The Overseas Investment Office (OIO) is continuing to look at whether UBNZ Funds Management Ltd, directed by Chinese busineswoman May Wang, breached the Overseas Investment Act 2005 by not obtaining required consents for the purchase of two farms on February 11, 2010, at Norsewood in southern Hawke’s Bay and Waitotara in south Taranaki, and two others four days later in the Manawatu. Once the four ex-Crafter farms had been purchased from the receiver, they were transferred to UBNZ Assets Holdings Ltd. UBNZ Assets Holdings is 80% owned by the New Zealand-based UBNZ Trustee Ltd (the latter directed and owned by May Wang), and 20% owned by Hong Kong-based Natural Dairy (NZ) Holdings, which is registered in the Cayman Islands.
May Wang – who has been fronting Natural Dairy’s deal to buy all 16 of the Crafar farms – has previously said that because she is New Zealand citizen and Natural Dairy only has a 20% stake in UBNZ Assets Holdings – less than the 25% trigger point for an OIO application – the purchase of the four Crafar farms completely conformed with the Overseas Investment Act (OIA).
However, the Act makes it illegal for “an associate of an overseas person” to be sell property to the overseas entity – Natural Dairy being the overseas Person in this case – without first getting OIO approval.
UBNZ Funds Management Ltd is clearly an associate of Natural Dairy as defined under section 8 of the Overseas Investment Act.
May Wang, in trying to justify her companies clear breach of the OIA relies on the wrong section of the OIA, namely s. 7(2)(b). It defines “overseas person” as including —
7. (b) a body corporate that is incorporated outside New Zealand or is a 25% or more subsidiary of a body corporate incorporated outside New Zealand; ….
Using this definition she rightly points out that Assets Holdings UBNZ is not an “overseas person”. But this misses the point and she knows it.
She chooses to ignore section 8 of the OIA which is the relevant section. UBNZ qualifies as an “associate person” to the “overseas person” (Natural Dairy). It is disingenuous for Wang to claim repeatedly she has “nothing to hide” when all along she breached the OIA by failing to formally notify the OIO that UBNZ Assets Holding Ltd was as associate of Natural Dairy and gain approval for the purchases of the four Crafar farms.
As OIO manager Annelies McClure has stated: “It is an offence for an overseas person or an associate of an overseas person to buy sensitive land without consent and significant penalties apply”.
Now that the remaining 12 Crafar farms have been sold by the receiver for $213.2m to UBNZ Funds Management, pending OIO approval, the OIO, in view of the serious breaches of the OIA involved in UBNZ’s earlier transactions, will have to block the sale to UBNZ.
Interestingly, the OIO received a retrospective application from UBNZ to buy the farms in mid-August, despite the farms being bought in mid-February
Even if OIO grants retrospective to UBNZ for the initial purchase of the four Crafar farms, which looks highly unlikely, the OIO will still be duty bound to prosecute the offending company if its role as an enforcement agency is to remain at all credible.
Furthermore, similar breaches of the OIA by NZ registered companies involving the sale of multi-million dollar “sensitive land” to overseas persons or associates, cannot be ignored. It was parliament’s clear intention in the OIA that such offending should be dealt with in the courts and that judges impose apropriate sentences uon conviction of offending persons.
Sources NZPA reports, including:
We have nothing to hide – Crafar bidder. October 22, 2010 NZPA