In response, Mr McCully angrily blamed Labour for misleading Mr Al Khalaf about the possibility that sheep exports for slaughter could resume, to the extent that the Government faced a legal threat of up to $30 million.
He said the farm deal was a way to diffuse that and ensure a free trade deal could be signed, and the farm would also act as a demonstration base for Kiwi agri-business.
Documents relating to the deal have now been released - albeit with redactions - after appeals to the Ombudsman from the Herald and others.
They show that staff at the Treasury flagged concerns to Finance Minister Bill English.
A briefing from February 2012 notes that "it is unclear what the benefits or this proposal are or what the potential costs are (e.g impact on other trade partners)".
"Treasury was not consulted on the paper, despite it having financial implications...Treasury does not have sufficient information to assess the value of this new expenditure...on this basis we recommend not supporting this proposal."
In another briefing paper a year later, officials again said they could not support the proposal, with their greatest concerns including that, "the details of the spending (who is being paid to deliver what) are still unclear".
It remained unclear what the benefits to New Zealand companies involved in the agri-hub would be, Treasury said.
After the deal was approved by Cabinet in February 2013, Treasury again voiced concerns in a briefing paper to Mr English, including that it was not consulted on the paper sent to Cabinet, and that "it was not clear from the paper what the $10 million committed is being used to purchase".
Cabinet instructed the Ministry of Foreign Affairs and Trade to work with the Treasury on the execution and management of the contract.
In December, 2013 an official emailed MFAT to say Treasury was "generally comfortable" with the business case, but, once the farm was up and running, an official in February protested that Treasury had been thus far excluded from governance group meetings. That situation was rectified.
Auditor-General Lyn Provost also reviewed the deal, at the request of Cabinet.
Her office judged an initial business case to be "weak", and distanced itself from the deal, stressing its involvement had to be limited.
Mr McCully had asked when the first boatload of sheep could be sent to Saudi Arabia for slaughter, papers show, but after the ban on the trade was extended in 2010, he then later agreed to pay a "capital contribution" to Mr Al Khalaf.
Speaking from Rarotonga, Prime Minister John Key stood by his assertion that Labour was "totally responsible" for the Saudi anger around live sheep exports.
"It is always going to be a he said, she said type argument. But it's pretty clear where this issue started."
The Saudi farm: Timeline of a deal
• In 2003, publicity around the treatment of live-sheep exports led to a voluntary moratorium.
• In 2007, the Labour Government banned the export of live animals for slaughter.
• In 2009, Agriculture Minister David Carter began negotiations with Saudi Arabia for a resumption of live-sheep exports.
• In 2010, the National Government extended the ban.
• February 2013, the Cabinet approved a proposal by Foreign Minister Murray McCully to pay $4 million to Mr Hmood Al Khalaf's business to secure it to run an agri-hub to promote New Zealand agriculture in Saudi Arabia and as a settlement of a long-running dispute over the ban on live-sheep exports, and $6 million to be paid to NZ businesses to deliver their services and help set-up the Saudi farm.
The Government also paid $1.5 million for 900 pregnant Awassi breeding ewes of Mr Al Khalaf's to be flown to the Saudi farm.
• May, 2015, after media reports on the deal, Mr McCully's office releases Cabinet papers that reveal the full cost of the deal, including the $4 million "facilitation payment" to Mr Al Khalaf. Previously, only the $6 million figure had been released.
• June, 2015, it is confirmed that lambs born on the Saudi farm suffered an extremely high death rate. The Government initially said a sand storm could be to blame, before Brownrigg Agriculture - a Hawkes Bay company that advocated on behalf of Mr Al Khalaf and later won a tender to set-up the farm - pointed to heavy rain and illnesses.
