Foreign Minister Murray McCully asked when the first boatload of sheep could be sent to Saudi Arabia for slaughter - then later agreed to instead pay a "capital contribution" to a businessman.

Documents also reveal a briefing from NZ Trade and Enterprise (NZTE) warned ministers about sending breeding sheep to Saudi in the latter half of 2014.

The Al Khalaf Group had pushed for a shipment of 50,000 sheep to be exported by sea within the 2014 year.

This raised concerns about temperatures on board ships in the Gulf, and November being "well outside the mating window for New Zealand ewes and performance of the breeding animals is likely to be significantly degraded".


NZTE suggested an alternative of a smaller airfreight shipment - an option which was later adopted by the Government, with 900 pregnant ewes flown over.

Prime Minister John Key was instructed to say the animals arrived safe and healthy, despite some ewes and a majority of the lambs subsequently born dying.

Mr McCully has come under pressure over the deal he set-up, which saw $11.5 million spent on Saudi businessman Hmood Al Khalaf's private farm in Saudi Arabia.

Opposition parties have said $4 million paid to Mr Al Khalaf was a bribe, to clear away Saudi ill-feeling and ensure a regional free trade deal could be signed.

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.

However, documents released this afternoon outline the extent to which National itself considered reversing the ban on live animal exports for slaughter, before ultimately extending the ban.

In May 21, 2010, Mr Al Khalaf wrote to Mr Key, and a subsequent email from an official in Riyadh said resolution of the issue was viewed as a "litmus test" in the relationship, and was being watched "at the highest levels of Government (possibly even the King and Crown Prince)".


The letter to Mr Key - not released but summarised in the email - noted an increasing sense of injustice and frustration, of "being stringed along for 7 years...of watching goal posts being moved regularly".

In a September 13, 2010 email, an official recounts a conversation with Mr McCully where the Minister requested "an outline of the steps required to resume the trade", and had additional questions, including if a first shipment could be made for Hajj in 2012.

However, National went on to roll over the ban on exports, and, according to papers, in 2011 then foreign affairs secretary John Allen was approached by lawyer Mai Chen suggesting he meet with Mr Al Khalaf and his associates.

In November 2012, Mr Al Khalaf wrote to Mr McCully to agree to "your offer of a capital contribution and a contribution for investment in research and development, as outlined in your letter of 12 November 2012".

The deal was signed off by Cabinet in February 2013.

Mr Al Khalaf's business partner was told, "for your invoice of $4 million please state that it is for services set out under the contract".


Auditor-General Lyn Provost reviewed the deal, at the request of Cabinet.

Her office judged an initial business case to be "weak", and later stressed its involvement had to be limited.

The documents, which were released after enquiries from the Ombudsman following complaints from the Herald and others regarding the treatment of Official Information Act requests, show that there were concerns about the deaths of lambs becoming public.

In December MFAT's acting director of the Middle East and Africa Division Jeff Langley reported that many of the newborn lambs were dying and it was important that the supplier Brownrigg Agriculture became involved to "manage their (and our) reputational risk".

Officials were clearly concerned the deaths would be made public.

Mr Langley told officials MFAT would produce some "defensive points" on the matter "in the unlikely eventuality that the situation...gets some public profile".


In earlier emails, officials also expressed concerns about the death of 174 Australian sheep on a Singapore Airlines flight - the same carrier that was set to take the New Zealand ewes a few weeks later.


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.