Are the National Government and Murray McCully guilty of corruption? The official verdict is now in, but not everyone agrees.

An allegation of corruption isn't something that should be bandied about too easily. And in New Zealand politics it possibly is. But it's difficult for many to see how the Auditor General's report paints a picture of anything other than corruption when examining the case of Murray McCully's Saudi sheep deal.

Is the Government guilty of corruption or bribery?

Murray McCully / Sarah Ivey
Murray McCully / Sarah Ivey

We can expect that the opposition parties, and generally those on the political left, are most likely to throw the term "corrupt" at the National Government. But, interestingly, it's actually the rightwing commentator and National Party member Matthew Hooton has absolutely savaged the Government over the Auditor General's report. He did this at 5:30am this morning in an interview with Rachel Smalley - which you can listen to as part of Felix Marwick's Newstalk ZB story: Saudi sheep: McCully 'acted immorally, misled the public' - Labour.

What Hooton says is worth reading at length (transcribed here, from the above interview). On whether Murray McCully should be seen as guilty of corruption, Hooton says: "He is not guilty of corruption as defined in the Crimes Act. But in any ordinary use of the word 'corrupt' he is corrupt. And this is a corrupt deal. And he should be fired... The Auditor General has found that he wrote his dodgy Cabinet paper, that was full of lies to his Cabinet colleagues... and he did not go through the proper procedures, and that is the main thing that the Auditor General has found. Any other minister who behaved in that way, and presented a Cabinet paper that they had not bothered to get any legal advice on, but which asserted untruthfully that there was a $30m legal risk, would have immediately been fired. In this case the Prime Minister has a tolerance for corruption and dishonesty."

Similarly, Hooton pronounces that the Government is guilty of bribery, saying that McCully "paid this $11.5m bribe - again I use the word 'bribe' in its everyday, ordinary language sense, not it's strict Crimes Act sense - in order to make those problems go away."

After reading the Auditor General's report, Hooton concludes that McCully should be fired: "The First Term John Key would have undoubted fired this Minister. This is the worst behaviour by a minister in the Key Government we have seen. It is far worse than anything Judith Collins has been involved in. Far worse than anything Pansy Wong or Richard Worth was involved in. It is a corrupt minister - under the everyday use of the term - that the Prime Minister is protecting because he is part of an old boys' network."

Blogger No Right Turn has also questioned how the Auditor General's Office can absolve McCully of bribery: "While they find it was not a bribe in the tightly criminal sense of whether Murray McCully is liable for prosecution under the Crimes Act (of course he's not - he was the briber, not the recipient), they're very clear that it was a payoff to Hmood Al Ali Al Khalaf to achieve a diplomatic objective (i.e. a bribe in the ordinary sense of the word)" - see: McCully lied to Cabinet.

The blogger also highlights how much deception and obfuscation has been uncovered, arguing that the report finds "that Murray McCully basically lied to Cabinet in his papers promoting the deal". He argues that accountability should be sought on behalf, not just of the public, but of McCully's Cabinet colleagues: "Ministers owe their colleagues a duty of candour in Cabinet discussions. McCully has violated that duty. He should resign as a result."

For a counterview, the best example is from Audrey Young, who argues that the Opposition refuses to accept McCully has won. She suggests that the report is not only a wakeup call for National, but also for Labour, who "shouted bribery and corruption from the rooftops and now that the report finds there was none". She claims that "Labour went after McCully with such vigor in part because he blamed Labour for the problem."

Also, according to Young, the Auditor General's report contradicts Labour's denial that they had messed up the relationship with the Saudi sheep farmer in the first place.

What is corruption anyhow?

For many, the Auditor General's pronouncements about the lack of "corruption" are unsatisfactory. This is because the report takes a very narrow and legalistic approach to defining corruption. The report suggests simply that the Government and McCully have not actually broken any laws. This, of course, is not the same thing as being innocent of corruption or bribery.

In this regard, Gordon Campbell jokes: "True, she found no evidence of bribery or corruption - and to be fair to McCully, there doesn't seem to be any evidence in Provost's report of copyright infringement or grand theft auto, either. What there does seem to be is evidence of what the A-G delicately calls 'unacceptable' behaviours" - see: On the latest McCully fiasco.

RNZ's Tim Watkin is even more incredulous about this: "The final findings are that corruption - defined as 'an abuse of power for private gain or an offence against the Crimes Act 1961 by a Minister or an official"'- did not occur. But it's a spurious finding because no-one has alleged that McCully gained financially from the deal; rather, it was accused he paid off al-Khalaf for political gain. I can accept that using public money for political purposes of this kind falls below a legal definition of corruption. I just find it repugnant" - see: The shame of the Saudi Sheep deal, or democracy gone to the dogs.

Watkin's blog post is the strongest critique that has been made about both the deal and the Auditor General's report. It's an absolute must-read for anyone who wants to see the case against the deal from someone who has worked closely on the story.

Watkin begins his column saying: "if you're not angry, you haven't been paying attention." He explains what there is to be angry about: "Occasionally, when it comes down to the abuse of power and a profound disrespect for the fragile system of democracy and governance that has made this country so strong for so long, we see politics at its worst. Or if not its worst, then at least in a very ugly form. At that point, I can still get angry. And the Saudi sheep deal makes me angry. Angry with a government that, publicly at least, is in denial over its misuse of power and its casual attitude towards our constitutional infrastructure. Angry at the damage done to our global reputation as transparent and honest brokers. Angry with a media that doesn't bother to research and think and critique nearly enough (although this story has been exposed by some top drawer journalism, others have woefully ignored, down-played or misunderstood it). And angry with an electorate that allows complexity to defeat morality."

