Cayman Islands companies, a mining billionaire, a frontwoman with a chequered past, connections with Kiwi politicians - the Chinese bid for the Crafar dairy farms has everything but transparency, finds Karyn Scherer.
On the wall of Allan Crafar's brick farmhouse in almost alpine Reporoa is a giant map of the North Island, with little stickers all over it.
All up, there are nearly 30 markers scattered over the map - each representing a plot of rural land acquired by his family at some point over the past few decades.
That anyone would need such a large map to remind themselves exactly how many properties they owned, and exactly where they were, says a lot about the dairy boom, and the bank lending that helped fuel it, just before the global financial crisis delivered a shocking reality check to the entire Western world.
Some would say a reality check was long overdue for the Crafars, given all the hassles they have had with the authorities over environmental and animal welfare issues - but they haven't entirely lost their sense of humour.
Hanging on the wall right next to the map is a plaque with a cow on it, which seems to sum up the situation: "Welcome to udder madness", it declares.
The family still have a few loyal supporters, including one mysterious benefactor who has been sending them anonymous donations on a regular basis. But there is no doubt that the battle over their agricultural empire has hit a raw nerve in both rural and urban New Zealand, largely due to the fact that among those vying to take their farms off the receivers' hands are a strangely secretive group of Chinese investors.
The dairy industry was stunned by revelations that those investors had plans to spend up to $1.5 billion in New Zealand, buying farms and developing processing facilities to send huge quantities of UHT-treated milk back to Hong Kong and China, where it commands a premium price because of its reputation for safety and high quality.
The battle has reignited public debate on foreign ownership which could have been written off as nothing more than racist cant, except the Government is showing every sign of taking it seriously.
It has been hinting for a couple of weeks that the results of a review of foreign ownership laws was imminent - but this week revealed it has now been delayed for an unspecified period.
Given that the review was originally intended to make it easier, rather than harder, for foreign investors to spend their money here, it is a particularly interesting move for the National Party - and probably shows just how much the public mood is able to influence politics these days.
Part of the problem is that the assets in this case are dairy farms - the assets that currently provide more than a quarter of the foreign earnings that keep New Zealand's economy afloat.
As far as May Wang, frontperson for the Chinese bid, and her cohorts are concerned, it can't be easy having Fonterra - New Zealand's largest company by far - making unfriendly noises about your ambitions. But it also has to be said that Wang and her backers have been naive at best about the kind of scrutiny their plans were always likely to attract.
As a Herald investigation has revealed, that scrutiny has turned up connections to prominent New Zealand politicians, and some of China's wealthiest tycoons. Add to the mix a former head of news for TVNZ; a farming family who appear to come straight from the pages of Footrot Flats; investors owed tens of millions; banks owed hundreds of millions; investigations by regulatory authorities in New Zealand and China; and a prominent receivership firm with a reputation as one of the toughest in the business, and it's a wonder the saga has not gripped the nation even more than it already has.
One of the questions you often hear in relation to May Wang is why the Chinese group would choose her as their frontperson, given her troubled past with failed property developer Dynasty Group.
As one key player puts it: "If they are solid, sound people over in China, why the hell would they put May Wang up front? You can imagine they don't keep in close touch with New Zealand, and it may look quite trivial to them, but selling her proposal to investors - maybe they've not heard about the last lot of investors she did that to."
The reason, it would appear, is because the investors did not choose her - she chose them.
Wang was unable to be reached for comment for this article. However she has previously said she arrived in New Zealand more than 20 years ago, and became a citizen in the early 90s.
She has been described as a charming, confident and deeply religious person who is an active member of a Buddhist temple in Botany. A Herald article two years ago noted that she was known as the Dream Maker - someone who could sort accommodation, find property, even organise film industry work through her string of businesses.
However former real estate colleagues have spoken publicly about their frustration over the number of deals she was involved in that seemed to end unhappily, and the Herald talked to one bitter investor who claimed she had used "fraudulent" and "deceitful" methods in her property dealings.
