Asset sales are on the agenda before the election. Michael Fay, strangely, is leading a coalition of underbidders for the Crafar farms against a bid from China worth $300 million more. According to the Waikato Times, New Zealanders have forgotten Fay’s involvement in the toxic asset sales of the late 1980’s and early 1990’s under both Labour and National governments. That would be a pity.
The Chinese bid has to be approved by Ministers following a recommendation from the Overseas Investment Office. Following an earlier bid from another Chinese consortium which was rejected as the bidder was “not of good character”, the rules have been tightened to give Ministers more say in the case of “sensitive land”, defined as land of more than 5 hectares. The Office investigates and makes a recommendation, and it is then up to the Ministers of Land Information, Maurice Williamson, and Finance, Bill English, to make the final decision.
The issue has become very political, not to say geopolitical. The Chinese are watching, and in the way of the Chinese, not just watching but letting people know what they think about obstacles to their investment. Fay is playing the “local” card, somewhat surprising for one who has spent the best part of ten years living in Switzerland as a tax exile. Federated Farmers supports the Fay bid.
As the Waikato Times reminded its readers, Michael Fay was heavily involved in the asset sales of the 1980s and 1990s. Getting the Bank of New Zealand, Telecom and Tranzrail on the cheap all made millions for Michael Fay and David Richwhite if not being of great benefit to New Zealand taxpayers or New Zealand infrastructure.
Fay and Richwhite were also heavy political donors, to Labour in 1987 and subsequently to the National party. They also worked very closely with Treasury in the lead-up to the sales. As he does, Fay is playing this politically, and as usual for less than it is worth.
The last decision turning down the Crafar farm sales to a different Chinese bidder was announced on the 22nd of December 2010. The current application for the sale has been with the OIO for over five months, outside their stated time for such applications of 70 days. It would be a pity if this decision was also announced in late December.
One the other hand, as the Waikato Times says, Fay’s group could simply increase their offer and then there would be no problem.