Ex-Ombudsman to handle residency row inquiry

MP John Hayes

Former Ombudsman Mel Smith will inquire into the actions of a public servant who allegedly helped National MP John Hayes get a woman to invest in a venture in the hope she would get residency in return.

The Ministry of Foreign Affairs and Trade released the details of Mr Smith's appointment to the Herald yesterday, saying it expected the investigation to be over by February.

It would examine whether the unnamed employee had breached the ministry's code of conduct, a spokesman said.

Mr Smith has recently retired as the Ombudsman and released a scathing report on the Immigration Service after the lie-in-unison scandal.

Foreign Affairs Minister Winston Peters asked the ministry to conduct an investigation when the residency story broke last month.

Because Mr Hayes no longer works at the ministry, he cannot be investigated by it, but any negative findings could impact on him.

The Sunday Star-Times said Kyoko Arai entered a retirement village venture with Mr Hayes, now the Wairarapa MP, in 2002 when he was the head of the Ministry of Foreign Affairs and Trade's South Pacific division.

Ms Arai said she had invested $600,000 into the Greytown village The Totaras after being told by senior ministry officials it would allow her to gain residency.

Mr Hayes said then he knew she wanted residency and supported her doing so, but made it "absolutely clear" that as a public servant he could do nothing to help her gain it.

Ms Arai said then that one of Mr Hayes' colleagues had helped her fill out the Totara contract.

He later took her to an immigration consultant, where she was told a law change meant she was not eligible for residency.

Ms Arai claimed last month she had repeatedly tried to get her money out of the venture, but Mr Hayes said he had repeatedly tried to buy her out and was still trying.

"I am quite confident that I'm within the law and have operated within the law."

He also said: "I am working through a process which I hope will result in that happening."

But he appeared unwilling to defend his former colleague. Asked if he had concerns about the person being subject to an inquiry, Mr Hayes said "no".