NZ paid Saudi trader $3.4m not to sue

Before last year’s announcement of a US$5m agri-business hub, the New Zealand government paid Hamood Al Ali Al Khalaf US$3.4m in 2013, formally to fund “a food security platform​”, according to official documents from the time. Two opposition parties in New Zealand have said this and other payments were bribes to Al Khalaf, a charge the government denies.

This payment, along with the agricultural hub – in fact a model farm – and export of 900 live breeding ewes, worth more than US$9.5m in total, were a package of measures designed to placate Al Khalaf​ in order to secure a free-trade agreement between Saudi Arabia and New Zealand. Al Khalaf threatened to block the agreement, in protest at what his business partner claimed were hundreds of millions of dollars in losses as a result of New Zealand’s live animal export ban.

Shutting down a lawsuit​

In documents approving the payment in February 2013, obtained by Fairfax Media, the New Zealand foreign affairs and trade minister Murray McCully claimed Al Khalaf was preparing to sue the country for up to US$25m. But the businessman had agreed to settle for US$3.4m instead, according to the papers.

In the documents, the government said the payment “recognises the intellectual property which the Saudi investor brings to the platform, the services and in-market networks he will contribute, as well as the settlement of the long running dispute​”.

The government is now facing calls to justify this settlement, including a written question to Prime Minister John Key asking what valuation the government placed on the “intellectual property​” referenced in the document, which Key is due to answer this week. Opposition figures and the New Zealand media have also asked to see assessments of the likelihood of success of any lawsuit from Al Khalaf.

50,000 breeders​

In other developments, it emerged Al Khalaf owns a New Zealand feedlot which held a shipment of 50,000 sheep and 3,000 cattle that were transported to Mexico last week, for “breeding purposes”. This prompted Al Khalaf’s Sydney-based business partner George Assaf to call for live exports for slaughter to be resumed, noting that New Zealand had also allowed large breeding shipments to countries such as Malaysia and China.

Broadcaster Newstalk ZB also claimed Saudi-NZ trade talks were set back significantly​ by the intervention of a junior official in 2009. The report alleges the unnamed official “lectured” a Saudi minister about New Zealanders’ feelings towards live animal exports – resulting in the rejection of a trade deal at the time.