Monday, February 20, 2012

Foreign investment secrecy nothing new

In the Weekend Herald, John Armstrong reminded us of the inscrutability of the processes followed by the Overseas Investment Office in approving foreign investment (I won’t say declining, because that doesn’t seem to happen very often) in New Zealand land.

Armstrong says the consent process is supposedly public but has more in common with the practices of a secretive sect. “Land subject to purchase by an overseas investor has to be advertised in New Zealand as being for sale. But the Overseas Investment Office is not obliged to consult with affected third parties and can ignore any submissions from that quarter. Applicants can seek to have their details kept confidential – even after the office's verdict has been published. It is not until that point that the public may get wind of a sale to foreign interests. By then – barring going to court as the rival Sir Michael Fay-led bid for the Crafar farms did – the horse has long bolted.”

Armstrong describes the process as archaic and flawed, but it was very nearly far worse than that.

In 1995 the National government tried to sneak through an amendment to the Overseas Investment Act that would have imposed blanket suppression on applications by overseas interests seeking to buy land or acquire an interest in New Zealand companies. News media that defied the blackout would have been liable for fines of up to $100,000 and even imprisonment.

Had this provision been in place now, the sale of the Crafar farms to Shanghai Pengxin could have been done and dusted without anyone knowing. If a journalist had learned of it and been foolhardy enough to break the story, he or she could have ended up in the slammer.

Astonishing as it may seem, this draconian amendment was set for a smooth ride through Parliament until a well-placed source in the bureaucracy tipped off the Evening Post, which splashed it all over page one. As a result, the amendment was shame-facedly shelved and no more was heard of it.

Does any of this matter now? Only in so far as it indicates a long-standing culture of secrecy surrounding (and probably within) the OIO; a belief that foreign investment in New Zealand, and the office’s processes for dealing with it, should be shielded from scrutiny. Whatever one's views about the Crafar land (and I don't have strong feelings either way), that's decidedly dodgy.

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