Another claimed she had persuaded him to invest his life savings in a South Island film project, believing it to have backing from Hollywood, Bollywood and China.
The proposed $20 million, four-storey film studio stalled after a failure to get consents to build next to the Dynasty Methven Resort Hotel, which was co-owned by Wang.
At the time, the Serious Fraud Office confirmed it was keen to hear from anyone with further information. More recent articles have referred to ongoing investigations by Inland Revenue.
So far no charges have been laid by either organisation. However the Companies Office has filed three charges against Wang alleging breaches of the Companies Act, including a charge of failing to keep proper books and records, one of failing to provide information to a liquidator, and one of leaving New Zealand without advising the liquidator. Those charges are due to be heard on September 9.
In March Wang defended her chequered business history to the NZ Farmers Weekly, which with Investigate magazine, BusinessDay, and NBR, has done a commendable job of trying to shed some light on the Chinese proposal.
Wang told Farmers Weekly her Dynasty business partner, now-bankrupt builder Rob Reece, had simply "walked away from the business", and that she was trying to repay creditors from her own funds.
The following month, she again called for a fair go from the media. "I do not believe my previous business difficulties should be used against a project that will bring benefits to this country," she said in a statement.
An attempt this week by Wang's creditors, who are owed more than $20 million, to make her bankrupt as well was again deferred, with a hearing now rescheduled for November.
If Wang has indeed been the victim of some unfortunate associations, then that may also be true of her association with Jack Chen.
In April Chen told the Herald, through spokesman Bill Ralston, that it was Wang who hatched the original idea for the dairy business. However its execution had been largely his own work, and he had been "the driving force" behind it, he said.
Ralston's role as PR man for Natural Dairy, the Hong Kong company with whom Wang has struck a deal to onsell the Crafar farms, has been a curious adjustment for some. His new duties can perhaps be explained by a Listener column he wrote earlier this month all about his "bucket list". "Perhaps No 1 on the bucket list needs to be: 'Stop arsing about and make enough cash to enjoy yourself before you drop dead, penniless'," he wondered aloud.
The Herald approached Ralston last week to get Natural Dairy's side of the story. An interview was organised with Graham Chin, a former National Bank executive who replaced Chen on Natural Dairy's board last September. Chin cancelled the interview at the last minute.
Chen was also unable to be reached for comment. But in April Chen told the Herald he arrived in New Zealand in 2002 and was now a permanent resident. He claims to have an investment banking business in Hong Kong, and has also taken credit for identifying Hong Kong company China Jin Hui Mining as "ripe for a takeover".
Chen became its chief executive and co-chairman in June last year, changing its name to Natural Dairy. He resigned from the board after just three months, but remains a director of its NZ subsidiary.
According to Ralston, Chen is still an "investor", but a request for a clarification went unanswered. The only Chen shareholding the Herald has been able to identify in relation to Natural Dairy is a large parcel apparently owned by Hu Haiwen, who is a manager in a Chen family business, Global Food. The business was bought by Natural Dairy last November for $HK26 million ($4.6 million), plus an licensing deal for 26 milk and beverage trademarks. Graham Chin was Global Food's major shareholder, but it was said he was holding the shares in trust for Chen's wife, who was chairman of the company.
Chen was also an original investor in a New Zealand company he set up with Wang two years ago, known as UBNZ Funds Management. The company Chen used for that investment has since been warned it is in danger of being struck off because its annual return is overdue.
Complaints made to the Hong Kong Stock Exchange (HKSE) allege that Chen is still the driving force behind Natural Dairy's plans. Some in Auckland's Chinese community also believe that is the case. If true, it begs the question of why he decided to resign from the board.
Some believe it is because Chen was found guilty of "serious breaches" of securities regulations by the Chinese authorities in 2004, which could tarnish Natural Dairy's hopes of raising enough money to fund its plans.
In a statement to the HKSE, Natural Dairy admitted Chen had been a given a warning, fined, and prohibited from holding any senior management position in any listed company in mainland China for three years for "making misrepresentations in its annual reports" and "failing to timely disclose material contracts" when he was chairman of a company called Shenlong Development.
