Foreign investment in Aotearoa/New Zealand
Overseas Investment Office – June 2012 Decisions
Serco Gets Land For New Wiri Prison
SecureFuture Wiri Limited Serco Group Pty Limited and/or InfraRed Infrastructure III Partnership (United Kingdom) (40%), Accident Compensation Corporation (30%) and John Laing Investments Limited, United Kingdom (30%) received approval for the acquisition of a leasehold interest in 19.8 hectares of land located at 20 Hautu Drive, Manukau, Auckland (being the site of the new Wiri Prison) and an overseas investment in significant business assets, being the Applicant’s acquisition of property in New Zealand used in carrying on business in New Zealand for consideration exceeding $100m.
The vendor was Her Majesty the Queen New Zealand (100%) i.e. the Government; consideration was confidential. The OIO states: “The sensitive land has been set aside by the Department of Corrections for the construction of the new Wiri Prison. The Department has entered a public private partnership with the Applicant to design, build and operate the new prison”. ACC’s involvement in the prison was questioned by the Labour Party. As reported by Scoop (12/9/12) under the heading “Undisclosed ACC sum sunk into prison privatisation gamble”:
“ACC’s involvement as one of the five members of the consortium that has won the contract to build a private prison in Wiri is completely inappropriate, Labour’s Justice spokesperson Charles Chauvel says. ACC was created to ensure that New Zealanders could access affordable rehabilitation services. To see it investing in a private prison project which is opposed by most New Zealanders is, quite simply, bizarre. It also raises questions around the safety of the investment. Serco is already operating Mt Eden Prison on a contract basis. It is repeatedly failing to meet its performance targets.
“There is no reason to think that the Wiri operation will be any more successful, given the sausage factory imperatives of the private prison business model. National has consistently refused to make the terms of the Wiri prison contract public, despite taxpayer money being involved. It is reputed to be of a 25 to 30 year duration, and to be worth some $1 billion. Judith Collins, asked in the House today whether she or her predecessor, Nick Smith, had been consulted about the decision by ACC to invest in building and operating a private prison, and whether she had concerns about the investment, admitted Dr Smith had been briefed about the investment. It is a shame that he did not invite ACC to reflect on whether it was an appropriate destination for investment of the Corporation’s funds. It is even more of a shame that Judith Collins has failed to send a similar signal since she became the Minister,” Charles Chauvel said”.
This deal has also drawn considerable criticism from the Green Party, best summed up by a TVNZ ONE News item titled “New Auckland prison, a waste of taxpayers money” (20/9/12): “As construction of a new private prison began in south Auckland today, ONE News can reveal the scale of the Government’s controversial deal. The prison, located in the suburb of Wiri, had a sod-turning ceremony today but ONE News understands there are hundreds of prison beds lying empty in jails across New Zealand. And Serco, the overseas company which will manage the new 960-bed facility, has confirmed it will be paid for 100% occupancy of the prison even if beds remain empty.
“Opponents have slammed the new jail – the first of the Government’s controversial public-private partnerships – saying it is a waste of taxpayers’ money and a back-stop for what they describe as National’s increasingly punitive social policy. ‘It seems a very perverse use of a total of $900 million’, said Green Party MP, David Clendon. But the Government estimates the deal will save taxpayers $170 million. ‘I’m confident that SecureFuture will deliver a safe, secure modern prison along with the required success in rehabilitation rates, and that the whole prison network can benefit from its international experience’, Corrections Minister Anne Tolley said. And she said the contract ‘demands that this consortium performs at 10% better than Corrections’.
“But the current prison system has over 1,000 empty beds. New Zealand has 10,171 prison beds and 8,550 prisoners, leaving a total of 1,605 beds lying empty. Even taking into account the planned closure of two prisons and other units over the next year, the figures show New Zealand will still be left with more than 900 vacant beds. “The solution, really, is to cut the losses and just say no to this project,” said Clendon. But the Government insists the country needs those beds, and more. ‘It’s not just numbers and beds’, said Tolley. ‘You don’t put men and women together; we’ve got different classifications of prisoners’.
