SFO probe will not affect deal: Natural Dairy

Chris Kelly. Photo / Mark Mitchell

The Serious Fraud Office's investigation into the Hong Kong-listed company trying to buy numerous Crafar farms will damage the company's reputation but not the deal itself, a Natural Dairy spokesman said yesterday.

On Thursday, the SFO announced it was launching an initial investigation into Natural Dairy and its dealings with associated company UBNZ over the proposed sale and purchase agreements of 20 Crafar farms across the central and lower North Island that are in receivership.

Natural Dairy spokesman Bill Ralston said he expected the initial investigation to be completed within a matter of weeks, not months, because of the pending sale of the farms.

The farms have not gained Overseas Investment Office approval, a stamp that is required to push any foreign deals of more than $100 million through.

When asked whether the investigation would have a detrimental effect on the sale of the farms, Ralston said: "I don't believe so. I don't think so. What it will have a detrimental effect on is obviously Natural Dairy, which is a publicly listed company in Hong Kong. So they're not going to particularly enjoy this from their point of view. This is a further delay."

Ralston said the news had come as a surprise to Natural Dairy. Even the company's lawyers were not aware of this development.

KordaMentha receiver Michael Stiassny said if the SFO found there had been any wrongdoing the sale would not proceed for Natural Dairy.

But Natural Dairy's was the best bid on offer, he said.

Landcorp was interested in the Crafar farms but its bid was knocked back by KordaMentha in July. Landcorp's chief executive Chris Kelly said the company was not taking the view that it was back in the running, despite reports suggesting it was.

Natural Dairy vice-chairman Graham Chin said on Thursday the company would co-operate fully with the SFO because "it has nothing to hide".

SFO will investigate its commercial transactions with the UBNZ group.

UBNZ Funds Management bought four Crafar farms early this year. The sale is being investigated by the OIO, as it did not gain approval before the farms were acquired.

Chin said despite the investigation, Natural Dairy remained confident that the purchase of the Crafar farms would proceed and that OIO approval would be granted.

OIO spokesman Brad Young said yesterday he did not know how long its investigation would take.

The OIO has now received applications from UBNZ for retrospective consent.

"UBNZ Funds Management Ltd is the company owned by May Wang that bought the four farms and at the same time, on the same day, they were immediately transferred through to UBNZ Asset Holdings Ltd.

"The investigation [the OIO's] was sparked because we believe consent is required under the Overseas Investment Act. The farms are considered sensitive land under the act because it's farmland of over 5ha," Young said.

Wang, UBNZ's group director, said she was unable to comment in detail on the news because the company was not warned before the SFO's announcement that an investigation was under way.

She said she was concerned the investigation could delay the OIO approving the sale of the remaining farms to Natural Dairy, and cause "unbearable damage" to UBNZ and the New Zealand economy if it was not swiftly resolved.

Labour's overseas investment spokesman David Parker said the UBNZ group should have gained OIO approval before the sale was completed but the issue was the breadth of ministerial discretion on foreign ownership.

"The reality is everyone that has applied has been approved. Yes, they should have complied with the law and there is no excuse if they didn't.

"But the law has a very wide discretion from the minister's wider approval to decline sales.

"This needs to be narrowed, so that the minister has to do what is in New Zealand's interests."

The Crafar farms went into receivership a year ago, owing more than $200 million to PGG Wrightson and the banks.