TODAY |

Agencies concede 'sobering lessons' from Saudi sheep scandal that damaged NZ's reputation

Government agencies involved in the Saudi sheep deal have conceded the project did not deliver the economic benefits that were claimed and admit the scandal damaged New Zealand's reputation here and abroad.

Your playlist will load after this ad

The previous National government gave Hmood Al Khalaf $10 million in cash, livestock and agricultural equipment. Source: 1 NEWS

In a letter to the Auditor General the Ministry of Foreign Affairs and Trade secretary Chris Seed and New Zealand Trade and Enterprise chief executive Peter Chrisp say they've learned "sobering lessons" from the scandal.

They admit the Saudi Arabia Food Security Partnership did not provide value for money and say they wouldn't get involved in such an agreement again.  

The controversial deal was the brainchild of the former National Foreign Minister Murray McCully.

It saw the former National government build a wealthy Saudi livestock importer, Sheik Hmood Al-Khalaf, an Agrihub at his property in the Saudi desert.

It gave him millions of dollars in agricultural goods and $4 million dollars cash.

Officials also deliberately pushed animal welfare laws to their legal limit as part of the deal - chartering a Singapore Airlines plane and flying 900 heavily pregnant sheep to the Saudi desert where many of their lambs died immediately on arrival.

READ MORE
Government axes controversial Saudi sheep deal, saving taxpayers $1m
READ MORE
No evidence of bribery or corruption in Saudi sheep deal - Auditor-General

National argued the Agrihub deal would deliver a valuable Free Trade Agreement with the Gulf States.

It believed Al-Khalaf was blocking the deal, angered that New Zealand had stopped live sheep exports after an animal welfare catastrophe aboard his vessel the Cormo Express in 2003 - where 6000 Australian sheep died.

Al-Khalaf believed previous governments had misled him about live exports resuming.    

But in today's statement Mr Seed and Mr Chrisp say the Saudi sheep deal delivered very little. 

"The advent of the Agrihub did not translate into progress as the FTA has now been stalled for a decade."

"The Agrihub also failed to generate the economic benefits that had been hoped for at the time. It is MFAT and NZTE's assessment then that at the conclusion of the process, the $11.5 million Saudi Arabia Food Partnership Agreement did not provide value for money - similar arrangements should not be recommended or utilised again."

The Agrihub also resulted in significant adverse publicity, reported both in local and international media, with criticism both in terms of how and why the Agrihub was set up and also in terms of the initial lambing loss. This did not reflect well on the New Zealand government of the time," they admitted.

"The partnership helped to resolve a diplomatic issue - the removal of the Saudi Minister of Agriculture's objection to the New Zealand-Gulf Cooperation Council Free Trade Agreement (the FTA), the FTA has not progressed for other reasons, including a dispute between other GCC members and Qatar."

National also argued the Agrihub would showcase the very best of New Zealand agriculture to the Middle East and deliver benefits for the Kiwi companies involved.

But MFAT and NZTE say the companies involved in the Agrihub saw no benefit.

"After two years of participation, no distributor in Saudi Arabia sought to purchase the products available. As a result both companies withdrew their interest and their focus on the Saudi market, and did not participate in the 2017 Saudi Agriculture Show."

The coalition Government shut down the remainder of the deal in December 2018 - cancelling the taxpayer funded installation of $2.5 million abattoir at the Agrihub.