Failed 'good character' test scuttles Crafar farms deal

May Wang. Photo / Greg Bowker

The Chinese company wanting to buy 16 Crafar farms for $200 million has been turned down by the Government because its directors and frontwoman May Wang failed a "good character" test.

Hong Kong company Natural Dairy and its sister company, New Zealand-based UBNZ Asset Holdings, had their application declined yesterday by Cabinet ministers Maurice Williamson and Kate Wilkinson.

They were acting on Overseas Investment Office recommendations.

OIO approval is needed when any foreign company bids for sensitive New Zealand assets such as farmland.

The OIO said it considered the UBNZ group of companies - including UBNZ Trustee and UBNZ Funds Management - to be associates of Natural Dairy, so approval was needed before they could buy the farms.

OIO manager Annelies McClure said the ministers had to be satisfied that the individuals involved in the deal were persons of "good character."

"The ministers were not satisfied that all the individuals with control of Natural Dairy were of good character."

Ms Wang, a UBNZ director and frontwoman for the Crafar deal, was bankrupted by the High Court at Auckland this month over a $22 million debt.

The bankruptcy was another nail in the coffin for the deal.

The sale and purchase transactions between Natural Dairy and UBNZ Asset Holdings, of which it owns 20 per cent, are being investigated by the Serious Fraud Office.

UBNZ Asset Holdings was going to buy the 16 farms for Natural Dairy and then the remaining 80 per cent of the company.

The OIO said it believed the directors' "good character" could be affected by the SFO investigation.

Ms Wang is also facing Companies Office charges over her property company Dynasty Group, which collapsed owing investors millions.

"The OIO considered that the charges Ms Wang currently faces and the possibility of further charges cast doubt on her good character," the OIO said in a statement.

UBNZ bought four Crafar farms this year. Those properties and the pending 16 were to be bought by Natural Dairy.

The OIO will decide what will happen with those four farms, as consent for this purchase was also declined.

One option is to apply to the High Court to have them sold.

It was revealed during the bankruptcy hearing for Ms Wang that the farms were receiving income from Fonterra, but had not declared the money to Inland Revenue despite claiming $24 million in GST refunds.

Natural Dairy spokesman Bill Ralston did not know the deal had fallen through until the Herald called last night.

He said he could not comment until he had read the ministers' report and spoken to Natural Dairy officials in Hong Kong.

Landcorp chief executive Chris Kelly told the Herald this month that the state-owned agency was still interested in buying the farms but had not been in conduct with receiver KordaMentha since it turned its offer down.

Green Party co-leader Russel Norman said New Zealand was lucky the Government could turn down the bid based on a good character test.

The Green Party opposes sales of farmland other than small lifestyle blocks to overseas investors.

Dr Norman warned that there would be future applications where the Government would not be able to turn down a bid based on character and said the rules needed to be tightened "if we're serious about maintaining New Zealand ownership of farmland".