational’.

Somewhere up on the Ninth Floor of the Beehive; in the Prime Minister’s department; John Key’s media advisors are busily spinning this line to deflect criticism from their Boss.

These paid merchants of mendacity are clever buggers; university educated – and taxpayer funded. We pay to have them teach politicians how to spin bullshit to us.

Not a nice thought, is it?

Whether Key’s spin doctors and media advisors  will be successful re-defining the debate is another matter entirely. They have their work cut out for them, going by polling by Fairfax and NZ Herald,

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Good luck in trying to dismiss two-thirds or three quarters of the public on this issue, Mr Key. As they say in business; the customer is always right.

Point 2.

Ministers could have overturned that decision, but there were no reasons to do so. The OIO correctly interpreted the legislation, and had they turned it down simply on the basis of being Chinese, it would not only be unlawful but unacceptable and would have been overturned in the courts.” – John Key, 27 January 2012

This is the second line that Key’s spin-doctors have advised him and other Ministers to push: that the law allows these sales to proceed and MPs hands are tied.

Except… when it suits John Key, he is more than willing to trade off the law for other considerations,

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Source

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In return for a new $350 million convention centre, John Key simply has to change the gambling laws.

Just as John Key changed employment laws in October 2010, to suit Warner Bros, in the making of “The Hobbit” movies,

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Source

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Funny ole world, in’it?

John Key sticks to the “letter of the law” like a fly to dog poo.  But when it suits him and his cronies, he can be… flexible.

What you are witnessing, my fellow New Zealanders, is what is colloquially known as “Crony Capitalism“.

Is this really how we want our country to be governed?

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* Note: the original OIO condition of a once-only $14 million investment has been increased with the latest OIO review, to $16 million. This blogger replies with a “whoopty-bloody-doo“; it makes little difference in the long term.

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References

The OIO Decision:  Decision required under the Overseas Investment Act 2005: Milk New Zealand
Holding Limited

Additional

No checks on foreign buyers of Kiwi land

NZ to lose ‘millions a year’ from Crafar sale

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Time to bend over again, fellow Kiwis (part # Rua)

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2010

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"If we ended up in a position where New Zealanders are tenants in their own country, I can't see how that would be in New Zealand's best interests." - John Key, 27 July 2010

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2012

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"No where is that better illustrated than in the Crafar farm deal where the tenant will be a Government state-owned enterprise, Landcorp." - John Key, 2 February 2012

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As this blogger predicted and wrote five days ago, National has caved to the  Wide Boys from Beijing who rode in to town on 15 April,

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China's no4 flies in as clock ticks on Crafar farm selloff
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The loss of the Crafar farms – and other farms sold to foreign investors – is not just about loss of direct ownership. It is about losing the profits that all those farms will generate, to overseas investors.

The flight of profits to offshore investors began in the late 1980s when Doulas, Prebble, Bassett, et al hocked of our former state owned enterprises. As with farms, we didn’t just lose ownership – we lost the income streams they generated. (Which worsened our balance of payments deficit and in turn made borrowing from overseas much more expensive.)

National did precisely the same thing on 27 October 2010, when Warner Bros sent their ‘boys’ in to ‘persuade’ John Key to ‘see things their way’.  Two months later,  it was revealed that Warner Brothers had threatened our government that  ‘The Hobbit’ movies  would be taken offshore if  changes to New Zealand’s employment laws were not made according to their demands.

This time, it was our Chinese cuzzies visiting  New Zealand – this time threatening our trade with their country, “if we don’t see things their way”.

National capitulated on both occassions, yielding to threats made first by a corporation, and then by a foreign power.

In the case of Sky City and the proposed Auckland Convention Centre, the tactics are more akin to bribery; building a convention centre in return for changing the gambling laws so the casino can install up to 500 more gaming machines (pokies). Problem gambling is expected to rise commensurately.

If the reader is starting to pick up a common theme here, you’re not alone.

New Zealand has a government willing to prostitute the country; our assets; our laws – in return for financial gain. This is perhaps the shabbiest, most degrading government we have ever elected. If New Zealanders are not angry and repulsed  by what we’ve all be witnessing – then we’ve all lost our collective senses.

The question I ask every New Zealander is; who will be next to come to Wellington; knock on John Key’s door; and announce, “I’ve got an offer you can’t refuse!”

What will be sold next?

What laws will we have to change to satisfy some corporatation or foreign power?

Is this what it feels like to be a Latin American “banana republic”?

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2014

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An incoming centre-left government  must address these issues of sovereignty. We cannot allow every foreign Tom, Dick, and Harriet to take ownership of our most precious resources and to dictate what laws we must amend to satisfy their profit-line.

This must stop.

An incoming government must, immediatly,

  • ban the sale of all land to non-New Zealanders
  • non-farming land may be leased to overseas businesses,  but not sold
  • farmland must not be sold nor leased to non-New Zealanders
  • conduct a stocktake of land ownership at the next Census
  • land already in foreign ownership may not be on-sold to anyone except New Zealanders
  • introduce a capital gains tax
  • introduce a Financial Transactions tax  in conjunction with Australia and our APEC partners
  • introduce a sinking-lid policy on gaming machines with a view to banning them altogether by 2017
  • implement job-creation programmes (eg; free vocational training for able-bodied unemployed; building 10,000 new state-houses, etc)
  • introducing a land/wealth-tax to capture those 1% who pay little tax, because they can hide their wealth by structuring their affairs to escape paying their fair share
  • reinstate Kiwisaver’s previous provisions (scrapped by National) and make it compulsory

Part of the problem we face as a nation and economy is that New Zealanders have always been poor savers. Instead we prefer to borrow billions from offshore lenders and invest it in non-productive assets such as rental housing and investment farms. This speculative investment does not create wealth – we simply  shuffle money around like some mad reality-game of “Monopoly”,

” There has been a big reduction in household debt,  from 154 per cent of gross domestic product, and one of the highest levels in the world three years ago, to 144 per cent now. ” – Source

In the process of this reckless self-indulgence (promoted by certain irresponsible right wingers who delude themselves that is “wealth creation”), we are heavily in debt,

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- Treasury

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Further to that, it makes us reliant on overseas capital.

In fact, it makes us totally  vulnerable to those  who hold the capital. We are at the mercies of those who hold the money-bags.

And they know it.

What makes matters even worse (yes, it gets worse) is that a National, once elected, exacerbates the problem with it’s blind adherence to free-market policies. National believes that only the free market can create jobs – with a little ‘nudge’, occassionally, by amending laws; reducing taxes; and implementing de facto subsidies. And anything else business wants.

In expecting only business to create jobs, National ties its own hands and becomes reliant on the markets for employment solutions. Unfortunately, those solutions are not always forthcoming.

Which means that National has to look at other, dubious, unconventional means to promote job creation. Such as the Sky City-Convention centre deal which might deliver more jobs – but will almost certainly create more problem gambling.

Who pays for more problem gambling? Answer; look in the mirror, Mr/Ms Taxpayer.

The sale of the Crafar farms; the dirty deals with Sky City and Warner Bros; our vulnerability to pressure from overseas investors are all symptoms of an economic malaise which the likes of Bernard Hickey, Gareth Morgan, Rod Oram,  and others have constantly warned us about.

Like the person who ignores the several “Warning” letters from debt-collctors – that is only postponing the Day of Reckoning.  New Zealanders are ignoring our own Day of Reckoning – and yet the warning signs of our gradual loss of economic sovereignty is fairly plain to see.

