The Government is currently conducting a review of all aspects of New Zealand’s foreign investment regime, hoping to introduce legislation by June 2004, and to have that legislation in place in 2005. For full details of that review, see the cover story of Watchdog 104, December 2003 ("Review Of the Overseas Investment Act: Threats And Opportunities", by Bill Rosenberg). It can be read online at http://www.converge.org.nz/watchdog/04/01.htm You will find a leaflet on the subject with this issue of Watchdog. We urge you to read it carefully, act on the suggestions contained in it as to what you can do about the review (those suggestions are also in this article), and spread the leaflet as widely as possible. If you’d like extra copies of the leaflet, just ask us.

What media publicity there has been on the review has concentrated on the possibility that it might tighten up controls on foreigners buying rural land – in the North Island, the public concern is primarily about coastal land, in the South, it’s about high country stations. This is the subject that gets most public attention and includes all sorts of specialist subheadings. For example, in the past few months, I have been rung by reporters asking for information on land purchasers by foreign musicians (I know as much as is in the media), and asking if we have a policy on land purchases by celebrities (it’s the same as our policy on land purchases by nobodies). If the review does lead to any tightening up, then we congratulate the Government in advance.

No, this review is primarily set up to investigate the removal of all remaining restrictions and oversight of transnational corporations (TNCs) setting up in New Zealand or buying other companies here. Should that come to pass, then the only law involved would be the Commerce Act, and the Commerce Commission would have to treat foreign corporate takeovers the same as it does domestic ones, namely restricting itself only to considering whether the takeover in question would reduce competition. Corporate takeovers are far and away the biggest component of foreign "investment" in New Zealand – land sales would account for, at most, hundreds of millions of dollars per year; one TNC takeover alone can be in the billions (to give an example, the recent $6.27 billion purchase of British-owned National Bank by Australian-owned ANZ, completing the Australian ownership of all New Zealand’s major banks). TNC takeovers and, more rarely, "greenfields" establishment (actually starting a business from scratch as opposed to buying up cheaply what locals or the NZ taxpayer have already got up and running) are where the action is.

Worldwide, TNCs and their client governments have been pushing for removal of any restrictions or oversight of foreign investment. Under the recently concluded US/Australia Free Trade Agreement a US investor does not require any sort of permission or oversight for a purchase below $A800m, a huge increase from the previous limit of $A50m. Freezing controls on foreign investment is a standard condition of free trade agreements, either multilateral or bilateral (such as the NZ/Singapore Closer Economic Partnership). The notorious Multilateral Agreement on Investment, which was defeated by global opposition in 1998, was an attempt to achieve a global removal of any controls on foreign investment in one king hit. More recently, a global investment agreement has been a sticking point in the "New Issues" which the First World nations are trying to ram through in the currently stalled World Trade Organisation negotiations.

If this review does remove any remaining oversight of TNC establishment and takeovers, then New Zealand will have lost the right to pick and choose whom we allow to do business in, and profit from, our country. The OIC is a feeble rubber stamp (and every issue of Watchdog bears witness to that) but that’s not an excuse to dump oversight. What needs to be done is to strengthen controls on foreign investment, not to weaken them. And if you don’t believe that those controls need drastic strengthening, then I refer you to the 2003 Roger Award Judges’ Report in this issue. Have a good read about the record of the winner, Juken Nissho. Study its impressive criminal record for breaches of health and safety laws and the list of serious injuries to its poorly paid workers; read about how it abuses its position as Kaitaia’s biggest business by polluting the town and its people; digest the fact that it has paid no tax in New Zealand for several years and is technically insolvent. Isn’t this a wonderful example of the sort of TNCs that the Government wants to attract here, and to make it even easier for such corporate criminals to roger our country? Juken Nissho is far from being one bad apple – read the Judges’ Reports for the previous six Roger Awards (you’ll find several of them at http://canterbury.cyberplace.co.nz/community/CAFCA/publications/Roger/index.html).

Successive governments, National and Labour, have instructed the OIC to facilitate foreign investment, to make it easier, not to "hinder" it. Their job is to be the doormen, to hold the doors open, not to be the bouncers and screen out the undesirables. Since the mid 1990s amendments to the Overseas Investment Act, applications for non-land, non-fishing projects have not had to pass the previous national interest criteria. There are only three factors for the OIC to consider in those cases – good character, business acumen, and making a financial commitment.

