Foreign Minister Murray McCully ought to stand aside while the Auditor-General conducts her inquiry into the Saudi sheep deal. It is already apparent, even from the heavily censored papers the Government has released, that this was a most irregular use of public money. At least, we hope it was: the idea that departments commonly have spare cash that can be spent without Treasury approval in this way does not bear thinking.

The Treasury, on its own initiative, examined Mr McCully's proposed investment and was not convinced of its benefits. The Audit Office at that time also took a look at the Cabinet's request, and found the business case "weak". The scheme to relocate a sheep breeding operation from New Zealand to Saudi Arabia went ahead for other reasons, which will come within the Auditor-General's inquiry this time.

It may be that using public money to appease a foreign investor aggrieved at a Government decision, and to do so in the hope this may clear an obstacle to a free trade agreement with his Government, is legitimate. The Prime Minister says none of the advice the Government received suggested it would be illegal. But Labour and other parties in Parliament clearly find it unacceptable and many among the public find it - at the least - uncomfortable.

In these circumstances, the right thing for Mr McCully to do is stand aside until questions about the propriety of what he has done are resolved. If his Foreign Minister will not do so of his own volition, John Key ought to require it, as he did a year ago with his then Justice Minister, Judith Collins. The precedent is not precisely similar, of course. They never are.


Mr Key did not know what Ms Collins had said or done about a former head of the Serious Fraud Office and needed to find out. In this instance, the Prime Minister knows exactly what Mr McCully has done and is comfortable with it. At least, he must be comfortable with it if he sees no need to suspend his minister until the Auditor-General issues her findings. An adverse report, therefore, will be awkward for him as well as the minister.

Mr Key rightly places a great deal of importance on free trade agreements. Saudi Arabia is the largest country in the Gulf Cooperation Council that comprises one of the wealthiest trading blocks in the world. If a well-connected Saudi investor's grievance of the live export ban was obstructing a free trade agreement, it makes sense to offer a settlement.

But the way it was done, two years ago, has left questions to answer. The New Zealand public knew nothing about it until the Prime Minister visited the Gulf this year. By that time it was too late for Mr McCully to make a convincing case this "agri-hub" held benefits for New Zealand. If the Government had honestly believed that two years ago, it would have publicised the venture proudly at that time. The fact it tried to keep it quiet carries its own comment. This is not the way New Zealand does business and not the way we expect governments to work. If the Auditor-General comes to the same conclusion, the minister must go.