Whether we do something about it; abandon the lunacy of neo-liberalism;  implement planned policies that encourage saving; promote job creation; etc – then everything we’ve witnessed in the last few weeks, months, and years will be only a prelude to more unpleasant things to come.

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2050

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A young student at Levin University is scrolling through the results of his on-line search for ‘farms-history-new zealand-colonisation’ and finds the information he is looking for. He turns to his study-mate, and says,

Hey, it’s true what my grand dad told me. Farms used to be owned by New Zealand families back in his day!”

His study mate looks up from his ‘ii-Pad’ and peers at his friend’s pad,

Yeah? I wonder how they could afford it? No one can afford to buy land  unless you’re really rich or a big Corpora-State.”

Dunno“, replies the first student, “It looks like land prices weren’t that expensive , and then they started to rise when Earth’s population reached 6 billion.”

Wow! They really owned farmland? They’re so lucky. I wish we could buy our own farm!”

Well, at least we get to work on them. Once I finish my Degree in McDonalds Beefculture, I’m applying for a job at the ’14th Manawatu Herd-Complex’. Are you still going for the Shanghai Agricorp in King Country?”

Nah. I’m thinking I might change and apply for the Nestle Agriplex in Otago or Southland. They don’t pay as well, but they teach you German as part of the contract. The Shanghai Agricorp want me to learn Cantonese at my own cost.”

His study mate dims the screen on his ii-Pad and asks his friend,

Are you studying this weekend or doing some workpractice at McD’s?”

Nah. I’m going to see my family. It’s my ninth birthday, and we’ve hired a blanketspace at my favourite park...”

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*

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That was a bit of fiction. So far.

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* * *

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References

Rich list shows rich getting richer

NZ dollar soars on speculation of Chinese investment

Numbers reveal National disgrace

Bryan Gould: Free-market ideology wrong

Debt being paid off, but savings not growing

Bernard Hickey:  the High Court ruling against the Crafar Farms sale may be just the intervention NZ Inc needs to confont its addiction to foreign debt and asset sales

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= fs =

Time to bend over again, fellow Kiwis…

15 April 2012 1 comment

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Fancy a good time, handsome? *winks*

First, it began with the Wide Boys flying in from Hollywood, to read Dear Leader the proverbial Riot Act,

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Source
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John Key was firm in stating; there’d be no extra deals made with Warner Bros; no extra incentives, tax breaks, sweet-heart deals; nothing.

$34 million later, Warner Bros left town.

It was a very generous deal,” Mr Key said.

So much for “no extra deals”.

(Funny thing though. I’m no expert, but isn’t it supposed to be the other way round, if we’re going to prostitute ourselves? Aren’t they suppose to pay us?!)

The trouble with prostituting ourselves to Big Boy corporations overseas is that, eventually, we get others knocking on our doors,

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China's No4 flies in as clock ticks on Crafar farm selloff  - Dominion Post - 14 April 2012

China's No4 flies in as clock ticks on Crafar farm selloff - Dominion Post - 14 April 2012

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Interestingly, this article cannot be found on the Fairfax website, Stuff.Co.NZ. Almost as it… someone didn’t want our Chinese cuzzies from seeing it online?!

But yet again, we’re seeing a bunch of Wide Boys ride into town. No doubt they have a “message” for Dear Leader (our Dear Leader – not the North Korean bloke) and no doubt he’ll pay careful attention to their “suggestions”; take notes; and smile benignly at them.

After which, this blogger expects the Crafar Farm sale to go though unimpeded to the  Shanghai Pengxin company.

And after that, expect our gambling legislation to be amended by National, to allow an extra 500 pokie machines at Sky City casino. In return for the “pay off”, a convention centre.

If anyone has ever wondered what it’s like to have your own government turn our own country into one, giant, corporate brothel, where we sell ourselves to Hollywood moguls, foreign governments, casino operators, et al – then wonder no more.

Funny thing, though…

When prostitution (or more technically, solicitation) was legalised in 2002, I never though our Prime Minister would become the Pimp Minister and sell us to the highest overseas (or local) bidder.

I think “business” is going to be brisk.

I need to buy more lube.

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* * *

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Additional

NZ Herald:  China wants NZ to ease the way for investment

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= fs =

User Pays: the eventual conclusion

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Superman, for hire? Not quite right, is it…

Of course, we rightly view such a scene with aversion.  Some things, we just don’t expect to see with a  price levied.

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= 1 =

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Our British cuzzies recently discovered this on Monday, when it was discovered that the governing UK Conservative Party’s top fundraiser Peter Cruddas, had been selling access to senior British government MPs and Ministers. The full story is worth reprinting,

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In a sting operation, ‘The Sunday Times’  secretly videotaped fundraiser Peter Cruddas  discussing donations. The film showed him telling undercover reporters: “200 grand ($317,000), 250 is premier league … it’ll be awesome for your business.”

If donors met Cameron, Cruddas claimed in the recording, “within that room, everything is confidential and you will be able to ask him practically any question that you want.”

‘We will listen to you’
He suggested they could even influence party policy, saying: “If you are unhappy about something, we will listen to you and we will put it into the policy committee at (the prime minister’s official residence).”

Cameron responded by saying Cruddas’ actions had been “completely unacceptable.” Cruddas, a millionaire, resigned within hours of the report.

Cruddas made the remarks to two journalists he thought were international financiers and who were accompanied by a lobbyist.

“Because we depend on donors so much we have to be careful” to show “you cannot buy access,” he said according to The Sunday Times. But, he told the undercover reporters, if you donate “you could well be at a private house having a private dinner with George Osborne, David Cameron, William Hague, the chairman around the table.”

Osborne, the cabinet minister in charge of economic and financial matters, and Foreign Minister William Hague are both members of Cameron’s center-right Conservative Party, which leads the governing coalition alongside the Liberal Democrats.

Embarrassing
The funding issue is embarrassing for Cameron, who promised before coming to power in May 2010 to curb corporate lobbying, saying it was the “next big scandal waiting to happen.”

Following the report, Cameron admitted he had used his official home at 10 Downing Street to host dinners for Conservative donors.

The scandal threatened to undo Cameron’s efforts to shake off his party’s image of being too close to the interests of business and the rich as Britain undergoes an austerity program to cut its budget deficit.

“This is not the way that we raise money in the Conservative party, it should not have happened,” said Cameron. “I will make sure that there is a proper party inquiry to make sure this can’t happen again.”

While there were also tax cuts for lower earners, the government’s recent budget went down badly with many Britons, giving the impression the government was looking after the wealthy and cared little for those suffering rising unemployment and falling incomes as the economy struggles to recover from recession.

Previous attempts to reform the political funding system have foundered on the Conservatives’ reluctance to cap donations from wealthy individuals and the opposition Labour Party’s desire to avoid limits on contributions from unions.

Msnbc.com’s F. Brinley Bruton and Reuters contributed to this report.

Acknowledgement for source: MSNBC World News

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By the next day, Britain’s Prime Minister and Leader of the UK Conservative Party, David Cameron, admitted what ‘The Sunday Times’  had uncovered,

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Full Story

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The article further states,

Of a dozen couples or individuals who dined with Cameron, including eight who were at a post-election celebration in July 2010, six were financiers, including three hedge fund managers, and two were property magnates. Two run manufacturing firms.

The Chequers list included the names of party treasurers as well as the millionaire property developer David Rowland and Lebanese businessman Fares Fares...

As other parties offer supporters and donors access to meetings and debates with leaders and senior officials, the Conservatives have a system for encouraging political and financial support. Their Web site offers a hierarchy of “Donors Clubs” where minimum levels of donation give increasing degrees of contact with party officials and representatives.

