Bernard Hickey: Should May Wang be allowed to buy NZ's dairy farms?

May Wang can say to Chinese investors that New Zealand produces clean, green milk. Photo / Paul Estcourt

The Crafar Farms debacle is back with a vengeance. It has emerged in the last 48 hours that Chinese-New Zealand citizen May Wang and her Chinese/Hong Kong backers have bought 4 farms from Robert Crafer and are about to buy a further 24 farms from his father Allan Crafar, the dirty dairy farmer from the central North Island who borrowed his way into receivership.

Wang aims to raise enough money from investors in China to spend NZ$1.5 billion in New Zealand on farms, factories and infrastructure to manufacture baby formula and/or tetrapak milk for the Chinese market.

Wang has no experience in dairying, but has spied an opportunity to sell an attractive story (Clean, Green NZ milk for the monster Chinese market) to cashed up Chinese investors and hope to pocket a cut along the way. She has yet to obtain Overseas Investment Office approval for any of these deals.

May Wang has a colourful past involving failed businesses here, litigious creditors and alleged infringements of the Companies Act. UBS sued her several years ago after she launched a funds management company called UBS NZ. She has since changed the name to UBNZ. Creditors have been on her tail for various monies owed.

A spokeswoman for the Ministry of Economic Development's Companies Office has told Interest.co.nz that Wang was charged in the Auckland District Court some time ago with infringements under the Companies Act relating to obligations with liquidated companies.

She did not appear because she was overseas and Wang has now applied for an adjournment until after April 27.

She has pulled in Auckland law firm Knight Coldicutt, Sir Ralph (Ngatata) Love and former TVNZ Head of News Bill Ralston to help give the whole plan some shape and (more positive) public profile in New Zealand.

This is the inevitable consequence of over-leveraging in the pursuit of capital gains. Now the banks are dumping the worst offenders and it has encouraged an opportunistic bunch of middlemen (and woman) to funnel easy, cheap foreign cash (in China and the Middle East) through into these farms.

It is an easy sell for May Wang because she can say to Chinese investors who are now cashed up from the lending-driven real estate boom in China over the last year that New Zealand produces clean, green milk (from the Crafar farms no less…) that Chinese consumers will buy.

The irony is the kerfuffle around San Lu's melamine poisoning scandal in china is that Fonterra and New Zealand came out smelling of strawberries and cream because they (via Helen Clark) blew the whistle on the poisoners.

We are effectively seeing a credit-fueled real estate boom in China spilling over onto our shores at a time when our Australian-owned banks are rightly losing patience with recidivist defaulters such as Allan Crafar and Bob McVitty.

See more here on McVitty and see more here on the Crafar Farms' animal abuse scandal that was broken by Interest.co.nz.

Talk of May Wang's involvement has been brewing since September. See more here.

The danger here is that Wang pockets plenty of fees on the way though, the end investors get very grumpy and the actual investment in new processing plant implodes. There is also little expertise to actually improve the management and production on these farms. The intention is to install or retain sharemilkers or farm managers.

Will they be any better than the Crafars? Or will they be the Crafars themselves as managers rather than owners? That itself may be a bad thing for our 'clean, green' image.

This all comes back to the issue of sovereignty. Who do we want owning and profiting from these farms? Where will the final decisions be taken about the long term future of the industry? Does foreign ownership actually improve incomes here?

The fear with these particular buyers is that opportunism and easy credit-fueled cash could cause more trouble than it's worth. Now it's time for the OIO, and ultimately the Government, to examine the legitimacy of the buyers.

Now it's also time for New Zealanders to face the deep and long term truth: we exchanged future sovereignty for short term capital gains through a credit-fueled frenzy. Now this deal with the devil is coming home to roost. We have no one to blame but ourselves.