New Zealand Labour Party

The Saudi Sheep Files

Today Labour is publishing documents obtained under the Official Information Act from Foreign Minister Murray McCully regarding the Saudi sheep deal for the public to view for themselves.

The documents prove the actions of the National Government relating to a $4 million facilitation payment to a Saudi Arabian businessman and a $6 million demonstration farm in the Saudi Arabian desert were unethical and wrong.

It is evident that the documents show deliberate misrepresentations by the Minister of Foreign Affairs as to the true nature of the payments made to the Al Khalaf group.

It is now clear:

  • Mr Al Khalaf had been disaffected for over six years. He had never issued any proceeding against the New Zealand Government. It seems clear he had no legal cause of action.
  • There is no evidence in any of the papers released that the Minister or MFAT had any legal advice from their own department or Crown Law to the contrary.
  • Mr Al Khalaf was influential in Saudi Arabia, linked to the Saudi Minister of Agriculture, and frustrating progress on the Gulf Cooperation Council Free Trade Agreement.
  • Mr McCully wanted to advance the trade agreement by obtaining the cooperation of Mr Al Khalaf.
  • The papers released this week record that McCully said “he would not want any (financial) contributions to be treated as compensation as this would involve a plethora of lawyers and bureaucrats”.
  • Mr McCully deliberately misrepresented the payments made to the Al Khalaf group.
  • The contract dated 19 February 2013 was drafted so as to pretend the $4 million cash payment was for good value for services and intellectual property. It was not.
  • Mr McCully did not obtain Cabinet approval for the $4 million payment, despite Treasury advice that he should have. Cabinet was only asked to note the payment.
  • Mr McCully then hid the $4 million payment from New Zealanders for over two years.
  • The true nature of the $6 million demonstration farm was also misrepresented. In reality this was primarily to buy the co-operation of the Al Khalaf group, not to demonstrate New Zealand technology.
  • The same is true of the $1.5 million spent on flying sheep.


A report of a meeting between the Minister of Foreign Affairs and the Hmood Al Khalaf Group of Companies dated 5 March 2012 shows Minister McCully said “he would not want any (financial) contributions to be treated as compensation as this would involve a plethora of lawyers and bureaucrats”.

The contract for services dated 19 February 2013 in respect of the first $4 million payment, in which the pretence is made that the payment is for services and intellectual property, makes no mention of the settlement of a dispute.

It is evident from the documents that the Treasury and the Auditor General both had serious misgivings about these payments which total some $11 million dollars.

It is now clear that the payments were not as described, but to obtain the cooperation of the Al Khalaf group.

You can read the documents for yourself:

  1. Former Agricultural Minister David Carter’s comments in the media from 2009 that causes concern.
  2. In September 2009, Former Minister Carter receives a letter from an associate of the Saudi businessman, expressing concern at the Minister's comments.
  3. In April 2010 the Saudi businessman gives a speech raising more concern with Former Minister Carter’s reported comments.
  4. In November 2011 Foreign Minister Murray McCully receives a letter in which it is alleged the Government suggested the Saudi businessman seeks commercial redress.
  5. In March 2012 a meeting brief refers to Minister McCully's comment that “he would not want any (financial) contributions to be treated as compensation as this would involve a plethora of lawyers and bureaucrats.”
  6. Communications in January 2013 between Ministry of Foreign Affairs and Trade officials and the Saudi’s business partner discuss the terms of the contract.
  7. The cabinet paper dated 13 February 2013 proposes the Saudi Arabian Food Security Partnership.
  8. The contract for services for the $4 million payment, dated 19 February 2013.
  9. A copy of the Auditor-General’s initial letter to the Ministry of Foreign Affairs and Trade, dated 20 August 2013.
  10. In August, briefing notes produced by the Ministry of Foreign Affairs and Trade for a meeting with the Auditor-General detail how the the Ministry will be explaining the unique nature of this “diplomatic settlement”.
  11. On 5 September 2013 The Ministry send an official response to the Auditor-General.
  12. The Office of the Auditor-General sends a second letter to the Ministry on 10 December 2013.
  13. Treasury advice can be found on the Treasury website here.


Labour will continue to be examining the documents, there are numerous other examples of inconsistencies and issues of serious concern.

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