For the 50,000-pound ($80,000) annual membership of the “premier supporter group” – The Leader’s Group – “members are invited to join David Cameron and other senior figures from the Conservative Party at dinners, … lunches, drinks receptions, election result events and important campaign launches”. “

Cameron was at pains to reassure British voters that,

“We are more transparent than any government and any prime minister have ever been. We behaved properly.

“What Cruddas was doing was totally unacceptable.”

We have a saying here in New Zealand for that kind of statement,

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Of  course, such things don’t happen here in New Zealand. Our own National Government does not do “favours” for cash donations to the Party…

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Full Story

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Full Story

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Full Story

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Full Story

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Full Story

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Full Story

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Full Story

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Full Story

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From the Electoral Commission webpage,  “Returns of party donations exceeding $30,000“,

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Source

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From the Electoral Commission webpage,  “Returns of party donations exceeding $20,000“,
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Source

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Those are the facts, as presented from various sources.

I invite you, the reader, to draw your own conclusions, regarding the individuals; companies; their donations  and their links  to National.

(Note: The Electoral Commission webpage on returns of party donations includes donations to Labour, ACT, The Greens, and NZ First.)

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= fs =

Al Capone lives again?

16 March 2012 2 comments

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"Hey, mack. Ya gots somethin' I want."

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There’s a old cliche in gangster movies that goes something like this,

Hey, Luigi, I gots an offer ya cain’t refuse!”

[cue machine guns being locked & loaded]

Ya dirty rat-

[rata-tata-tata-tata...]

It seems that our Chinese cuzzies have been watching a few too many gangster movies,

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Source

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Mr Cheng Li, the “political counsellor” at the Chinese Embassy in Wellington, has threatened warned ‘suggested’ that Chinese investment in NZ may be at risk if the Shanghai Pengxin deal to buy the 16 Crafar farms is not permitted to proceed.

Someone should tell Mr Li that,

  1. We are not a canton of China nor an occupied state like Tibet,
  2. New Zealanders don’t take kindly to being “leaned on”. We didn’t like it in 1984 and ’85  when  our American cuzzies   tried to pressure the Lange Government to abandon our nuclear-free policy – and we certainly don’t like it when someone  “heavys” us to make a deal we don’t want.
  3. This does not enamour New Zealanders to welcome overseas investment in our country.

It’s interesting that the OIO (Overseas Investment Office) stated that Shanghai Pengxin is a good corporate citizen. That may  certainly be, and the owners of that company are probably  Honourable Men.

The same, unfortunately cannot be said of the Chinese Government. “Monstering” us to sell, is simply  not a good look.

Go back to spying on Tibetan activists and Falun Gong members, Mr Li.

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= fs =

In a matter of days… not nine months?!

16 February 2012 2 comments

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The Crafar Saga;  a time-line on the sale process,

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5 October 2009: Crafar Farms placed into receivership, owing $216 million to creditors.

22 December 2010: Government  blocks  bid by Natural Dairy to buy the 16 Crafar farms on ‘good character’ grounds.

27 January 2011: KordaMentha accepts offer from Shanghai Pengxin International Group Ltd to buy Crafar Farms.

13 April 2011: Shanghai Pengxin lodges application with the Overseas Investment Office (OIO) to buy the Crafar farms.

26 September 2011: Crafar farms receiver KordaMentha  rejects a conditional NZ$171.5 million offer for 16 central North Island dairy farms from a group led by controversial former merchant banker Michael Fay.

26 November 2011: Parliamentary Election

27 January 2012: Government ministers approve Shanghai Pengxin’s application to purchase 16 Crafar farms.

15 February 2012: High Court over-rules  Government’s decision consenting to Shanghai Pengxin’s application to purchase

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The OIO spent nine months assessing the Pengxin bid, which is reported to have valued the farms at $210 million, some $40 million higher than the bid by a consortium of New Zealand bidders led by merchant banker Michael Fay.” – Source

We don’t have a clear timeframe for this process but expect to receive the resubmitted recommendation report from the Overseas Investment Office in a matter of days, not weeks.” –  Mr Williamson, Ibid

Interesting…

It  took nine months for the OIO (Overseas Investment Office) to report their decision to Ministers Williamson and Coleman, for their rubber stamp approval…

But Minister Williamson now reckons it will only a matter of days to receive the resubmitted recommendation report from the Overseas Investment Office?!?!

… and this is the government that swears, hand-on-heart, that the extraordinary delay (applications normally take 50 – 70 days to process – not nine months) in processing and approving the Crafar purchase by Shanghai Pengxin, had nothing to do with the November election?!?!

The only thing worse than lying politicians?

Politicians who don’t lie very convincingly.

What a shabby, shonkey, shameful  government we elected last year.

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Kiwis, Cows, and Canadian singers…

31 January 2012 3 comments

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A little bit of recent history first…

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As the dust settles over the sale of the Crafar Farms to Shanghai Pengxin, it may be worth looking at some aspects of how this government handled the sale, and it’s aftermath…

For starters, a time-line on the sale process,

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5 October 2009: Crafar Farms placed into receivership, owing $216 million to creditors.

22 December 2010: Government  blocks  bid by Natural Dairy to buy the 16 Crafar farms on ‘good character’ grounds.

27 January 2011: KordaMentha accepts offer from Shanghai Pengxin International Group Ltd to buy Crafar Farms.

13 April 2011: Shanghai Pengxin lodges application with the Overseas Investment Office (OIO) to buy the Crafar farms.

26 September 2011: Crafar farms receiver KordaMentha  rejects a conditional NZ$171.5 million offer for 16 central North Island dairy farms from a group led by controversial former merchant banker Michael Fay.

27 January 2012: Government ministers approve Shanghai Pengxin’s application to purchase 16 Crafar farms.

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The first matter that arises is the length of time from Shanghai Pengxin’s initial application (13 April 2011), to consent being issued by relevant Ministers: over nine months.

(Strangely, 13 April 2011 was a Sunday. Is it usual for government offices to be open in the weekend?)

The OIO (Overseas Investment Office) sets time limits for itself to process application,

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Estimated decision times

There is no statutory timeframe within which an application for consent must be decided. However applications generally fall into one of three categories according to complexity with category 3 being the most complex. These categories provide a guide for how long it may take for a decision to be made:

  • Category 1 applications, where the OIO aims to make decisions within 30 working days from the date of registration. Examples include: (a) applications for consent to purchase significant business assets,
    (b) “sensitive land” decisions delegated to the OIO by Ministers that don’t fall into the categories below,
    (c) variations to existing consents.
  • Category 2 applications where the OIO aims to make decisions within 50 working days from the date of registration.  Examples include: (a) “sensitive land” applications for consent requiring Ministerial consideration e.g. the purchase non-urban land greater than five hectares in size, where it includes or adjoins other sensitive land, such as conservation land, reserves etc
    (b) applications for exemptions,
    (c) applications where the overseas person is intending to reside in New Zealand indefinitely.
  • Category 3 applications, where the OIO aims to make decisions within 70 working days from the date of the registration.  Examples include: (a) applications to acquire an interest in fishing quota,
    (b) applications that involve special land being land that includes foreshore or the bed of a river or lake,
    (c) where the applicant intends to establish a purchasing programme such as a series of land acquisitions in a specific area for a specific project,
    (d) applications in respect of which a third party submission has been received by the Ministers or the OIO,
    (e) applications where the Ministers or the OIO have decided that consultation with third parties is appropriate in considering whether or not to grant consent.

