"We have managed to bring it to an end, saving the last million dollars or so. But I'm afraid the other $10 million that has already been spent has been flushed down the drain by the prior Government."
It means that a $2.5m kitset abattoir, which is in the Hawke's Bay and was intended for the hub, will no longer be sent overseas.
About $1.17m had been identified for abattoir delivery and installation.
The then-National Government had paid about $10m, including a $4m payment to Al Khalaf, for the deal.
Opposition parties at the time called it a bribe to set up a free trade agreement.
The deal was made partly as an effort to secure a free-trade deal with the Gulf States.
Al Khalaf had lost millions of dollars after New Zealand banned live sheep exports for slaughter over animal welfare concerns in 2003, and ill-feeling over his treatment was identified as an obstacle to an FTA progressing.
Former Foreign Minister Murray McCully also said there was a risk Al Khalaf could take legal action. As a result, the deal saw a $4m facilitation payment made to the Al Khalaf Group, and a further $6.5m allocated to create a farm on his land.
The Auditor-General criticised the deal, but found no evidence of corruption or bribery.
Progress on a free trade agreement with the Gulf countries has stalled after fallout with Qatar.
