Roundup: Saudi sheep farm inquiry draws calls for New Zealand FM's head

Why did the New Zealand government pay for a sheep farm in the Saudi Arabian desert and fly live sheep over to stock it?

The answers were still unclear Wednesday after the Auditor-General delivered a scathing report on the deal, which was supposed to pave the way to a free trade agreement (FTA) with the Gulf Cooperation Council.

The New Zealand taxpayer-funded "agrihub" was gifted at a cost of 11.5 million NZ dollars (8.32 million U.S. dollars) as part of a "food security partnership" with the privately-owned Saudi firm, Al Khalaf Group, in 2013.

The New Zealand government had tried to explain the deal as a way to promote New Zealand farm produce and expertise to valuable export markets in the region.

But with no discernible benefits and most of the sheep dying in the desert sand, critics accused Foreign Minister Murray McCully of bribing the Al Khalaf Group in order to expedite a stalled free trade agreement with the Gulf Cooperation Council.

McCully defended himself, saying the deal had been done to fend off a lawsuit from the Al Khalaf Group, which was seeking compensation for New Zealand's ban on live sheep exports after investing millions in New Zealand farms and infrastructure.

This had been the cause of the Saudi Arabian government's refusal to finalize the already negotiated trade agreement, it was said.

The FTA with the Gulf Cooperation Council -- comprising Saudi Arabia, the United Arab Emirates, Kuwait, Qatar, Bahrain and Oman -- has been under negotiation since 2009.

Auditor-General Lyn Provost launched an investigation in June last year at the behest of lawmakers and about 10,000 New Zealanders who signed a petition demanding an inquiry.

On Wednesday, she issued her report, saying she found no evidence of corruption, as defined by the law, and that the spending was carried out with the necessary government approvals.

However, she added, "I share many New Zealanders' concerns about the arrangements."

She detailed "significant shortcomings" in McCully's papers to the Cabinet seeking approval for the deal.

"The contract's benefits to New Zealand were unclear in the Cabinet paper, the business case, and its subsequent implementation," Provost said in the report.

"A key objective of the Saudi Arabia Food Security Partnership was to remove a perceived obstacle to a free trade agreement with the Gulf Cooperation Council. That agreement remains unsigned, although in two recent joint statements (in April and September 2016) New Zealand and Saudi Arabia have indicated progress, including towards completion of the free trade agreement," she said.

"This lack of transparency, both at the time of the decision and subsequently, has led to the concerns from the New Zealand public about the nature of the payments made. To date, explanations from ministers or officials have not resolved those public concerns."

McCully himself welcomed the report's findings that there was no evidence of bribery or corruption, or improper government spending.

"The government was faced with a situation that carried diplomatic, economic and legal risk. It required a creative solution that demonstrated good faith and a willingness to move forward to the Saudi party," McCully said in a statement.

"We are confident that the Food Security Partnership is meeting its objectives and has removed a major obstacle holding New Zealand back in the Gulf, as well as opening up opportunities for New Zealand companies in the region."

Opposition lawmakers said the report provided reason enough for McCully's sacking.

"Whether he should resign is for the Prime Minister who should be asked: Have we reached the point in New Zealand that his standards are so low that Ministers will only be sacked if they end up before the courts rather than for incompetence, wasting millions, hiding it, and misleading Parliament and the public?" Shadow Attorney General David Parker of the main opposition Labour Party said in a statement.

The report was "a damning indictment of Minister McCully's rogue behavior and his total disregard for transparency, due process and the respectable use of public funds," Green Party co-leader James Shaw said in a statement.

"New Zealanders should be able to expect more from a minister than they're 'not legally corrupt,' and we deserve better. Minister McCully has got to go." Endit