Note that these targets apply to high quality, well prepared and analysed applications, and excludes the time where the OIO is waiting for the applicant to provide further information and the time for Ministers to consider and make decisions on relevant applications. 

Source

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Even if the Crafar farm sale had been considered as a “Category 3″  application – there is considerable difference between 70 working days (deadline around 17 June 2011) –  and nine months.

A cynic might suggest that  Ministerial approval was delayed because of last years’ election. There is considerable public opposition to farm land sales to non-New Zealanders and this would have had a profound impact on National’s electoral support.

I would go so far as to say that National would have lost another couple of percentage points (minimum) in Party Votes – and therefore lost the election itself.

It is therefore National’s “good luck” that the decision to approve the sale to Shanghai Pengxin came two months after the General Election.

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A lot of Racist Angst or Righteous Anger?

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The first media reports that Ministerial consent had been granted for the Shanghai Pengxin appeared around 11am on the morning of January 27.

At 11.23am, Interest.co.nz published a web story, headed, “Govt Ministers rubber stamp Overseas Investment Office approval of Shanghai Pengxin’s Crafar farms bid” .

At 11.28am, TVNZ’s website reports, “Turning down Crafar sale ‘unlawful’ – Key” .

Ten minutes later, and Scoop.co.nz, reported, “Sale of Crafar farms to Pengxin is approved”.

At 2.22pm, TVNZ’s story appeared, “Fay group fights Crafar farms sale to Chinese”.

And this appeared on TV3’s website at 4.02pm, “Parties slam Crafar farm sale to Chinese”.

There were other stories on this issue – but these carried the gist was what the media was reporting. It was undoubtedly the lead story of the day.

Media reporting on this issue was prominent and widely discussed. The nationality of the purchasers was mentioned – but mostly only  in passing.

Criticism, of which there was plenty,   rested on two major points,

  1. Loss of profits overseas,
  2. Loss of sovereignty, and the dominance of our FTA with China over local decision-making.

Both are critical issues that have a real bearing on our country’s future.

With regards to Point #1 – profits lost overseas – Green Party Agriculture spokesperson Steffan Browning said,

As food prices rise globally, selling off our productive land − such as the Crafar farms − to overseas bidders is economic folly. Foreign ownership of the Crafar farms means that the profits will flow overseas, adding further to our current account deficit. In the 12 months to September 2011, $15.2 billion flowed out of NZ to overseas owners of NZ companies and debt.” – Source

This is an issue of considerable weight, considering that New Zealand’s credit rating was downgraded last year by two credit-ratings agencies.

Anything that increases the outflow of profits from New Zealand worsens our current account.

The question then becomes – why allow it to happen if we can avoid it? Especially since we will end up paying for offshore investors’ profits, by way of increased interest rates.  Our current account deficit matters – especially when it impacts on businesses and home owners via  the interest they pay on their loans.

With regards to Point #2.  John Key stated,

And had they turned it down on the basis simply of being Chinese on their desk it would have been not only be unlawful but unacceptable.” – Source

And in the NZ Herald,

Mr Key also pointed to the Free Trade Agreement with China negotiated by the former Labour Government that contained a clause known as the Most Favoured Nation status.

That meant Chinese investment in New Zealand could not be treated differently to any other country.” – Source

So if it is true that China (or any other nation for that matter) has a “Most Favoured Nation” status, and that they are able to compete with local New Zealanders for land, businesses, contracts, etc, then I think we have a problem.

For one thing, it seemingly makes Parliament and elections an irrelevancy if we cannot restrict purchases of our assets to New Zealanders only..

Secondly, no New Zealander can hope to compete with rich overseas investors, should they have a mind to bid for an asset. Michael Fay is one of New Zealand’s richest men – and his consortium was outbid by Shanghai Pengxin by (reportedly) $30 million.

But most importantly, FTA’s are not democratic institutions. No New Zealander voter for it. Very few had a hand in agreeing to it.  Yet our FTA with China appears to take pre-eminence over Parliament?

That is a dangerous position for New Zealand to be in. Especially when we possess natural resources that other nations may covet. Our naivete may yet be our down fall.

Up until 7pm on Friday, the debate had been framed – for the most part – in economic and nationalistic terms.

Then, Maurice Williamson (Minister for Land Information/ Overseas Investment Office) and Cedric Allan (spokesman for Shanghai Pengxin) were both interviewed on TV1’s “Close Up“, that night,

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[click on image]

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Williamson succeeded in re-framing the debate over the Crafar deal. From economic and national sovereignty, he turned it into a race-based debate.

Williamson said,

“…New Zealanders were happy for Shania Twain to own 23,000 hectares or whatever.” – Williamson, 6.04

Actually, that’s just not true. Minister Williamson has either forgotten, or is fibbing,

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Full Story

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Williamson continued,

When the Americans, a huge number of Americans,  were buying it [land], not mutter. Not a murmur. Not a whisper from all of your opponants out there. But as soon as the word ‘Chinese’  was mentioned, we were opposed to it. And I have to say  that is bordering more on racism than it is on xenophobia.”  – Williamson, 6.11

The charge is repeated by agri-journalist, Richard Rennie,

We’re talking tens of thousands of hectares bought by the Italians, the Germans, even the Brits and Americans. And yet we haven’t heard a murmur from anyone in New Zealand about that.” – Source

Again, none of it is true,

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“… I didn’t hear this level of protest when huge tracts of land was being sold under the Labour government…  ” – Williamson, 6.30

Then Williamson contradicted his 6.04 statement,

Well of course the public don’t like any of our land being sold to foreigners and I understand that...” – Williamson, 8.56

Maurice Williamson had been well-prepped by his media advisors. Instead of being drawn into a debate over economics, he had succeeded in reframing the issue as one of racism. And most liberal minded New Zealanders would think twice before uttering a criticism that might be construed as racist. (Those in our society who are already racist wouldn’t care a hoot and would probably vote ACT or National anyway. They are not Williamson’s intended audience.)

This is where the racism/xenophobia meme started: Friday evening, on “Close Up“, by Maurice Williamson.

Even when  we finally got to the nub of the truth, about China’s actual long-term goals, the real point by now had been lost amidst Williamson’s echoing cries of  ‘racism!’.

For the record, Shanghai Pengxin representative, Cedric Allan said,

China is looking for energy, it’s looking for water, it’s looking primarily for food…” – 7.22, Allan

Of course it is.  And the OIO decision had nicely  set in concrete China’s very long-term goals of securing food-supplies for the future,

The conditions

…Milk New Zealand must use reasonable endeavours to assist Landcorp to extend its business to, and market its products, in China” – Source

Pengxin announced in April 2011 after launching its bid for the farms that it planned to increase milk production from the Crafar farms by 10% and wanted to capture a bigger share of the Chinese market with branded, dairy-based consumer products. It said it planned to spend more than NZ$200 million to buy and upgrade the farms. It then planned to invest a further NZ$100 million on marketing cheeses, ice creams and baby formula for the Chinese market.” – Ibid

Is there anything wrong with increasing dairy exports to China?

Normally, no.  Fonterra has been developing and building our exports to the Chinese market for the past decade. With revenues of nearly $20 billion in 2010, it is one of our major industries and export earner.

But, as mentioned before, any export-revenue to China by Shanghai Pengxin-owned  farms will not come to New Zealand. They will end up in offshore bank accounts, and will be of little benefit to New Zealanders. In fact, most of the profits will vanish off-shore just as the dairy products will.

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And topped off with some rich irony.

