New Zealand Labour Party

Did Murray McCully break Public Finance Act?

Murray McCully appears to have breached the Public Finance Act by dressing up the cash payment paid to Al Khalaf as a joint venture, new documents show, Labour’s Trade and Export Growth spokesperson David Parker says.

“In a briefing to Murray McCully on 19 April 2012, MFAT officials said they would find a way to meet Al Khalaf’s previously stated desire for compensation ‘possibly through the joint venture’. They did this after Mr McCully had earlier insisted the $4 million payment not be called compensation because that would cause “a plethora of layers and bureaucrats” to become involved. 

“In a sign of how ridiculous the subterfuge was they even put the word “compensation” in quote marks. The $4 million payment was then turned into a joint venture contract for services with Al Khalaf Group, with no mention of compensation and the pretence it was for intellectual property and services.

“There were no grounds for any compensation in the first place, because Al Khalaf had no legal claim against New Zealand. This was a facilitation payment to pay off a Saudi businessman getting in the way of the Gulf FTA.

“It seems at least some of those involved knew this was an illegitimate ‘compensation’ payment, but Mr McCully insisted it be called a joint venture so he could get around ‘bureaucrats and lawyers’ and avoid the law.

“Treasury said a compensation payment would require a new appropriation under the Public Finance Act. Mr McCully’s duplicity in dressing up the compensation as a joint venture deceived the Treasury and could well be a breach of the Act.

“This stinks,” David Parker says.

The new Documents are attached.