Labour managed a couple of good blows on the government this week.
David Cunliffe disclosed that a Mossack Fonseca related entity had purchased a significant block of farmland in the Taranaki. Through the judicious use of google a canny staffer managed to show that the beneficial owners had been held criminally liable for the depositing of carcinogenic material in a river in Argentina and the story had legs for a second day. Then by questioning whether the owners really were of good character for the purposes of the Overseas Investment regime the OIO was forced to announce that it is reinvestigating the application.
It appears that the checks the OIO made included a brief use of google and a reliance on the applicants confirming they are of good character. You have to question the thoroughness and quality of the background checks made and wonder in how many other cases have they been sub optimal..
The Overseas Investment Office has re-opened its review of the sale of Taranaki farmland to foreign investors after Labour MP David Cunliffe revealed the Argentinian owners were prosecuted for pollution and discharging toxic chemicals into a river in Buenos Aires.
The OIO approved the $6 million sale of Onetai Station in Taranaki to Ceol and Muir Inc in 2014, a company linked to the Mossack Fonseca firm at the centre of the Panama Papers controversy. The owners behind it are Argentinian brothers Rafael and Federico Grozovsy.
Mr Cunliffe has questioned whether the brothers met the ‘good character’ requirements for OIO approval after uncovering documents showing a court found the Grozovsky brothers criminally responsible for chemical pollution of a river at their tannery in Buenos Aires in 2011. In a statement today, the OIO said those reports raised “serious issues” and it was now investigating them.
It came just a day after the OIO gave its handling of the 2014 decision the all-clear. It had reviewed that decision after discovering Ceol and Muir Inc was registered to the Mossack Fonseca offices.
Yesterday it released a statement said it was confident due process was followed and emphasised the foreign buyers had to “be and remain of good character” for OIO approval.
Grant Robertson followed up the initial OIO disclosure with a call for a full inquiry into circumstances behind the Government’s decision not to review the Foreign Trusts regime. And he is right on the money.
At this stage it looks like a casual discussion between John Key and his personal lawyer and a referral to Todd McClay led to McClay changing the course of IRD action and eventually the ruling out of changes to the Foreign Tax regime being made. It was only the disclosure of the Panama papers that has led to the Government grudgingly taking action. This needs to be investigated.
Phil Twyford managed to land another blow in his housing portfolio with similar allegations of cronyism, a public entity not doing its job properly and overseas interests purchasing New Zealand land.
He had complained to the Auditor General about Housing New Zealand paying investment banker Andrew Body $1.6 million for advice on selling state houses. In particular he was concerned that Mr Body may have been advising a potential purchaser at the same time. Matt Nippert reported the issue in this way:
The Labour Party’s Phil Twyford is calling for an investigation into the Government’s handling of Housing New Zealand consultants, claiming “clear conflicts of interest” where they simultaneously formulated the policy to sell state houses, as well as advising potential buyers.
According to documents released under the Official Information Act, investment banker Andrew Body had declared in June 2011 when appointed to a ministerial advisory panel that his company Andrew Body Ltd was an adviser to the United Kingdom-based investment fund John Laing that “may seek to become involved in the provision of social housing”.
John Laing is also part of the SecureFuture consortium that built and operate the new privately-run prison at Wiri.
This declaration was not made to Housing New Zealand, even though at the same time ABL was earning more than $1 million under a contract to scope state house sales.
A spokesperson for HNZ said Body and ABL were not required to disclose the interest.
The office of the Auditor General has upheld the complaint. The report is astounding and is littered with references to paperwork not being available. You get a strong sense that the arrangements for ensuring value for money was really loose.
On the conflict of interest allegation the report says this:
There were some significant weaknesses in Housing New Zealand’s records of its management of the two potential conflicts of interest that you raised. Only one of the two was recorded in the contract documentation, and Housing New Zealand could not supply us with copies of advice that it had sought about it or mitigation strategies (if any).
The OAG thought that the John Laing link may have been to a different entity to that which expressed a recent interest. But clearly more investigation needs to be done in the area.
Phil Twyford has responded:
It’s a disgrace that at a time when people are living in camp grounds and garages this Government is ignoring obvious conflicts of interest as they flog off billions of dollars’ worth of publically-owned land and housing to merchant bankers, foreign companies and overseas PPP investors.
“Andrew Body was paid $2.3m to help develop the sell-off policy, then to advise on the sell-off itself. Meanwhile one of his clients – UK-based PPP investor John Laing – was an interested party and is now a shortlisted bidder for the first tranche of houses to be sold.
“Housing NZ has been ticked off for failing to tender six major contracts in breach of the agency’s own procurement rules.
“This dodgy process makes it all the more alarming the National Government has changed the law to give ministers extraordinary unfettered powers to negotiate the sale of state houses on any terms they want.
“Housing NZ provided incorrect responses under the OIA and tried to cover up the conflicts of interest and their failure to tender these major contracts under government procurement rules.
“New Zealanders hate the idea that millions of dollars of state houses are being sold off by and to merchant bankers and overseas companies. It’s even more galling when this increasingly arrogant Government can’t even follow basic rules in the sell off”.
The two incidents have very concerning similarities. Substandard management by the Government agencies involved. Selling off our land in pursuit of foreign cash. Cash is king. Kiwi families are collateral damage because they cannot afford to buy or pay rent and the social housing is disappearing.
And the Mossack Fonseca issue is dominating the media for the third day in a row. Matt Nippert has analysed the figures and suggests that the Foreign Trust industry is only paying a third of the tax that it should be paying. That underlying sense of greed is impossible to dispel.
National is strangely silent. No doubt the pollster is hard at work trying to sort out what acceptable line there is for the Government to take.
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