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The Right have been leading the charge to support the Shanghai Pengxin deal, and accusing detractors of naked racism…

Meanwhile, the Left has countered with (credible) concerns about loss of export income…

The Right are not usually renowned for sympathatic understanding of racism against ethnic groups. They are usually more relaxed with “trashing the treaty”, mixed with a bit of Maori bashing, as  their usual ‘sporting activity’. After all, the right wing party ACT was adamant that Maori were not going to get tangata whenua-based seats on the Auckland Super Council.

The Left, on the other hand are not usually in a position where they find themselves arguing on behalf of economic benefits; current accounts; export earnings; and sound commercial practices. What next – Socialist International on the Board of Goldman Sachs? (Actually, they might not do a half-bad job, to be honest… )

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But the final verdict?

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Lies with the voting public.

Somehow, I doubt if the public are terribly reassured by Key’s pronouncement on this matter,

If we saw a significant buy-up of New Zealand farms, then the Government’s response would likely be to further toughen the regulations or the Overseas Investment Act, but at this point, we’re not really seeing that.” – Source

When John Campbell asked Dear Leader what constituted “a significant buy-up of New Zealand farms” (7.47) – Key was left floundering. He couldn’t name a figure. He could only waffle about vague trends. However, by the time a “trend” is established, how much of a mess will we have created for ourselves?

How much is too much?

And will our elected representatives have the wit to know when to say, “No more”?

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The Law

Overseas Investment Act 2005

- Section 16

- Section 17

- Section 18

The OIO Decision

Decision required under the Overseas Investment Act 2005: Milk New Zealand
Holding Limited

Previous Blog entries

The road to poverty?

The Great NZ Sell-Off Continues

How to lose $5.3 billion dollars without any effort at all

The second colonisation of New Zealand

The Crafar Farms – Why the delay from the OIO?

Farms, politicians, and emails

Competing against the Chinese Government…

Is this man a complete fool?

As predicted

Land Sales – a Sorry Saga of Sheer Stupidity

Mum & Dad investors?

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Mum & Dad investors?

30 January 2012 4 comments

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John Key laments that he could do nothing to stop the sale of the Crafar farms to overseas investors because of our Free Trade Agreement with China.  Shanghai Pengxin had as much right to bid for, and have their bid accepted, as any other bidder in this country,

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Full Story

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Key says that attempting to halt the sale would have meant the Chinese suing us for breaching the FTA, as he was quoted in the Otago Daily Times,

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“Ministers could have overturned that decision, but there were no reasons to do so. The OIO correctly interpreted the legislation, and had they turned it down simply on the basis of being Chinese, it would not only be unlawful but unacceptable and would have been overturned in the courts.” ” – Source

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In which case, how will John Key ensure that Kiwi “mum and dad” investors are allowed first option to buy shares in soon-to-be privatised state power companies – without Chinese demanding the same right to bid,

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Full Story

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Won’t we be sued by China  if “mum & dad” investors get first preference over countries with which we have a FTA with?

It will be interesting to see how our Dear Leader resolves this little dilemma.

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As predicted…

27 January 2012 2 comments


As predicted in my post, Farms, politicians, and emails ,

This blog predicts that National will allow the OIO to permit the sale of the Crafar farms to Shanghai Pengxin, and will try to “sweeten” the deal with sale-conditions designed to satisfy public concerns.” – 24 January

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Source

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It is little wonder that this decision was released some nine months after the application was lodged with the Overseas Investment Commission – John Key knew that if this decision was released before November, that they would have lost the election.

This is the sort of manipulative shyster we have as our Prime Minister.

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Is this man a complete fool?

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5 July 2010

As a general and broader principle I think New Zealanders should be concerned if we sell huge tracts of our productive land.

“Now, that’s a challenging issue given the state of the current law and quite clearly it’s evidentially possible and has been achieved that individual farms can be sold. Looking four, five, ten years into the future I’d hate to see New Zealanders as tenants in their own country and that is a risk I think if we sell out our entire productive base, so that’s something the Government will have to consider.” – John Key

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26 January 2012

What ministers are looking at is: Does the bid by this Chinese entity meet the regulations. If it does, they have no grounds to turn it down because if they do turn it down, then they would be subject to judicial review and they would almost certainly lose.”

“If we saw a significant buy up of New Zealand farms then the Government’s response would likely be to further toughen the regulations or the Overseas Investment Act. But at this point, we’re not really seeing that.”

A deal between Pengxin and Landcorp “could be” a good commercial proposition for the state-owned company. – John Key

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It appears that the John Key of July 2010 is not the same John Key of January 2012. Somewhere along the way, aliens have abducted the 2010 John Key and replaced him with a doppelganger. Dang dastardly, these aliens. (Please take away that damned  clone. And you can keep the original.)

The following story is full of “Keyisms” – half-truths, mis-representations, and fudging the issue,

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Full Story

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Some of his statements are breath-taking in “bending” the truth,

Prime Minister John Key says he would not have a problem with state-owned Landcorp running the 16 Crafar farms under Chinese ownership. That would “not necessarily” be a case of New Zealanders becoming “tenants in their own land”, he said.”

Whut?!

Prime Minister, the definition of “tenant farmer” is as follows,

A tenant farmer is one who resides on and farms land owned by a landlord. Tenant farming is an agricultural production system in which landowners contribute their land and often a measure of operating capital and management; while tenant farmers contribute their labor along with at times varying amounts of capital and management.” – Wikipedia

Ergo; if Shanghai-Pengxin (or any other foreign investor) owns the land, and Landcorp works the land – then Landcorp is a tenant farmer.

Is there any part of that simple truism that escapes our Prime Minister?

If so, I can ask some school children to draw him some pretty pictures in coloured crayons, a-la “Seven Days“.

John Key then says,

He “had a feeling of what might happen”. “

Yeah. I bet he does.

Key goes on,

“The Government is not in one sense the arbiter of the decision about yes or no for foreign ownership of the existing Crafar Farms – that is a recommendation from the Overseas Investment Office. What the Government’s role is to determine whether the Overseas Investment Office followed the law properly,” Key said. “

To maintain the rural theme of this blog-piece: Bovine excrement!

The OIO’s rules are crystal clear,

Estimated decision times

There is no statutory timeframe within which an application for consent must be decided. However applications generally fall into one of three categories according to complexity with category 3 being the most complex. These categories provide a guide for how long it may take for a decision to be made:

  • Category 1 applications, where the OIO aims to make decisions within 30 working days from the date of registration. Examples include:  (a) applications for consent to purchase significant business assets,
    (b) “sensitive land” decisions delegated to the OIO by Ministers that don’t fall into the categories below,
    (c) variations to existing consents
  • Category 2 applications where the OIO aims to make decisions within 50 working days from the date of registration.  Examples include:  (a) “sensitive land” applications for consent requiring Ministerial consideration e.g. the purchase non-urban land greater than five hectares in size, where it includes or adjoins other sensitive land, such as conservation land, reserves etc
    (b) applications for exemptions.
  • Category 3 applications, where the OIO aims to make decisions within 70 working days from the date of the registration.  Examples include:  (a) applications to acquire an interest in fishing quota,
    (b) applications that involve special land being land that includes foreshore or the bed of a river or lake,
    (c) where the applicant intends to establish a purchasing programme such as a series of land acquisitions in a specific area for a specific project,
    (d) applications in respect of which a third party submission has been received by the Ministers or the OIO,
    (e) applications where the Ministers or the OIO have decided that consultation with third parties is appropriate in considering whether or not to grant consent.

