Fletcher Challenge Officially
Reclassified as Foreign Company

The Overseas Investment Commission (OIC) maintains a list of companies that, although they are over the legal limit of 24.9% foreign shareholding, it exempts from being defined as foreign companies because they are "New Zealand controlled", in the OIC’s opinion.

Fletcher Challenge Ltd (FCL) was a long time feature on this list. But CAFCA recently discovered that, in an unpublicised move, the OIC reclassified FCL as a foreign company in the middle of 1999. FCL was removed from the exemption list by the Overseas Investment Exemption Amendment Notice 1999, which came into force on 16/7/99. We only found this out because the eagle eyed Bill Rosenberg spotted FCL making its first appearance in an OIC decision, and we asked the OIC for confirmation.

This continues the trend of more and more big New Zealand companies falling into foreign ownership (Brierley’s was the most high profile one to be previously reclassified by the OIC, in 1996). This reclassification of Fletcher Challenge means that, at the stroke of a pen, a huge chunk of the New Zealand economy is officially transferred to foreign ownership. When all four divisions of FCL are added together, it is the biggest company in the Management Top 200 1999 list (Fletcher Paper alone was number two on that list). FCL occupies a dominating place in paper production, building materials and construction, oil, gas and electricity production and distribution. It controls a significant part of NZ’s oil reserves. This decision means that we now have no NZ-owned petrol distributors: Challenge is now officially classified as foreign.

According to 1999 figures, FCL is the second largest owner of exotic plantation forests in NZ, with 288,000 hectares. This reclassification means that the five largest forest owners are now foreign-owned, and that nearly 60% of the country’s plantation forests are foreign-owned. Foreign purchasers of NZ rural land have to satisfy "national interest" criteria before being approved by the OIC. We asked the OIC if FCL met these criteria when it was reclassified and became the foreign owner of hundreds of thousands of hectares of rural land. The reply: "The removal of FCL did not make it an ‘overseas owner’ as it was already one" (OIC letter to CAFCA, 14/2/00). The letter said that everything before FCL’s reclassification as a foreign company was exempt from having had to meet the national interest criteria; they would only apply from here on in. What a bloody farce!

There are still companies being added to the OIC’s list of those exempt from being defined as foreign–owned. In 1999, whilst FCL was removed, Infrastructure and Utilities NZ Ltd (Infratil) and Sir Ron Brierley’s Guinness Peat Group PLC, were added (in September and October, respectively). For the record, the other companies on that exempt list are: Apple Fields Ltd, Bancorp Holdings Ltd, BIL NZ Assets Ltd, Fisher and Paykel Industries Ltd, Freesia Meat Holdings Ltd, Fulton Hogan Ltd, Greenstone Fund Ltd, New Zealand Guardian Trust Ltd, and Wrightson Ltd.

The economic recolonisation continues at an increasing pace. Some of it, like this reclassification of a huge New Zealand-based transnational, is being done by stealth.

Foreign Control Watchdog, P O Box 2258, Christchurch, New Zealand/Aotearoa. December 1999.

Email cafca@chch.planet.org.nz

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