Natural Dairy noted the disqualification had since expired, and insisted Chen was a person "of good character and integrity, which should not be dogmatically disregarded because of a single incident."
An Auckland academic who has written papers on China's securities market says China was trying to crack down on cowboy sharemarket behaviour at the time, as it was poised to enter the World Trading Organisation. Professor Henk Berkman even cited Shenlong Development in one of his papers, which examined related party lending in Chinese public companies.
Shenlong Development was originally known as Fujian Province Union Company. It listed on the Shanghai Stock Exchange in 1993 and Chen was its chairman from the end of 1998 until March 2002. Two months before he resigned, it changed its name to Shenlong Development. The company, which has been through various guises, including as a diversified manufacturing business, has since been delisted and now produces rice wine.
Interestingly, Chen's wife is listed as a director and shareholder of a New Zealand company called NZ Shenlong International Group Invest Co, which was first registered in September 2002. The company ceased to exist in March 2004.
Some people suspect that Chen may be one of the four New Zealand investors that Natural Dairy's lawyers, Knight Coldicutt, claimed earlier this year were backing May Wang - but who wished to remain anonymous.
The way the deal has been set up is extremely complicated, but Companies Office records show Wang originally had four investors in a company called UBS Funds Management. Wang had 40 per cent, Jack Chen 30 per cent, Anna Zhang 12 per cent, Nancy Liu 12 per cent and Xiao Ye 6 per cent.
The company changed its name to UBNZ Funds Management after giant Swiss investment bank UBS initiated legal action over its choice of moniker (Wang also had a company called Credit Swiss Funds Management - remarkably similar to another Swiss investment bank, Credit Suisse).
Two months after Jack Chen resigned from Natural Dairy, the shareholding in UBNZ Funds Management changed. This time, May Wang had 15 per cent and three Cayman Islands companies had the rest: Quality Index (40 per cent), Wonder Effort (30 per cent), and Progress Great (15 per cent). It is not possible for the public to verify who owns Cayman Islands companies. However one possible conclusion is that they could be linked to Jack Chen, Anna Zhang and Nancy Liu - all of whom appear to have been key members of an Auckland group known as the Chinese Business Roundtable Council (CBRC).
Why New Zealanders would use Cayman Islands companies is a mystery, given that any income from them is still required to be declared here. One benefit of owning a Cayman Islands company is that it obscures your identity.
In January this year, the shareholding of UBNZ Funds Management was changed again - this time the shares were all put into Wang's name. Wang has insisted there are no other people involved in the company. However, the fact that the shares are still effectively in four parcels, in the same proportions as they were previously, may indicate she is simply holding them in trust for other people - which is not unusual in China.
Natural Dairy's official explanation for Chen's resignation last year was because of his "personal commitment and his future intention of pursuing a political career". Local Chinese believe he is behind plans for a New Citizens' Party, which is rumoured to be keen to contest October's local body elections in Auckland.
Despite the fact that he spearheaded the CBRC, Chen has a low profile locally. In fact the CBRC appears to have been recently disbanded, or at least downgraded. Its Queen St office, which is owned by one of May Wang's companies, now houses a Chinese newspaper called the United Daily News. The newspaper is believed to be owned by a company called NZND Media, which is in turn owned by the New Zealand subsidiary of Natural Dairy.
The sole director of NZND Media is Avondale resident Eric Yee, photos of whom also feature prominently on the CBRC website. Yee is also a director of three New Zealand companies with Graham Chin. The pair replaced Jack Chen's wife as directors of all three companies in July last year.
The current chairman of Natural Dairy, investment banker Yip Kean Mun, is also listed on CBRC's website as a director of its investment arm.
Chinese businessman Bill Liu used to be listed as an adviser, but his name no longer appears. Liu, whose real name is Yong Ming Yan, pleaded not guilty in April to 12 charges relating to false declarations on immigration papers and using fake identities to obtain a passport.