Note that these targets apply to high quality, well prepared and analysed applications, and excludes the time where the OIO is waiting for the applicant to provide further information and the time for Ministers to consider and make decisions on relevant applications.

Source

So John Key is trying to pull a fast one in attempting to evade responsibility for any decision making on this issue.

Applications for “sensitive land” requires ministerial consent. It’s there, in black and white (and highlighted in red). If Key doesn’t understand the workings of the OIO, he has no business being Prime Minister of New Zealand.

Key waffles on,

“What ministers are looking at is: Does the bid by this Chinese entity meet the regulations. If it does, they have no grounds to turn it down because if they do turn it down, then they would be subject to judicial review and they would almost certainly lose.”

No, Prime Minister. Parliament is sovereign. Parliament makes the rules – not our Chinese (or American or Australian or German) cuzzies.

If we don’t want to sell our land – we don’t have to. Just as the Chinese Government has the ‘smarts‘ to have precisely the same laws in place in their country.

If you are telling us that we have lost control over the sale of our own land, to a foreign power, then we are in serious trouble,  Mr Prime Minister.

The Government had spent “a long time tightening up the law” around foreign ownership of land.”

Has it? Has it really?! Because I’ve emailed the government on precisely this issue and have yet to receive a reply of any description.

There is no indication whatsoever that this government has “tightened” any aspect of “foreign ownership of land”. (Except in JohnKeyland.)

Labour had negotiated the free trade agreement with China, which had given the Chinese the same rights to invest in New Zealand as the British, American, German or Australian investment.

In which case, Mr Prime Minister, why are the Chinese able to deny foreigners from buying land in China?

We cannot say we are not going to accept a bid because someone is Chinese. We can say it’s because they don’t meet certain regulations and conditions in the Overseas Investment Act but we can’t say it’s because they’re Chinese.”

Which is why many critics are also opposed to German, American, Australian, etc, buyers of our farmland. The German buy-up of Southland is also cause for concern.

We always have the power to disagree with the Overseas Investment Office but we couldn’t disagree because we don’t like the ethnicity of a buyer. We’d have to say it doesn’t meet these regulations or these terms.”

There was “a degree of subjectivity” in the tests but it was “for the most part, pretty clear cut“.”

There are plenty of reasons why Government can decline an application. Economic. Social. Environmental. Ethnicity is a straw-man argument which only John Key seems to be dredging up.

“If we saw a significant buy up of New Zealand farms then the Government’s response would likely be to further toughen the regulations or the Overseas Investment Act. But at this point, we’re not really seeing that.”

The sale of the Crafar Farms was “a significant transaction in terms of a one-off purchase” but in the overall context, it was not.”

One wonders what constitutes “a significant buy up of New Zealand farms“? Any sensible person would look at sixteen farms as being fairly significant.

If not – what is “significant”? 17 farms? 20? 50? Half the country?

A deal between Pengxin and Landcorp “could be” a good commercial proposition for the state-owned company.

With that stastement, John Key has just made a complete 180-degree ‘flip flop’, from decrying being a tenant in our own country – to being a “good commercial proposition”.

This is the man who is our Prime Minister. One who changes his values and position on issues, to suit circumstances and monetary gain. The term “amoral” only barely describes a politician of Key’s nature.

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Competing against the Chinese Government…

26 January 2012 6 comments

Cont’d from: Farms, politicians, and emails

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Full Story

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New Zealanders should take note of the following, which was reported in the above article,

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“It is understood Pengxin has been conditionally approved to buy the farms, and management by Landcorp is thought to be among the conditions.

“We are in play, as we speak, doing due diligence on those farms,” Mr Kelly said. “We will then attempt to enter into a management contract. If we can’t, then that’s the end of the story. It’s extremely busy, but we’ve been asked by Pengxin to do our best and that’s what we’ll do.”

There was minimal risk to Landcorp in the deal. The only capital investment was likely to be in farm equipment and stock, which could all be absorbed back into the business if things fell apart.

New commercial opportunities in China could also open up later on as a result of the deal, Mr Kelly said.

Investigations into Pengxin are believed to have shown it to be a reputable trader with access to cheap credit from the Chinese Government.

“They’re not a Mickey Mouse outfit. What they’re doing is, without any question, advancing Chinese Government policy,” a source familiar with the company said.” - Ibid

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There we have it.

The Chinese government is pursuing an agressive policy to buy up farmland where ever possible, to pursue it’s own narrow, nationalistic agenda.

To facilitate this form of commercial neo-colonialism, it is funding nominally “private” companies (eg; Shanghai Pengxin) with cheap loans – loans that New Zealand companies do not have access to. These “private” companies are acting as de facto arms of the Chinese Government.

The questions that remain to be asked are;

  1. What is the policy of the Chinese Government in buying up farmland around the world? What is the purpose of this massive buy-up?
  2. Will our government accede to the Chinese government and permit the alienation of our own productive farm-base to a foreign government, pursuing unknown, hidden agendas?

In pursuing their agenda, New Zealanders cannot hope to compete with the vast resources of a major economic power. If one of New Zealand’s richest men (Michael Fay) cannot out-bid a foreign investor – then there is no way that ordinary Kiwis can compete.

We will be out-bid every time a foreign buyer (whether German, Americam, Chinese, etc) wants a piece of our land.

The result will be that that, in years and decades to come, New Zealanders will become tenants in their own country.

Landcorp is setting itself up to be the first tenant in a foreign own farm.

Will this  be our future?

And will  we permit it to happen?

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Email addresses

Prime Minister, John Key: john.key@parliament.govt.nz

Letters to Editor, Dominion Post:  letters@dompost.co.nz

Letters to Editor: Waikato Times: editor@waikatotimes.co.nz

Letters to Editor, NZ Herald: letters@herald.co.nz

Letters to Editor, The Press (ChCh): letters@press.co.nz

Letters to Editor, ODT: odt.editor@alliedpress.co.nz

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Farms, politicians, and emails…

24 January 2012 3 comments

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January 14

To re-cap:

The second colonisation of New Zealand

The Crafar Farms – Why the delay from the OIO?

The time-line thus far;

5 October 2009: Crafar Farms placed into receivership.

22 December 2010: Government  blocks  bid by Natural Dairy to buy the 16 Crafar farms on ‘good character’ grounds.

27 January 2011: KordaMentha accepts offer from Pengxin International Group Ltd to buy Crafar Farms.

18 April 2011: Shanghai Pengxin lodges application with the Overseas Investment Office (OIO) to buy the Crafar farms.

26 September 2011: Crafar farms receiver KordaMentha  rejects a conditional NZ$171.5 million offer for 16 central North Island dairy farms from a group led by controversial former merchant banker Michael Fay.

To date, nothing further has been heard on this matter.

I have emailed Bill English again,

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from: [email]
to: bill.english@parliament.govt.nz
date: Sat, Jan 14, 2012 at 5:59 PM
subject: Crafar Farms

Sir,

Shanghai Pengxin lodged an application with the Overseas Investment
Office (OIO) on or around 18 April 2011, to buy the Crafar portfolio
after Natural Dairy’s application was rejected.

Normally, applications take up to 50 to 70 working days to process, as
per OIO guidelines. (Ref:LINZ, Application Assessment & Timeframes,
Estimated decision times,
http://www.linz.govt.nz/overseas-investment/applications/assessment#estimated)

It has now been nine months since Shanghai Pengxins lodged it’s application.

