Political roundup: Guilty or not? The Saudi sheep scandal

NZ Herald | 7 August 2015

The scandal over the Government’s Saudi sheep deal has been going on for months now, and with the release of hundreds of pages of documents this week we may finally have enough evidence to reach some sort of verdict

It’s a shadowy and bizarre saga that has spanned 12 years, and has produced a convoluted and complex debate over the last three months as revelations have come to light.

Cover-ups, spin, complex explanations, and official bureaucratise have made it difficult for the public to come to any firm conclusions about what has been going on and who is to blame. The National Government and Murray McCully have been accused of making bribes, breaking rules on political process, being incompetent, and actively deceiving the Saudi Government, Parliament and the New Zealand public.

Below are some of the most important items presenting evidence and analysis about the case. Of course ultimately the public needs to make its own mind up about this landmark case which is revealing of how government works (or does not work).

Prime Minister John Key. Photo / Nick Reed
Prime Minister John Key. Photo / Nick Reed

The Case for the Government

For the ultimate case for the defence, all you need to do is watch Mike Hosking’s two-minute video: Mike’s Minute: No crime in Saudi sheep deal. Hosking is of the view that there is “no smoking gun”, and with nothing more to see the public needs to move on.

A more nuanced defence was made earlier in the life of the scandal by Audrey Young, who usefully put forward both the prosecution and defence case – see: Saudi sheep scandal: Putting Murray McCully in the dock. In the end, Young appears to come down in favour of the Government. Certainly Young’s “defence case” is one of the best you can read. She says: “It is the duty of the Foreign Minister to try to resolve such differences, especially when its resolution is likely to lead to tangible benefits to New Zealand. Nothing Mr McCully has done has been motivated by anything other than New Zealand’s best interests. The Cabinet made the decision in a proper way approved by the Cabinet office”.

The Herald‘s John Armstrong picks up on the lack of private benefit argument in his column yesterday, saying “the notion of a bribe in most people’s minds is that the briber gets some personal benefit. In this case those offering the money – the New Zealand Cabinet – could be seen as acting in the national interest rather than personal interest” – see: Key’s tactics leave Opposition sheepish.

Armstrong also points out how well John Key has managed to deflect the attacks in the last few days: “the Prime Minister outmanoeuvred Opposition parties. John Key had a simple line and he stuck to it whatever question was asked. He laid all the blame on Labour”.

National pollster David Farrar hasn’t blogged much on the issue, explaining “frankly I haven’t seen what the fuss is about” and “I don’t see any wrong-doing” – see: Herald views on Saudi farm deal. He also emphasises, “it was a decision made to further NZ’s interests and trade relations. There was no personal benefit to any Minister from it”.

Yesterday Farrar blogged to endorse Armstrong’s column: “This is broadly correct. National inherited the problem, and to solve the issue they could either decide to allow live exports for slaughter to resume, or try and soothe the Saudis” – see: Armstrong on Sheepgate. But Farrar doesn’t entirely endorse the sheep deal and he says “it would be desirable for the Auditor-General to investigate fully”.

Perhaps unwittingly, senior Labour MP Phil Goff made some statements that are less than condemning of the scandal – Fran O’Sullivan writes: “Former Foreign Minister Phil Goff has been less damning of McCully than some other Opposition politicians. Goff has been around long enough in international circles to know there are a lot more grievous transgressions than a mere $11.5 million compensation deal. As he told the Herald: “I’m keeping a partially open mind on it; it just looks like a cover for passing across $10 million or $11 million to the unhappy private investor.” It was legitimate for a foreign minister to unblock any obstacle, “but if you are going to do that, you have to be very careful indeed” – see: Bungled Saudi sheep deal a carcass that can be laid at Cabinet’s door.

Prime Minister John Key during a post-Cabinet press conference at the Beehive. Photo / Mark Mitchell
Prime Minister John Key during a post-Cabinet press conference at the Beehive. Photo / Mark Mitchell

The Case against the Government

There are plenty of blog posts and opinion columns lambasting the Government for the Saudi sheep deal. Yet the most recent must-read case against the Government comes from a straight news report investigating and explaining the latest available information – see Andrea Vance’s Treasury objected to $4m payment for food security partnership with Saudis.

This article is the most definitive trawl through the OIA dump from National. It highlights how Treasury officials were opposing McCully’s planned deal, repeated expressing their concerns to Government. Similarly, see Stacey Kirk’s No evidence of legal advice Government faced $30m lawsuit over Saudi sheep deal.

The most condemning – and also insightful – account of the Saudi sheep scandal has come from National Party loyalist Matthew Hooton, who has been at the forefront of the campaign against Murray McCully’s conduct in this matter. Some might question his analysis due to the fact that as a lobbyist Hooton previously (unsuccessfully) sought the original contract to help the Saudi businessman Hamood Al-Ali Al Khalaf rectify the sheep exporting problem. Nonetheless, Hooton has blown the whistle on what has transpired, and become National’s biggest critic on the scandal, publishing numerous columns about it in the National Business Review.