Let’s just take one of those – good character. The OIC accepts a lawyer’s letter saying that his/her client is of good character. That’s it. And the good character requirement applies only to individuals, not to the companies themselves. On several occasions in the past few years, CAFCA has laid complaints of lack of good character with the OIC, against both foreign individuals and companies. In the case of individuals (one of whom boasted, in an American newspaper, of funding a Third World terrorist movement branded by the US State Department as worse than Cambodia’s infamous Khmer Rouge), the OIC has sat on its hands – for more than a year in that case – then pronounced itself satisfied. We have supplied detailed evidence of the crimes, criminal and civil, by the former American parent of Waste Management. We also drew to the OIC’s attention the dreadful record of Archer Daniels Midland in the US (a whole book has been written about one particular ADM crime). All has been declared above board by the doormen of the OIC (perhaps we should call them the Dawemen, in honour of their CEO). Currently we have submitted a lack of good character complaint to the OIC about Juken Nissho. And it’s not only us. Several years ago we secured the complete (well, with numerous deletions) file about the 1999/02 Labour/Alliance government’s initial refusal to allow Brierley’s to sell its stake in Sealord to foreign fishing TNCs. In the case of several unidentified fishing TNCs, the Ministry of Fisheries had recommended to its Minister that the company was not of good character and itemised its international criminal record. In every case, the OIC urged the Minister that it was satisfied as to the applicant’s good character and urged him to override his Ministry’s advice.

Obviously, all of the above would require the Government to instruct the OIC to change its approach, to become a bouncer and not a doorman. And the Government, in the person of Minister of Finance, Dr Michael Cullen, has made abundantly clear its view that the review should remove all restrictions on, and oversight of, TNCs. Cullen was quoted in an extremely revealing Sunday Star Times article (25/1/04; "Buying into the case for foreign control"; Ruth Laugesen): "’I don't think the Government would be terribly keen on the Russian Mafia deciding to set up munitions factories as a means of solving Northland's employment problems’, he says. Apart from that, he can't think of an awful lot of cases in which New Zealand should turn away a foreign investor with pocketfuls of loot. ‘They contribute to the New Zealand economy, they are crucial for employment and economic growth, and that has been the case in New Zealand at least since 1840’… Does Cullen feel any dismay that New Zealand might be well on the path to becoming a branch office for the multinationals? He scoffs at the question. He points to all those who work for Shell, BP or Telecom. ‘To a substantial extent, a good part of New Zealand is already owned from overseas’".

And there’s another myth, that TNCs create lots of jobs. In fact, official statistics reveal that only 17% of New Zealand workers are employed by TNCs. That means that 83% aren’t. The TNCs need us more than we need them. Cullen did not mention the many thousands more New Zealanders who used to work for Telecom and its predecessor before it was flogged off by the last Labour government in which he held office. Because that’s the other side of the "foreign investment creates jobs" myth. In many cases, it does the exact opposite, creating mass unemployment instead.

"…Mark Weldon, Chief Executive of the New Zealand Stock Exchange, says it is clear the OIC system is not working well and the Government needs to look at other ways to have a say about who owns the economy's commanding heights. ‘One of the large risks to self-determination would be an economy in which all the major sectors in industry are actually owned elsewhere. You then become basically a branch economy, and it's pretty hard to have any national identity’, he says. ‘We just need to be very careful, whether through the OIC or other methods, that we don't lose control of strategically important assets. We need to have some sense of economic and business self-determination in the long run so you don't just end up being a call centre at the bottom of the Earth’. He regrets that New Zealand's banking sector is overwhelmingly in Australian hands, with all five major trading banks Australian. Yet in Australia, banks are protected from foreign raiders by a ‘four pillars’ policy that puts a cap on foreign ownership of the four major domestic banks. Having more locally-owned financial institutions would give banks better local knowledge allow them to better tailor their services to the local market, says Weldon…Long term it was damaging to our economy for so many foreign-owned firms to be sending substantial profits offshore to enrich other communities. Weldon said it was not yet clear whether New Zealand's long-term fate was for ever-greater foreign control of the economy. The path to greater economic self-determination lay in New Zealand finding a way to grow 100 of its small companies into big ones. The dismal alternative was an economy ‘where all of the profits from all of the productive enterprise are shipped offshore’" (ibid.).

So this review presents us with an opportunity, as well as the all too obvious threats. Dr Cullen is not going to toughen up the foreign investment regime for us, nor is the Parliamentary Labour Party going to take any initiative. Left to its own devices, it might tinker with some of the land sale provisions, but won’t interfere with the pending liberalisation of corporate takeovers. That most opportunist of parties will only respond to public pressure, so we need the help of yourselves, and the wider public, to apply that pressure. Make this an issue that won’t let the Government sit comfortably, make it one that bites them on the arse.

We’ve already had reports from inside one of the Wellington meetings of interdepartmental officials to discuss this review that when CAFCA’s name was mentioned, a Treasury mandarin snorted: "CAFCA! They’re only Bill Rosenberg and Murray Horton, in Christchurch". Bill and I are duly flattered that we two are officially considered to personify CAFCA, but we urge you to prove just how wrong these bureaucrats are. Act on the suggestions accompanying this article, make a fuss, do it in numbers, and let’s get stuck in. Let’s make this review work for us, rather than allowing it to be another rubber stamp in the process of transnational corporate recolonisation of our country.