As the Minister responsible for the OIO, can you explain why Shanghai
Pengxins’ application has not yet received a decision? I have written
to you previously on this matter, and received on an acknowledgement
of receipt of email, but nothing further.

Information on this matter would be appreciated.

Regards
-Frank Macskasy

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It is my guess that the decision by the OIO was deferred last year  because of the General Election. The sale of the Crafar Farms is a contentious issue, to put it mildly, and would most likely  cost National the election had the OIO granted Shanghai Pengxin’s application.

I am betting that the OIO will make it’s decision in February or March, and will grant consent. I’m further “betting” that the consent will be made with some sort of “sweetener“, such as Landcorp managing the farms.

The result, however will be the same;  productive farmland alienated into foreign control; valuable produce shipped off to Chinese consumers; and profits lost to Chinese investors.

Gain to New Zealand? A few dozen employees’ salaries.

I am reminded of John Key’s pronouncement on foreign ownership of our productive landbase,

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The sell-off of our country continues.

That, coupled with the on-going de-unionisation of our workforce, is further indication of where our New Right government is heading.

Truly, we are in the midst of an ideological “civil war”.

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UPDATES

January 25

No response has been recieved from Bill English or any other Minister on this issue. The only conclusion I can reach is the following;

  • this government is ducking for cover,
  • this government intends to allow the Shanghai Pengxin purchase to proceed,
  • this government instructed  the OIO to delay making a decision on Shanghai Pengxin’s application, because  of the sensitivity of this  as an election issue,
  • this government has manipulated and interfered with the OIO process – just as National’s appointee to the Board of NZ on Air attempted to interfere with the broadcasting of a documentary, because it was considered as ‘embarressing’ to National,
  • this government has accepted donations from Chinese businessmen connected to Shanghai Pengxin,

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Full Story

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This is not the first time that National has benefitted financially from doing questionable “deals”,

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Full Story

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Full Story

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This blog predicts that National will allow the OIO to permit the sale of the Crafar farms to Shanghai Pengxin, and will try to “sweeten” the deal with sale-conditions designed to satisfy public concerns.

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Labour on farm sales – NOT good enough!

21 October 2011 1 comment

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Full Story

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Labour has stated that,

A Labour government would ensure sales were declined unless potential foreign buyers of farm or forestry land also invested in new processing or other related jobs.Source

Sorry, Mr Goff, but that is totally unacceptable and is merely ‘tinkering’ with the problem.

The sale (or leasing) of our productive farmland means that we lose profits to overseas investors. It means that a foreign owned farm will (a) export their produce (b) make a profit (c) remit much of that profit back to overseas investors, who look for returns on their investment.

It means that New Zealand farmland is priced out of reach of our own people, who cannot hope to compete with Americans, Germans, Chinese, etc. The purchase of the Crafar  farms by Shanghai Pengxin’s over a Michael Fay-led local consortium should ring alarm bells in our heads.  (More here)

Labour needs to lift it’s game on this issue.

There has to be a total ban on the sale/lease of farmland to anyone who is not a New Zealand citizen.  Anything less will ultimately undermine our long term prospects for wealth-generation and prosperity.

We would end up tenants in our own country.

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The second colonisation of New Zealand

1 October 2011 9 comments

This recent story in the media should give us all cause for concern,

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Full Story

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I should start with a disclaimer: I hold no real enthusiasm nor liking for  Michael Fay’s method of operation. He and his colleague, David Richwhite, gutted NZ Rail during their tenure as part-owners of that asset.  (The  New Zealand Securities Commission  investigation into Fay & Richwhite’s alleged insider trading – and whilst no prosecution resulted – did result in an out-of-court settlement, where they paid NZ$20 million to the Securities Commission in June, 2007. )

As taxpayers, we are still paying for the upgrading and  maintenance of railways that was neglected during 15 years of private ownership.

However, the reality is that Michael Fay is leading a New Zealand consortium to buy the 16 Crafar farms. These farms amount to 11,000ha of property throughout the central North Island.   Their transfer into foreign control would be a significant loss to the NZ economy.

There are three  major issues highlighted by this story, and another,  that convincingly illustrate why overseas investors should be permanently denied ownership (or even  leasing) of our productive farmland.

Issue 1:

“Receiver KordaMentha has formally declined the Fay group’s $171.5 million offer for the 16 central and lower North Island farms, saying the conditional offer it has accepted from Chinese group Shanghai Pengxin “was by far the best offer at [that] time and remains so today”…

… “Our offer is at a price we firmly believe makes sense it that we are paying the right price for the long-term farming future of these properties,” the group’s negotiator Steve Bignell said. “ Source

This illustrates the risk of permitting foreign interests to bid for our farms. Foreign investors (generally) have very, very deep pockets. When even a millionaire such as Michael Fay can be out-bid  – we need to ask ourselves how ordinary New Zealanders can compete with foreign investors.

In a bidding war, New Zealanders will always lose. Our sons and daughters have zero chance and nil opportunities to own a slice of our country’s natural wealth, when faced with the near-limitless resources from overseas buyers.

We may not like Michael Fay, but  at least he represents an opportunity to keep the Crafar farms – and the wealth they create – in local ownership. That he is unable to acquire these properties because he has been out-bid to the tune of $38.5 million dollars is disturbing.

I believe it is a sign of things to come.

Issue 2:

“Over a certain price level, these farms don’t work.”Ibid

If true, then the question that begs to be asked is: why? Why are overseas investors willing to pay inflated prices for our productive farmlands?

The answer is not very complicated nor obscure.

The human population on Planet Earth has reached 7 billion.

By 2050AD it is estimated that the population will reach 9 billion.

All 9 billion will require food – lots of it.  And unfortunately for the Human race, there is only a limited amount of arable land on this little planet of ours. With ongoing desertification, arable land is reducing each year. Soil erosion  is another factor in this problem.

On top of that, as populations increase, so does pressure on food supply. In countries such as India and China, as their middle classes grow and become  more affluent, they will demand access to more and better food.

Countries such as New Zealand offer sources of clean, well-processed, safe, reliable, sources of protein.

In other words: supply and demand.

Just as the U.S. has cornered oil supplies in the Middle East, growing economies in the East and elsewhere will look to “cornering” nett-food suppliers. It is interestimng that the Prime Minister, John Key, alluded to this matter at a public meeting in Lower Hutt, on 24 May. He stated that China’s centralised, autocratic government could not afford to risk disruption to their domestic food production; a hungry population; and a subsequent “Arab Spring”-style uprising.

No government on Earth could withstand one billion hungry people in revolt.

Key hinted that China’s acquisition of land in Africa and here in New Zealand was based on a strategic need to secure food sources.

If true, money is no object. After all, you cannot feed money to hungry mouths.

In which case, it is little wonder that Shanghai Pengxin’s offer for the Crafar farms is “over a certain price level“. China is not interested in selling the food for profit. It is seeking the food for it’s own population. Because by 2050, one billion Chinese will have eight billion other competitors seeking the same food source.

This is what ‘Shanghai Pengxin‘ spokesman Cedric Allan said,

“…  while it initially intends to continue supplying Fonterra with raw milk investment plans include working “in partnership” with an existing processor to develop baby formula, ice cream and cheeses suitable for Asian markets.

“We do not intend to be simply a customer of a dairy processor.

“To ensure the processor can produce long term and if they needed to increase their capacity to do so then we could help them with that.

“We have no wish to own or control a processor, other than to make sure they are in a position to provide surety long term.” “ Source

Again, no individual New Zealander(s) can hope to compete against  that kind of long-term acquisition-strategy.

