McCully 'should go' over Saudi farm deal

Murray McCully. Photo / UN, Kim Haughton

Foreign Minister Murray McCully should be removed from Cabinet over his handling of the Saudi farm deal, Labour says.

Labour leader Andrew Little has stepped-up his party's criticism of the Foreign Minister, who is currently overseas on an official tour of the Middle East.

"In my view, from the Cabinet paper that I've seen, he has misled Cabinet. I think John Key has to call Murray McCully in," Mr Little told media this morning.

"John Key has to set a standard here...Murray McCully should go. He has no place in that Cabinet."

Mr Little said a $4 million facilitation payment - part of around $11.5 million of taxpayer money spent on the Saudi demonstration farm - would be called a bribe in any other country.

Mr McCully strongly supported the spending on businessman Sheikh Hamood Al Ali Khalaf's farm in Saudi Arabia.

The private property would be used to demonstrate New Zealand agribusiness, Cabinet were told, before the deal was signed-off in February, 2013.

Other reasons given were that the deal would help clear the way for a stalled regional free trade deal, and that Mr Al Ali Khalaf had taken legal advice that indicated the Government could be exposed to a legal claim of up to $30 million.

Mr Al Ali Khalaf's Sydney-based business partner, George Assaf, has said the farm fit-out was done to "compensate" the pair for New Zealand'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 and the fallout was a reason for the stalled regional free trade agreement.

In fierce debate in Parliament last week, National pushed back by blaming Labour for antagonising Mr Al Ali Khalaf to the extent where the Government was potentially exposed to a big legal claim.

Labour has called the threat of legal action hollow, and Mr McCully has since confirmed the threat was not "live" at the time that Cabinet approved the deal.

Mr Key has previously expressed confidence in Mr McCully over his handling of the deal, saying whether a legal threat was "live" or not at the time Cabinet was told of the deal was not critical.

"Sometimes people say, 'I might take legal action'... sometimes what then happens is you try and find a way to resolve that issue, and therefore, because you are looking to resolve it, they put that legal action on hold. That's a pretty normal practice," Mr Key said last week.

The Green Party has asked the Auditor-General to investigate the Saudi farm deal, a request her office is yet to respond to.