Documents obtained by Radio New Zealand have now confirmed that MFAT "did not seek or provide advice on the extent of the risk of a claim in the New Zealand courts for compensation from the Al Khalaf Group against the government".
The documents were released following discussion with Chief Ombudsman Peter Boshier.
Opposition parties have long argued that there was never a realistic threat of legal action and it has been used by the Government as justification for the deal.
An investigation by Auditor-General Lyn Provost into the Saudi sheep deal also found no evidence that MFAT sought or received advice on any legal threat.
In a report released last year, she said her office "saw no evidence of internal or external advice being sought on the extent of the risk of a claim for compensation from the Al Khalaf Group".
Provost's report concluded that the deal was not corrupt but that it had "significant shortcomings".
"Public money was spent within the necessary financial approvals. That said, I share many New Zealanders' concerns about the arrangements," she said.
The $11.5 million in Government money was spent on sending New Zealand sheep and equipment to Al Khalaf's farm in Saudi Arabia.
That included $6 million spent on establishing the farm, including equipment and technology, and a $4 million payment to the Al Khalaf Group.
A key motivation for the Government for the deal was to help progress a free trade deal with the Gulf states.
Labour MP David Parker said the documents confirmed the National Government had squandered millions of dollars and misled the public and Parliament.
"They've wasted $11.5 million. They've flown sheep to the other side of the world.
They've clearly lost their moral compass," Parker said.
He said the Government had spent the past two years fighting to block the release of documents which showed they had not told the truth.