Issue 3:

Shanghai Pengxin has lodged its application with the Overseas Investment Office (OIO) to buy the Crafar portfolio after Natural Dairy’s application was rejected.” – 18 April 2011 Source

The OIO (Overseas Investment Office) usually takes between 30 working days (Category 1 applications) to 70 working days (Category 3 applications). Source.

It has been approximately 115 working days since Shanghai Pengxin  lodged its application with the Overseas Investment Office.

One can only assume that,

(a) the OIO has mis-placed Shanghai Pengxin’s application (have they looked behind their cafetaria sofa?).

(b) the OIO has been “requested” by the Minister-in-charge to “review” Shanghai Pengxin’s application. And to report back sometime after the election.

The sale of the  16 Crafar farms is politically explosive. It would do to National what “Corngate” did to Labour in 2002. National cannot risk this matter affecting their re-election chances in November.

Which is why I am betting that,

1. We will not see a decision from the OIO any time this year.

2. The Fay-led consortium will fail.

3. The Shanghai Pengxin application will be approved.

The sale of New Zealand will accelerate, and with the apathetic acceptance of the majority of New Zealanders.

Just how gullible are we?

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+++ Updates +++

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Source

Fay said the group of farmers had “serious concerns” about the state-owned farming corporation’s role with Shanghai Pengxin, whose bid for the 16 in-receivership dairy farms is conditional on getting Overseas Investment Office consent.

“Landcorp is well known in the farming community for buying farm land in competition with locals – effectively using taxpayers’ money to outbid those same taxpayers,” Fay said.

Fairfax revealed recently that Landcorp was in preliminary talks with Pengxin for the job of managing or sharemilking the farms if the Chinese company is successful in buying them.

It has been nearly seven months since Pengxin applied to the OIO for consent.

Fay said Landcorp seems to have become “utterly confused” about its purpose and could have allowed itself to be used as a pawn in the deal – “just to give the Chinese bids an acceptable local face”.

Fay’s group has offered receivers KordaMentha $171.5 million for the farms. Its bid has been declined as too low but the farmers consider their offer “still live”.

Through its OIA request, the farmer group has asked Landcorp to provide all details of its dealings and correspondence with Pengxin, any correspondence it may have had with the OIO, and all correspondence between Landcorp and an unsuccessful bidder for the Crafar farms, Chinese group Natural Dairy and May Wang’s UBNZ companies.

The farmers say they are making a single bid for the Crafar farms because the receivers require it, but if successful they would split the farms up between them to be owner-operated.

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The Big Questions that need to be asked here are;

  1. Why is Landcorp – a State Owned Enterprise (SOE) – working with overseas interests rather than local investors and taxpayers?
  2. Is this an acceptable use of taxpayers’ money and resources?
  3. What is the government’s position on a SOE working with a foreign company, against New Zealand investors?
  4. Has Landcorp  offered to work with the Fay-led consortium? If not, why not?

Perhaps it is appropriate for these questions to be put to Landcorp’s Chief Executive, Chris Kelly, and Shareholding Minister, Simon Power?

Especially when, amongst it’s various “Mission Statements”, “Statement of Corporate Intent”, etc, we find the find Objectives that Landcorp is committed to,

“1.1

- To exhibit a sense of social responsibility by having regard to the interests of the community in which it operates and by endeavouring to accomodate or encourage these when able to do so.

1.4

- To provide the shareholders with maximum sustainable returns by;

Meeting social obligations.

5.4  Opportunities, risks and returns affecting or likely to affect Landcorp,

Returns through,

- stabilisation of rural land values.”

Source: State of Corporate Intent 2011-2014 (PDF)

None of the above seems consistent with supporting a foreign-based investor-takeover of New Zealand farmland, instead of a local initiative.

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from:    [email]
to:         Simon Power <simon.power@parliament.govt.nz>, Chris Kelly <kellyc@landcorp.co.nz>
date:    Thu, Oct 13, 2011 at 12:33 AM
subject:    Landcorp & Shanghai Pengxin

Sir,

According to recent media reports Landcorp  “is in preliminary talks with Pengxin for the job of managing or sharemilking the 16 Crafar  farms if the Chinese company ( Shanghai Pengxin) is successful in buying them.”

Landcorp appears to be supporting Shanghai Pengxin’s bid to purchase the Crafar farms over an offer by a local consortium, led by Sir Michael Fay.

Could you please explain how a New Zealand crown-entity – namely Landcorp, which is owned and resourced by New Zealand taxpayers – can appear to be supporting a foreign bid to gain control of large areas of productive New Zealand farmland; soliciting business from said investors; and thereby undermining a local bid?

Could you please explain how Landcorp can be associated with a foreign investor, instead of local investors, when their Objectives (2011-2014) specifically require Landcorp to be  committed to;

“1.1

- To exhibit a sense of social responsibility by having regard to the interests of the community in which it operates and by endeavouring to accomodate or encourage these when able to do so.

1.4

- To provide the shareholders with maximum sustainable returns by;

Meeting social obligations.

5.4  Opportunities, risks and returns affecting or likely to affect Landcorp,

Returns through,
- stabilisation of rural land values.”

In view of the above stated objectives, it would appear to make better sense if Landcorp were to support the Fay-led consortium, rather than overseas interests. Considering that Landcorp is owned by New Zealand taxpayers, it seems to be a fair expectation that Landcorp support local investors rather than overseas individuals and/or corporations.

I await your response to this matter.

-Frank Macskasy
- Blog-author, “Frankly Speaking”

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Chris Kelly responded the following day with this response,

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from:    Chris Kelly kellyc@landcorp.co.nz
to:    [email]
date:    Thu, Oct 13, 2011 at 4:33 AM
subject:    Re: Landcorp & Shanghai Pengxin

Dear Frank M

If and only if Pengxin have OIO approval to buy Crafar farms might Landcorp be involved in managing the farms.
Land corps preferred option was to buy them ourselves.
We would be happy to work with the Fay consortium.We have not been approached by them.
Landcorp has not been in contact with the OIO to assist Pengxin to buy the farms.

Regards, Chris Kelly

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Which begged the obvious question in return,

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from:    [email]
to:    Chris Kelly <kellyc@landcorp.co.nz>
date:    Thu, Oct 13, 2011 at 8:52 AM
subject:    Re: Landcorp & Shanghai Pengxin

Dear Chris,

Thank you for your response.

Has Landcorp considered approaching the Fay-led consortium to offer a joint-bid for the Farms? If not, why not?

Thank you, in advance, for any light you can shed on this issue.

Regards,

-Frank Macskasy

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To which Chris Kelly replied,

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from:    Chris Kelly kellyc@landcorp.co.nz
to:    [email]
date:    Thu, Oct 13, 2011 at 8:15 PM
subject:    Re: Landcorp & Shanghai Pengxin

Dear Frank,
We have not approached Fay.He represents a group of local farmers who want to break up the farms and run them as separate units.Landcorp wants to run them as a combined group.

Regards, Chris Kelly

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Which is interesting. If  Shanghai Pengxin buys the farms, there would be no guarantees how they are operated. Landcorp will have no control over their management whatsoever.

As a partner, in a Fay-led consortium, Landcorp would have a measure of control.

Is this making sense to anyone?

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Further Reading

Fay says xenophobia played no role in Crafar bid

Foreign Ownership of New Zealand’s Land

OIO Application Assessment & Timeframes

Farmland Grab

Shanghai Pengxin

Landcorp may bid for Crafar farms

Landcorp

Labour on farm sales – NOT good enough!

Kiwis against foreign ownership of farms

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