Rotorua Mayor Steve Chadwick and councillor Reynold Macpherson clash over Trility wastewater deal

otorua Lakes councillor Reynold Macpherson, left, and Rotorua mayor Steve Chadwick. Photos / File

LDR_STRAP

A war of words has again erupted between Rotorua mayor Steve Chadwick and councillor Reynold Macpherson, with Macpherson calling the mayor arrogant and Chadwick accusing Macpherson of being "an embarrassment" and intentionally trying to damage the city's reputation.

It comes as the Overseas Investment Office wrote to Macpherson saying it will not formally investigate the controversial Trility wastewater deal, a decision Macpherson says he remains "troubled about".

Macpherson made the complaint to the Overseas Investment Office (OIO), with Local Government Minister Nanaia Mahuta also among the recipients, on August 3.

On Wednesday Macpherson said in his opinion Chadwick "arrogantly dismisses … legitimate concerns" regarding the Trility deal.

In response later in the day, Chadwick claimed Macpherson had an "unsuccessful history" of "running off" to central government, which was, in her opinion, "an embarrassment and is damaging to Rotorua's reputation nationally". She said she could "only assume it is designed to damage our reputation".

She said Macpherson's accusations were, in her opinion, "vexatious, frivolous ... factually incorrect [and] absurd".

Rotorua Lakes councillor Reynold Macpherson. Photo / File

In Macpherson's complaint, he wrote to Mahuta suspecting the council "may have breached the terms of the Overseas Investment Act ... which introduced national security considerations into overseas investment in New Zealand" by entering into a 10-year, $156 million contract with Trility Ltd to manage the district's wastewater services.

Trility NZ's ultimate holding company, Beijing Water Enterprises Group, is based in Hong Kong but is a publicly-listed company.

On July 29 the council agreed to enter into the contract, with seven councillors in favour and four against, including Macpherson.

Chadwick dispatched a 21-page rebuttal to Macpherson's letter on August 11, at a cost of just over $2400 in council staff time.

At the time, she said she was "disturbed to read that the majority of the information [in Macpherson's complaint] was incorrect and misinformed" and that "attacks on the integrity of council decision-making demand a strong response".

On August 12 Macpherson wrote his own rebuttal to Chadwick's, further alleging - in his opinion - the influence of the Chinese Communist Party in Trility's holding company.

On August 24 OIO enforcement manager Simon Pope confirmed the organisation was seeking further information from the parties involved in the contract, but had not opened a formal investigation.

The Rotorua Daily Post obtained a copy of the letter finalising the issue, which was sent to Macpherson, the council and Trility on October 6.

Rotorua mayor Steve Chadwick's rebuttal document and covering letter. Photo / File

In it, OIO enforcement senior solicitor Nelson Curry said the Trility deal was "not subject to screening under the 'national interest' considerations.

"While Trility is an 'overseas person' under the [Overseas Investment] Act, the transaction will not result in Trility acquiring interests in sensitive land or significant business assets, and therefore consent was not required.

"The transaction did not result in property used in carrying on business being acquired and, as such, did not require notification under the 'emergency notification' rules.

"This means the transaction was not subject to screening under the 'national interest' considerations introduced by the Overseas Investment (Urgent Measures) Amendment Act 2020, even though the contract for services relates to wastewater assets - a concept used in connection with 'strategically important businesses' in the recent law changes."

Curry said the OIO may look to refer the example to the Treasury to consider as part of the Overseas Investment Amendment Bill.

"However, as the regulator, we are not otherwise able to take this further.

He noted it was Trility's responsibility under the Act to ensure it required consents before making overseas investments in "sensitive assets in New Zealand.

"In any event, it appears that Rotorua Lakes Council have had legal advice throughout its procurement and due diligence process."

On Wednesday, Macpherson said many members of his lobby group, Rotorua Residents and Ratepayers, would be "disappointed" by the OIO decision.

"While we accept that due process was followed by Rotorua Lakes Council regarding policy making, procurement and due diligence, we remain troubled that Trility is Chinese-owned and controlled by entities reporting to the Chinese Communist Party, which in turn controls the People's Republic of China.

He said, in his opinion: "The reasons are that the People's Republic of China has an appalling human rights record, the Chinese Communist Party's interference in Australian and New Zealand politics with anti-democratic intentions has long been proven, and yet Rotorua's mayor arrogantly dismisses these legitimate concerns as 'conspiracy theories' and as 'absurd … fear-mongering'.

"Rotorua Residents and Ratepayers' view is that you are judged by the company you keep."

According to MarketScreener, Trility's ultimate holding company, Beijing Water Enterprises Group is 41.3 per cent owned by Beijing Enterprises Holdings Limited, which is 62 per cent owned by Beijing State-Owned Assets Supervision and Administration (SASAC).

Beijing Water Enterprises Group was a further 11 per cent outright owned by SASAC, and another two per cent owned by China Yangtze Power Co Limited, itself 63.1 per cent owned by SASAC.

SASAC was created in 2003 as a "state asset watchdog to "directly supervise [China's] biggest industrial players", according to a June 2017 South China Morning Post article.

Rotorua mayor Steve Chadwick. Photo / File

On Wednesday, in response to Macpherson's comments, Chadwick said Macpherson had "an unsuccessful history of running off to the likes of the Auditor General, Ministers and now the Overseas Investment Office".

"It is an embarrassment and is damaging to Rotorua's reputation nationally so I can only assume it is designed to damage our reputation.

"Yet again, time and expense have been wasted by officials needing to respond to vexatious, frivolous accusations and factually incorrect claims that create concern and needlessly waste both ratepayer and taxpayer funding.

"Councillor Macpherson's assertions that myself and the chief executive have ties with the Chinese Communist Party, for instance, are untrue and completely absurd.

She said she had "no concerns about this matter".

"A very rigorous process was undertaken over several years, with expert advice sought and received throughout, so I did not expect there would be an investigation."

Council chief executive Geoff Williams said the OIO decision that an investigation was not warranted was "no surprise".

"[The] council was involved and informed throughout and very aware of the robustness of the process that was followed."

A Trility spokeswoman referred the Rotorua Daily Post to the council for comment.