Accusations fly over Saudi farm

Almost 1000 breeding ewes were air-freighted from New Zealand to the farm. Photo / File

Controversy about $12m spent on Mideast sheep venture boils over in Parliament.

A threat of legal action being used to partly justify nearly $12 million spent on a Saudi businessman's farm was clearly hollow, Labour says.

Controversy over the spending boiled over in Parliament yesterday with accusations of bribery.

Foreign Minister Murray McCully became increasingly combative in his question-time responses, blaming the previous Labour Government for the situation and labelling it the most "stupid and dishonest" in history.

The farm is owned by businessman Sheikh Hamood Al Ali Khalaf's Al-Khalaf Group, but is to be used to demonstrate Kiwi agribusiness.

Almost 1000 breeding ewes were air-freighted from New Zealand to the farm, which is still being completed.

The sheikh's Sydney-based business partner, George Assaf, has said the taxpayer-funded farm fit-out was to "compensate" the pair for NZ's ban on live sheep exports for slaughter.

The 2003 ban, implemented by the Labour Government and extended by National, had cost them hundreds of millions of dollars.

The fall-out was identified as a major obstacle to getting a regional free trade deal over the line. In defending itself this week, National has claimed another factor was at play - the Al-Khalaf Group indicating it could sue for up to $30 million.

Mr McCully said that even after the export ban the Saudis had been encouraged by Labour ministers to increase their investment in NZ, with the promise the trade issues would be resolved.

"Unfortunately the current Government inherited a serious problem in 2008." He said the relationship with the Saudi Government and the Gulf states had been poisoned, and the Government "was also exposed to a legal claim of up to $30 million".

NZ First leader Winston Peters said the payment was a "new low" and a "multimillion-dollar bribe".

Labour trade and export spokesman David Parker said the legal threat was clearly hollow. "No court claim had been filed. New Zealand's prohibition on the export of live sheep for export was extended by the National Government and is legal."

Last night One News said NZ Trade and Enterprise was considering helping Kiwi businesses set up similar farms in Africa and the Middle East.

NZ breeding sheep would be sent over, and the resulting lambs sent to Saudi Arabia for slaughter.