Parker David: Oral Questions — Questions to MinistersText is incorporated into the Bound VolumeParker David: Oral Questions — Questions to Ministers[Sitting date: 27 May 2015. Volume:705;Page:4031. Text is incorporated into the Bound Volume.]10.Hon DAVID PARKER (Labour) to the Minister of Foreign Affairs: Who was paid the first $4 million in respect of the multimillion-dollar payments to Saudi Arabian interests referred to in the Cabinet paper of 13 February 2013 he tabled yesterday and how was the value calculated and split between “intellectual property which the Saudi investor brings to the platform the services and in-market networks he will contribute” and “the settlement of the long-running dispute”?Hon MURRAY McCULLY (Minister of Foreign Affairs): The $4 million was paid to Hamood Al Ali Al Khalaf Trading and Transportation under a contract for services between the Ministry of Foreign Affairs and Trade and Hamood Al Ali Al Khalaf Trading and Transportation. The value was identified in negotiations between the parties. This was a process overseen by senior officials of the Ministry of Foreign Affairs and Trade and the final agreement was signed off by the Secretary of Foreign Affairs and Trade with the support of myself as foreign affairs Minister and Cabinet.Hon David Parker: I raise a point of order Mr Speaker. My question asked for the split between those different cost centres.Mr SPEAKER: The question very clearly did. Could the Minister address the part of the question as to the split of the $4 million.Hon MURRAY McCULLY: The matters that were considered by the officials who conducted the negotiations are referred to very fully in the Cabinet paper that I tabled in the House yesterday. They relate to all of the costs associated with shifting the operations that were previously based in New Zealand to a new hub in Saudi Arabia. They included the intellectual property of the Al Khalaf group and access to its physical location in Saudi Arabia and as I say many other items that are enumerated in the Cabinet paper that I tabled in the House yesterday.Hon David Parker: I raise a point of order Mr Speaker. I did ask for the split and I still have not received it.Mr SPEAKER: I agree with that and we have now tried on two occasions to get it. The way forward now is with further supplementary questions. I invite the member to ask further supplementary questions.Hon David Parker: If this businessman needed New Zealand to pay many millions of dollars for the model farm using New Zealand technology and New Zealand sheep what intellectual property justified this multimillion-dollar payment?Hon MURRAY McCULLY: As the paper that I tabled yesterday makes clear the New Zealand Government specifically resisted the concept of compensation to the Al Khalaf group. But no doubt they would have had in their minds the fact that the actions of the previous Labour Government had exposed the New Zealand Government to legal claims estimated to be up to $30 million. The honourable member may wish to ask himself whether he as a member of that former Government carries some of the responsibility for that sorry state of affairs.Hon David Parker: I raise a point of order Mr Speaker. [Interruption]Mr SPEAKER: Order! This is a point of order and it will be heard in silence.Hon David Parker: That is all very interesting but my question was—Mr SPEAKER: Order! Can I invite the member to re-ask that question.Hon David Parker: If this businessman needed New Zealanders to pay for the model farm using New Zealand technology and New Zealand sheep what intellectual property justified this multi-million dollar payment?Hon MURRAY McCULLY: As I indicated in my primary answer the agreement that was struck between officials and the Al Khalaf group included all of the intellectual property associated with shifting the Awassi sheep breeding operation from New Zealand to a new location in Saudi Arabia. Also in the minds of officials would have been the fact that the Al Khalaf group had taken legal advice and could mount a legal claim against the Government for an amount estimated to be up to $30 million. It is a bit rich for members of the former Government who exposed New Zealand to the risk of a $30 million claim to berate members of this Government for resolving the issue for one-third of that amount.Hon David Parker: Given that his Government renewed the customs export prohibition order on animals for slaughter in 2010 and that it is perfectly legal for New Zealand to have a policy banning live sheep exports how can he justify paying millions of dollars to settle a hollow legal threat?Hon MURRAY McCULLY: I agree that the customs export prohibition order was renewed by the current Government. What was different was that we did not mislead the Saudi investors about the consequences of the roll over of that order. We fronted up and told them the truth when the previous Government had actively misled them over many years and exposed the New Zealand taxpayer to a claim of up to $30 million.Hon David Parker: Was the real reason the first $4 million was paid to pay off people whose influence in Saudi Arabia was getting in the way of the Gulf free-trade agreement?Hon MURRAY McCULLY: I made it clear that one of the consequences sadly from this whole saga was that the relationship between New Zealand and Saudi Arabia was poisoned and that poisoned relationship spilled over into the wider Gulf Cooperation Council. But I have also made it clear that the officials negotiating this matter had to consider the fact that there was a looming claim for up to $30 million resulting from the actions of a Government of which the Hon Mr Parker was a member.Hon David Parker: Can the Minister point to any other example where the New Zealand Government has ever paid millions of dollars to an overseas businessman in order to advance a free-trade agreement?Hon MURRAY McCULLY: I cannot point to any such example because I do not think New Zealanders had a Government as stupid and dishonest as the Government that Mr Parker was a member of.Rt Hon Winston Peters: Is it not a fact that this is a new low in our international relationships and that this is a multimillion-dollar bribe that has been given to private interests in Saudi Arabia? Is that not a fact?Hon MURRAY McCULLY: I have made it clear that the officials who were dealing with this matter would have had on their minds the damage that had been done to New Zealand’s fading relationship with Saudi Arabia and the wider Gulf as well as having on their minds the exposure of the New Zealand Government to a substantial claim for damages resulting from the actions of the Government of which the right honourable member was a member.James Shaw: What legal advice did the Government receive as to the likely success of the potential claim by Mr Al Khalaf?Hon MURRAY McCULLY: As I have made clear the Government did not wish to proceed down that path and it entered into talks with the parties to try to avoid such an outcome. I am satisfied that we would never have done so had we not been advised that the claim had some prospect of success. The member may wish to look at the Cabinet paper and see that there is a redaction there which is a reference that would have been disadvantageous to the interests of the New Zealand taxpayers.Hon David Parker: Why is he the first Minister in history to back a multimillion-dollar facilitation payment which in other jurisdictions is called a bribe?Hon MURRAY McCULLY: Unfortunately the current Government inherited a serious problem in 2008 and—[Interruption]Mr SPEAKER: Order! The question has been asked. The Minister has now got a right and a responsibility to answer it.Hon MURRAY McCULLY: It is clear to the Government that the relationship with the Saudi Arabian Government was poisoned that the relationship with the Gulf States had been poisoned and that the New Zealand Government was also exposed to a legal claim for up to $30 million. One solution was for us to go on misleading people as the previous Government had done but we decided it was time to front up and try to resolve that situation.James Shaw: How can the public be assured of the credibility of the tender process when it was overseen by the Ministry of Foreign Affairs and Trade which had already decided to compensate Mr Al Khalaf and is also responsible for negotiating the trade deal that was being blocked by Mr Al Khalaf?Hon MURRAY McCULLY: I have already told the House yesterday that the tender process was overseen by Ministry of Foreign Affairs and Trade officials New Zealand Trade and Enterprise officials and an independent expert who was also a previous chief executive of Landcorp. I am satisfied as to both the capabilities and the integrity of all of the individuals involved.