Rachel Smalley also believes that the deal should be seen as a bribe: "To anyone else, this is exactly what it says on the tin. It was a bribe. And while the Auditor-General stopped short of calling it that, if you read this report you can see that she believes this was a very, very shonky deal" - see: Lack of clarity, transparency around Saudi sheep deal baffling.

Smalley also condemns "the lack of clarity and the lack of transparency" in the whole arrangement, saying "This is not how New Zealand governments do business. There may be a free trade deal that comes out of this, but at what cost to our international reputation?"

But not everyone agrees that this is corruption. Mike Hosking discussed the issue briefly this morning on Newstalk ZB - to hear this, listen to the first couple of minutes of the 10-minute summary of his show today: How Shady Was That Deal?.

Here's how Hosking explained why the sheep deal was OK: "Do remember - a government can do anything they want. If they want to set up a farm; they can set up a farm. If it happens to be with a bloke who happened to be the same player that got stiffed on live shipments, they can do that too. Now it might look shady or dodgy or cute or convenient, or anything you want to call it. But politics is an art. And if you can appease one person in order to achieve something else further down the track, then most governments will be happy to do it. Hence the word 'shortcomings' as opposed to 'corruption'. Upshot? If you were looking for a scandal or a scalp, neither were ever coming."

Hosking's defence of National shouldn't signal that the political right is all lined up behind the Government on the issue. Not only has Matthew Hooton proved to be an even harsher critic of the Government than Labour or the Greens, rightwing blogger David Farrar has expressed his strong unhappiness (after previously being more comfortable with the deal). He gave his conclusions yesterday: "It is bad wasteful spending that has produced few benefits. The deal was sold as settling a legal dispute, but there was no serious threat of legal action. I hope the Government takes the criticism on board and says it won't do any such deals again, and especially one so lacking in good analysis" - see: Auditor-General on Saudi sheep deal.

Farrar also warns his party to take this seriously: "The Government may see this as an exoneration as the AG found it was legally sound. They should not. The criticisms of the AG are significant and the quality of the decision making something that should be unacceptable no matter who is in Government."

What are other politicians saying?

David Parker. Photo / Paul Taylor
David Parker. Photo / Paul Taylor

David Parker has led the charge against the Government for Labour, saying that the report shows that McCully "acted immorally, he acted improperly, he mislead parliament, he mislead his Cabinet, he mislead the public, he mislead the media." You can see Parker's statements, comment from the Greens' James Shaw, as well as from Murray McCully himself, in Sam Sachdeva and Stacey Kirk's Saudi sheep deal not corrupt, had 'significant shortcomings', report finds.

The Act Party leader, David Seymour, has also been energetically commenting on the Auditor General's report. But his approach has been rather contradictory and confused. Of course he's made the normal ideological points to suggest that the Saudi sheep deal should be seen as some sort of leftwing failing. For instance: "Whether it's SkyCity, Lord of the Rings, it's normal for the government to try and pick winners and spend money on corporate welfare. "But just remember when the opposition do their nut about this, or any other particular deal, it's Winston Peters who wants to subsidise trains and horses, it's the Green Party who want a Green Investment Fund and it's the Labour Party who want to spend $2 billion bribing the people of Mt Roskill with a railway even though they have no business case." - see Mei Heron's Greens call for McCully to resign over Saudi deal.

Seymour has been particularly scathing of those attacking McCully. Responding to Greens co-leader James Shaw calling for the minister to resign, the Act MP said "He's a young pup. He's just practicing the art of oppositional politics. He doesn't have the sort of experience, that I for example bring" - see Felix Marwick's Saudi sheep: McCully 'acted immorally, misled the public' - Labour.

And talking to Newshub, Seymour defended McCully, saying, "Anyone who's called him corrupt should apologise to him, because the finding is that he's not corrupt" - see: Sheep deal reminiscent of Robert Muldoon - David Seymour.


Where to from here?

Although the Auditor General's report is in fact incredibly critical of the Government, the public perception is likely to be that National and McCully have been vindicated.
Unless there are further revelations, it's likely that the story will now subside and die.

In this regard, Andrew Geddis has outlined three reasons that Murray McCully will survive this report - see: My hot takes on the Auditor General's "sheep-to-sand report".

Geddis' third point is perhaps his most depressing: "And last, this actually looks like the sort of deal that Key might well put together himself. Remember Sky City and the Auckland Convention Centre? Remember The Hobbit and Warner Bros? So I don't think Key really would regard the process failures pointed to by the Auditor General as being all that important. What matters is getting the job done - and it looks like New Zealand may be inching towards a trade deal with Saudi Arabia and the rest of the Gulf States. So ... who really cares about how we got there? Which is a little bit depressing, really. Because I'd like to think that when one of the public's most important watchdogs barks so loudly, something should happen as a result."

However, there is surely still more to be told about the saga. The NBR's Rob Hosking questions the Auditor General's statement that "This report is an opportunity for the complete story to be told." In reply he says, "New Zealanders still need to know what all this intrigue and secrecy has actually achieved for the $8.7 million spent so far, let alone the extra $3 million which is still to be spent" - see: Saudi Sheep Deal: McCully cleared of sharp practice - but not of sloppy management (paywalled).

In fact the Auditor General has instructed government officials to provide further details in the near future on what benefits have arisen from the sheep deal. This could be cause for further embarrassment.

Finally, to see how those on social media have responded to the report, see my blog post, Top tweets about the Auditor General's report on McCully's Saudi sheep scandal. And you can also look at my updated version of Cartoons about NZ's Saudi sheep scandal from one year ago.