Hooton’s most important column is from June: Govt sheepgate story a shameful coverup (paywalled). In this, he declares that “in my 25 years participating in and commenting on politics I have never known a more pathetically obvious case of a government trying to wilfully ignore wrongdoing by a minister”.

Hooton lays the blame for the original rupture in Saudi-NZ relations with David Carter, who was the Minister of Agriculture when the situation became a problem. According to Hooton, McCully then made the situation worse by concocting a deal: “McCully prefers to do unorthodox deals over straightforward ones and informal processes over formal ones. He has a strange aversion to following the usual procedures, even when they are administratively easier, politically safer and more effective in achieving his policy goals. Instead, the foreign minister appears to get some sort of childish thrill out of subterfuge, even when it is unnecessary and not in his interests or the government’s”.

Hooton then calls on Key to sack the minister: “For Mr Key to allow Mr McCully to continue as foreign minister, just because he fears the consequences of sacking him, brings disgrace on the government and New Zealand and suggests Mr Key is now impotent as prime minister over even the worst behaviour by his senior ministers”.

The latest column by Hooton – McCully sacking critical to Key’s integrity (paywalled)) – has a similar theme, saying that “this week’s release of nearly 1000 pages of previously secret government documents demands his sacking”, and that if Key doesn’t do so then he has lost his integrity, which might well contribute to his loss of the next election.

In another column, Hooton says that National’s blame of Labour for the mess is “preposterous” – see: PM talks piffle over Saudi farm deal (paywalled).

But the minister can’t be sacked according Fran O’Sullivan, because McCully has carefully implicated his colleagues in the scandal: “it’s difficult to see how Key can axe him without also turning focus back on his entire Cabinet, which approved the deal in the first place without seeking appropriate advice. McCully – known as the Dark Prince – has made sure of that. If his backside is on the wire, then so too are those of nearly 20 other Cabinet ministers and, in particular, his boss” – see: Bungled Saudi sheep deal a carcass that can be laid at Cabinet’s door.

O’Sullivan has written other critical columns about the Saudi sheep deal – for example, in Saudi deal: bribe or facilitation payment?, she says that the Auditor General needs to investigate what has happened. And she points out that the irony of the Government possibly implicated in bribery, when it’s usually the private sector being told to raise its standards.

The standards and manoeuvrings of government officials are also coming into question as the hundreds of pages of bureaucrats’ documents are pored over by the media. In this regard it’s well worth reading Richard Harman’s very solid investigations into MFAT dealings in the scandal – see: New Zealand diplomats set out to deceive Saudi Arabian officials.

In order to pull the wool over numerous eyes, officials had to conduct questionable activities, according to Harman’s analysis. He paints a picture of the National Government and officials scoring an own-goal: “What is clear from these documents (and these are only half the full release) is that New Zealand got caught out by its own duplicity. It led the Saudi Arabians to believe the live sheep shipments would be resumed but the Government had no intention of that happening”.

In another blog post, Richard Harman continues the duplicity theme, showing how officials instructed the Saudis on how to invoice for their compensation payment without it being detected as such – see: Don’t involve any lawyers. According to Harman, “McCully was ‘compensating’ Mr Al Khalaf but he just didn’t want to call it that because that would have attracted too many lawyers and bureaucrats. Ministers don’t want them around generally when they are bending the rules. But what Mr McCully appears not have bargained on was that all these papers would become public”.

As usual, it’s not only the original misdemeanours of the scandal that are problematic, but the way politicians have subsequently handled the issue publicly. And for this, National receives strong condemnation from Radio New Zealand’s Brent Edwards, who criticises National’s political management as also being deceptive – see: Woolly claims about questionable deals.

Edwards characterises the Government’s response as entirely cynical: “Ignore or reject requests for information. Delay as long as possible and then dump the information, with much of it deleted of course, during a recess week so you do not have to answer questions in Parliament when the release of information is still fresh in the public’s mind. As well, no matter what the official papers say, do not deviate from your spin. Say it often enough and perhaps enough people will believe you. Finally make sure the minister under scrutiny – in this case Foreign Minister Murray McCully – is overseas and not available to answer questions”.

See also, his earlier article, Closing Sheepgate behind him?

So far, newspapers have not been inclined to pronounce a guilty or innocent verdict on the scandal. The Herald has asserted that “We need to be convinced” about the sheep deal – see: Saudi sheep farm deal far too woolly.

For a relatively neutral verdict, albeit one that ultimately seems to condemn the deal, see Peter Wilson’s Saudi farm deal ‘a shabby affair’, which explains the timeline.

Finally, the saga has been ripe for satire, so it’s worth checking out Steve Braunias’ The secret diary of Murray McCully, David Slack’s The Law is my Shepherd, and my own blog post, Cartoons about NZ’s Saudi sheep scandal.

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