New Zealand turns down Chinese bid for dairy farms

Dec 22, 2010, 5:41 GMT

Wellington - The New Zealand government rejected Wednesday a Chinese bid to buy 20 farms as the start of a drive for a foothold in the world's biggest international dairy industry.

Two cabinet ministers with the final say supported the Overseas Investment Office's (OIO) refusal of an application by the Hong Kong-registered Natural Dairy (NZ) Holdings Ltd to buy the farms, which are currently in liquidation.

May Wang, a Chinese businesswoman and New Zealand citizen, who has been the front woman for the bid, was declared bankrupt last week and the Serious Fraud Office is investigating Natural Dairy's affairs after the OIO passed it information that it said 'may disclose serious or complex fraud' in October.

OIO manager Annelies McClure was quoted on the New Zealand Herald website as saying that ministers had to be satisfied all the individuals involved with applications were 'of good character.'

'The ministers were not satisfied that all of the individuals with control of Natural Dairy were of good character,' she said. 'Accordingly, consent was declined.'

The farms, totalling 8,000 hectares in the North Island, were put into liquidation in October 2009, reportedly owing creditors about 200 million New Zealand dollars (149 million US dollars).

Natural Dairy told the Hong Kong Stock Exchange the purchase was intended to be the first stage of a 1.5-billion-New-Zealand-dollar plan to establish a farm-to-supermarket shelf operation supplying infant formula and other milk products to the Chinese market.

The move was seen as a potential challenge to New Zealand's Fonterra Co-operative Group, which is the world's biggest exporter of dairy products and has targeted China as its largest growth market.

It sparked a public controversy about foreign ownership of farms with Prime Minister John Key saying New Zealanders would not want to be 'tenants in their own land.'

Land Information Minister Maurice Williamson and acting Finance Minister Kate Wilkinson gave no reasons for their veto, saying only, 'We concur with the Overseas Investment Office's recommendation that consent should be declined. We will not be commenting further on our decision.'

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