Just as this issue was being completed, the Minister of Finance, Bill English, released the first of the recommendations of the review of the Government’s overseas investment regime (changes to the actual Overseas Investment Act will be announced later. A more detailed analysis will be in the next issue). Utterly predictably, they focus obsessively on liberalising what paltry “oversight” there is left in that regime, because apparently it’s just too hard for the poor old foreign investors who are all busting their guts to come here and save little old NZ.

Laughably, one of English’s first big ideas is to delegate even more of the decisions to the Overseas Investment Office (OIO), which already approves 98% of them. This can be best be described as the asleep at the wheel policy, removing the necessary political input by the relevant Ministers charged with acting in the national interest (as opposed to National’s interest). CAFCA has always said that the OIO’s job could be done by a monkey with a rubber stamp. It sees its role as a doorman, not a bouncer. It is not a neutral administrator but an active advocate for the transnational corporations and foreign land buyers which it defines as its clients (not the people of New Zealand, for whom it nominally works).

If Ministers had not chosen to do their jobs and left it up to the OIO, Auckland Airport would now be foreign-owned. The OIO was happy to approve that, it took the Government to act in the national interest and veto the sale. Another recent high profile example was Brierley’s attempt to sell its Sealord stake overseas, at the beginning of the Labour government. The then Overseas Investment Commission (OIC) was all in favour; the Government vetoed it. CAFCA got the whole file on the subject from the OIC and it is a textbook case of just what is wrong with leaving it all in the hands of the rubber stampers. The OIC went to extraordinary lengths to try to twist the Government’s arm to approve the sale. For example, when relevant Ministries recommended that prospective foreign buyers be refused because they failed the “not of good character” condition in the Overseas Investment Act, the OIC urged the Government to ignore and/or override that. There were many such examples in the file.

It is all detailed in “Sealord Sale: OIC Exposed” by Bill Rosenberg in Watchdog 95, December 2000, http://www.converge.org.nz/watchdog/95/8sealo.htm One quote will suffice: ”The OIC had become a conduit of commercial pressure on the Ministers; the quasi-judicial façade it had tried to construct in analysing the decisions and recommending their approval had disappeared and they were acting as lobbyists for the companies”. And that’s what the OIO remains today – lobbyists for the companies. Obviously, the Government is happy to not even pretend to do its job in relation to foreign investment.

Bill Rosenberg , in his current capacity as the Economist and Policy Director for the Council of Trade Unions, said that “this would be an extraordinary time to loosen the already fragile oversight of overseas investment. Dividends and other income from foreign direct investment in New Zealand contributed $7.9 billion to the current account deficit in the year to March…. At this time we should be aiming to be more strategic and clever about the overseas investment we accept, rather than less so” (CTU press release, 23/7/09).

Blatant Conflict Of Interest

The Green Party shone a spotlight on who is driving this review. “The appointment of five lawyers from firms that make money from overseas investment to advise the Government on rewriting overseas investment rules is a blatant conflict of interest. When Bill English announced on 17 March 2009 that a Technical Reference Group (TRG) ‘will be established’ in order to simplify overseas investment rules, the criteria given was that the group would be comprised of ‘senior legal practitioners with expertise in applying the Act’.

“The five members of the Group are lawyers drawn from Bell Gully, Simpson Grierson, Russell McVeagh and Chapman Tripp and Minter Ellison Rudd Watts - all law firms that make money advising overseas investors. All members of the group appointed received letters on 12 March 2009 from former Minister of Land Information Richard Worth thanking them for agreeing to be on the review - five days before the Government even announced the review. Notably missing from this group are any legal experts from groups tasked with providing protection for sites of specific cultural, environmental or historical significance.

“Information obtained under the Official Information Act by the Green Party shows that officials were advised not to formally announce the TRG but rather to put any information about this group in a ‘non-highlighted’ section of Treasury’s Website. Information pertaining to their advice is branded confidential. Group members will not be asked to give formal advice or produce a formal report, in order to avoid any ‘conflicts of interest’ that may arise due to members’ employment. In other words there will be no paper trail to gauge what specific advice the TRG gave the Minister or how any potential conflicts of interest have been handled. In a February publication foreshadowing the current review, Chapman Tripp – a law firm represented on the review declared that it would be raising its concerns over the current Act ‘with the Government on behalf of its clients’” (“Secrecy And Vested Interests Drive Investment Rules Shake-up”, press release, 23/7/09, Russel Norman, Co-Leader). A stitch up and job for the boys, all rolled into one.