“New Zealand has one of the highest rates of imprisonment in the Western world and National has set a target of 600 fewer people being locked up by 2017 with a view to lowering reoffending by 25%. However, one critic said the Government’s welfare policy will do nothing more than help fill the Wiri prison. ‘We are starting to see a very punitive regime; if that continues, then it is very likely that the number of people being placed into prison will increase’, said Kim Workman, from Rethinking Crime and Punishment. But Tolley slammed the criticism as ‘absolutely silly’.
“Private jail managers, Serco, told ONE News they will be paid for operating a full prison, regardless of inmate numbers. ‘We will be paid to operate for 960 prisoners’, said Paul Mahoney, from Serco. Opponents have said that makes the private prison a preferred provider and could lead to job losses in public prisons. One investor that stands to profit is ACC, with its 30% share. ONE News today discovered that the deal is worth about $10 million to the accident compensation provider. The SecureFuture consortium of Fletcher Construction, Serco and Spotless Facility Services has been contracted to design, finance, build, operate and maintain the prison under the public-private partnership. Up to 1,000 construction jobs and 300 long-term positions will be created, with the new facility scheduled to open in 2015 as part of a 25-year contract worth approximately $840 million”.
Do We Need More Prisons?
Joseph Lose in Truth questioned whether the prison was even needed. “The prison guards’ union claims Corrections’ scaremongering about a prison population explosion was bunkum, and now the Department is closing regional facilities to pay $1 billion over 25 years for a lemon. Bevan Hanlon, President of the Corrections Association of New Zealand told Truth the proposed new 960 bed facility at Wiri was already costing jobs from the provinces. ‘There are just under 2,000 spare beds in the country’, Hanlon said. ‘Now they are going to build another 960 bed prison – it just doesn’t make sense’.
“Hanlon claims the Government has been misled by their own figures. ‘Someone has told lies about the so called muster crisis’, he said. ‘They spent $220 million on that, which we call Bunk-gate. So why now, during New Zealand’s biggest financial crisis, do they privatise that 960 bed prison in Wiri? The Government is taking out a $900 million loan from a private company and the worst time to take out a loan is when you are desperate and broke. Worse still is to do that with people who come to you offering things that are better than they really are. Serco is a company that outsources government services mainly in Europe. Most of these governments are broke and making serious austerity cut backs yet they are all still contracted to Serco who posted a massive profit last year. Something is not right. So why commit to a 25 year mortgage for a prison when it’s not needed. That money could be spent on health or education or Christchurch – anywhere but a prison’.
Serco – which administers the Auckland Central Remand Prison – has recently been fined for breaches of its contract. Releasing an inmate before he was due has cost them $25,000. This comes on top of the $150,000 fine they copped after an escape. Serco has won the contract for the new jail in Wiri despite attracting massive fines. Corrections Minister Anne Tolley said, ‘the financial penalty handed out is a sharp reminder that high standards must be maintained at all times'”.
Aussies Sell Spotless To Americans
Pacific Industrial Services Bidco Pty Limited United States Public (85.3%), Australian Public (13.2%) and various overseas persons (1.5%) received approval for the acquisition of rights or interests in 100% of the shares of Spotless Group Limited which owns or controls a leasehold interest in 2.5304 hectares of land at 1A Carrington Road, Pt Chevalier, Auckland, and an overseas investment in significant business assets, being the Applicant’s acquisition of rights or interests in 100% of the shares of Spotless Group Limited the value of the assets of which exceeds $100m. The vendor was Spotless Group Limited Australian Public (59%), various overseas persons (39%) and United Kingdom Public (2%). The OIO states: “The proposed underlying transaction is the acquisition of the worldwide business of the Spotless Group. The Applicant intends to acquire Spotless Group Limited with a focus on improving the efficiencies and productivity of the business”. Spotless is a laundry, hospitality and cleaning contractor. In September 2009, Spotless received OIO approval to buy Taylors, a well-known laundry supplier.