Yan is considered to be a political opponent of the Chinese Government and is wanted in his homeland for an alleged fraud of several million dollars. The charges were embarrassing for several Labour MPs who helped him get New Zealand citizenship.
The CBRC has several other links to the Labour Party. Labour leader Phil Goff is patron of the organisation, and Labour MP Raymond Huo is listed as being on CBRC's board, with Chen, Liu and Zhang.
Huo is a former Herald journalist and when the Herald phoned him last week to discuss Natural Dairy's plans and the people behind it, he initially agreed, saying "I know all of them well". He later changed his mind, then promised to call back, but didn't do so.
Wang appears in several photographs on the CBRC website. Chen also appears with various politicians, including Prime Minister John Key, and there is also a photograph of Rodney Hide, taken at a function at what appears to be Bill Liu's restaurant.
But Chen's initial contact with key political figures in New Zealand appears to have been with former National Prime Minister Jenny Shipley. In 2004 he, Shipley and Sammy Wong founded a company together called New Zealand Pure & Natural. Chen quit as a director a year later, but according to Companies Office records, he continued to be a shareholder until just four weeks ago.
Property records show further links between Wang and Chen. Wang's former $5.6 million home in St Heliers was until recently owned by one of Chen's companies. Wang appears to have moved several times in the past year, and gives her most recent address as an apartment in Quay West.
The close links between Chen, Chin and Wang are important, as they could point to who is really controlling Natural Dairy and/or UBNZ.
Last month Natural Dairy announced a HK$77 million loss for the March year. Although this is an improvement on its HK$203 million loss the previous year, there still seems to be some confusion over exactly what mining assets it owns, and its food business is small.
It announced last year that it hoped to raise most of the money for its further expansion in New Zealand through convertible bonds.
A division of the China Construction Bank - China's third largest bank, which includes Jenny Shipley on its board - has agreed to subscribe to a portion of these, and has an option to subscribe to more if it wishes.
Natural Dairy has agreed to buy out UBNZ for $500 million, and has already handed over $100 million of that. The rest of the money it will need for the Crafar farms appears to be coming from a $100 million loan from Westpac, as the original lender to the farms (KordaMentha told the High Court last month this was not strictly correct).
Another $50 million appears to be coming from redeemable preference shares issued by Natural Dairy and the investors backing Wang.
However questions have been raised as to why Natural Dairy has valued UBNZ at $500 million, when UBNZ has agreed to pay only $213 million, plus stock and valuation, for the Crafar farms. It has also been noted that the market value of the properties has fallen significantly since the original deal was struck.
In a statement to the HKSE, Natural Dairy said it was not privy to the price UBNZ agreed to pay for the farms, which was "commercially sensitive". However the price has since been confirmed in High Court documents.
To help quell concerns about the price, Natural Dairy has agreed to a price adjustment mechanism, based on new valuations. There will also be significant pressure on Wang to ensure the New Zealand business makes money. As part of the financing of the deal, UBNZ must make a profit of more than $35 million by a specified date, or it will have to pay 80 per cent of the shortfall "multiplied by 14 times".
While Wang has struggled to come up with more than 6c in the dollar for her own creditors, UBNZ has been scouring the country for further investments.
It is believed to have engaged at least one agent in the South Island, and there has been talk of it eventually acquiring 100 farms in Otago and Southland. Carter Holt Harvey's converted dairy farms near Tokoroa were also on its list.
Shunned by independent milk processors, who have told UBNZ they have no extra capacity, the company has also been hunting for potential sites for its own factories.
In March it was reported to be in advanced talks with the Far North District Council and local farmers about plans for a milk treatment plant near Kerikeri. One farmer confirmed he planned to sell to Wang; another said UBNZ "are buying a lot more than we know".
At the end of June, UBNZ was revealed as the investor behind a last-ditch bid to save cash-strapped biotech company Genesis Research & Development.
Its investment of nearly half a million dollars has bought it a 16.3 per cent slice of Genesis, and it has apparently indicated it is keen to increase its stake. Although Genesis' main area of research has been in immune disorders and cancer in humans, the company has said it will probably refocus on agricultural biotech.
On July 9, Natural Dairy also announced to the HKSE that it had leased a processing plant in Tauranga. Speculation has centred on a small bottling plant in Maleme St.
Because of its effective monopoly, Fonterra is required by law to supply up to 600 million litres of raw milk to its competitors, and Natural Dairy has confirmed it will be relying heavily on that supply until it buys more farms.
However all its plans appear to hinge on whether the Overseas Investment Office (OIO) gives it the green light.
In May Agriculture Minister David Carter suggested at a regional party conference that he thought that was unlikely. The comment was embarrassing for the Government, given that its Ministers have the power to veto the deal, and Graham Chin reacted angrily, questioning whether Natural Dairy was being treated fairly.
Chin has insisted New Zealanders have nothing to fear from the company, and that its plans will help create dozens of jobs and provide a significant boost to the dairy industry.
However OIO staff have dropped heavy hints about their concerns.
It has been reported that an email from an OIO lawyer to the Government, obtained under the Official Information Act, warned the case was likely to cause "some rather complex and serious issues" for the office.
In March OIO manager Annelies McClure was quoted by Farmers Weekly as saying Wang's business history was "not consistent with an ability to fund purchases of this size". It has also been noted that applicants are required to be of "good character".
High Court documents show McClure told the court last month she had "cause to doubt" that Wang and her partners had made full and accurate disclosure of "critical elements" of their application.
She also revealed the office was investigating eight suspected breaches of the Overseas Investment Act by Wang and her partners.
UBNZ has argued that because Wang is a New Zealand citizen, it shouldn't even have to go through the OIO process. The OIO is believed to be concerned about the amount of time Wang has spent out of the country. But in any case, the High Court has ruled that Natural Dairy already effectively controls UBNZ and therefore it will need permission. UBNZ and Natural Dairy are appealing the decision.
While UBNZ has already bought four Crafar farms, it is possible even that deal could be overturned. It recently applied for retrospective approval from the OIO, but if the OIO turns it down, or it decides that UBNZ has broken the law, then the OIO can ask the courts to have the farms resold.
While Allan Crafar has not yet given up hope of raising the money himself to buy back the farms that have been placed in receivership, even he concedes his situation is like "pulling a bull out of a bog". At last count the banks were owed around $216 million, he says, with penalty interest accruing at 16 per cent.
Meanwhile, the receivers are still in talks with other buyers. Much of the speculation so far has centred on State-owned Landcorp, which already owns more than 100 farms around New Zealand.
Landcorp has made a joint bid with Wairakei Pastoral for 16 farms, and has admitted they would fit well with some of its other properties. But it also insists the properties would need many millions more pumped into them to make them commercially viable - on top of the millions that have already been spent by the receivers.
So far, KordaMentha has made a point of mentioning that it is not even considering Landcorp's offer - but it's possible that could simply be brinkmanship.
Landcorp chairman Jim Sutton says the farming community is a small one, and he has not heard about any other bidders doing proper due diligence on the entire portfolio.
"We can't, under our governing act, make investments that are not commercially sound, so our pricing has had to reflect what we think on a reasonably conservative and cautious basis what we think is a sound investment - and frankly that's not the basis on what most farms have been sold in New Zealand in the last 50 years."
KordaMentha may believe it can make more money for the banks by selling off the properties in smaller lots. According to Sutton that's a risky strategy, as it could leave some farms unsold. "It's not surprising if our bid didn't compete with May Wang's, but there are properties there that have got problems that would make them pretty hard to sell on their own."
Talk on the real estate grapevine is that the receivers are in fact negotiating a deal with other credible buyers.
If so, then they must be made of the same sort of steel and have the same sort of patience as Wang and her business partners. According to Farmers Weekly, the tender documents make it clear that many of the normal legal safeguards that protect buyers in property transactions do not apply in this case.
Whether it will be a case of buyer beware - or beware of the buyer - remains to be seen.