More Than 9,000 Hectares Get New Overseas Owners
In two separate decisions several large forestry land parcels have been sold to an overseas controlled company. Firstly, Craigmore Sustainables (Forestry) NV & Craigmore Sustainables LLP New Zealand Public (40.2%), United Kingdom Public (24.6%), United States Public (12.6%), Netherlands Public (11.8%) and various overseas persons (10.8%) received approval for the acquisition of 100% of the shares of Forestry New Zealand Limited which owns or controls a freehold interest in 8,688 hectares of land located at Tiniroto Road (Riversdale – Wairoa), Sugar Loaf Road (Birch Hill – Pongaroa), Duncan Road (Makiri – Gisborne), Poroporo Road (East Cape), Oio Road (Patua – Taumaranui), Mangapoike Road (Te Puna – Wairoa) and Bruce Road (Waihora – Gisborne). The vendor was Craigmore Farming Co. Limited New Zealand (100%); consideration was confidential. The OIO states: “The Applicant intends to manage the existing forestry operations together with converting and extending marginal farming land into plantation forest”.
In a second decision, Craigmore Forestry Limited New Zealand Public (40.2%), United Kingdom Public (24.6%), United States Public (12.6%), Netherlands Public (11.8%) and various overseas persons (10.8%) received approval acquisition of a freehold interest in 511 hectares of land located at 2691 Waimata Valley Road, Gisborne (Makiri Station). The vendor was Makiri Station Limited New Zealand (100%); consideration was also confidential. According to its Website, Craigmore Sustainables is a specialist manager of farmland and forestry assets. The group was established in 2009 by Forbes Elworthy. As of October 2012, Craigmore manages $NZ75m ($US62m) of investor capital invested in 13,000 hectares (33,000 acres) of land across 17 properties. The Elworthy family is a significant investor in both the farmland and forestry funds and has been farming in New Zealand for 150 years, (Forbes’ father Sir Peter Elworthy was President of NZ’s Federated Farmers and Chair of the Independent Directors of the Reserve Bank of New Zealand).
Oakwood Retirement Village Buys Bowling Club To Expand
Metlifecare Oakwoods Limited New Zealand Public (48.8%), Macquarie Bank Limited, Australia (25.7%), and Australian Public (25.5%) received approval for the acquisition of a freehold interest in 0.6 hectares of land at 375 Lower Queen Street, Richmond. The vendor was Richmond Bowling Club Incorporated New Zealand (100%); the price $750,000. The OIO states: “The Applicant currently operates the Metlifecare Oakwoods Retirement Village on the adjoining land and wishes to acquire the land to enable it to expand the retirement village”.
Swiss Buys Mohau Station
Monte Forestry Limited Christian Welte, Switzerland (100%) received approval for the acquisition of a freehold interest in 1,210 hectares of land known as Mohau Station located at 1115 Waikura Road, East Coast. The vendor was Kenneth Rae McLanachan New Zealand (100%); consideration was $3,620,000. The OIO states: “The Applicant intends to combine Mohau Station with its adjoining land to create a single productive and financially sustainable farming and forestry operation. Mohau Station includes land with high erosion classification which the Gisborne District Plan requires to be established in effective tree cover. The Applicant will continue pastoral farming on the land that is less prone to erosion and can be sustainably farmed”. Welte already has significant land/forestry investments here. See our commentary in February 2011 for details of Christian Welte’s purchase of 2,061 hectares in Opotiki, and our November 2011 commentary for details of his purchase of 7,000 hectares freehold and 1,500 hectares leasehold on the East Cape.
AMP Sells Down Interest In Government Buildings
AMP NZ Office Bowen Campus Limited New Zealand Public (72%), United Arab Emirates Public (19.6%) and various overseas persons (8.4%) received approval for the acquisition of a freehold interest in approximately 1.4 hectares of land located at 34-38 Bowen Street, Wellington. The vendor was Capital Properties (Wellington) Limited AMP Capital Property Portfolio, New Zealand (100%); consideration was $50,400,000. The OIO states: “The Applicant considers the land to be a strategic site in the heart of Wellington’s Government precinct. The Applicant will initially continue to lease the buildings on the land. The Applicant also intends to carry out a refurbishment or redevelopment of the buildings”. In December 2010, AMP Capital property sold the LynnMall Shopping Centre for $174million.
Other June Decisions
Jan Arnold Cornelis Schepel Netherlands (100%) received approval for the acquisition of a freehold interest in 13 hectares of land at 4189 State Highway 23, Raglan. The vendor was Erena Farm Limited Terrence Michael Magill, New Zealand (95%) and Susan Jane Magill, Australia (5%); consideration was $640,000. Dr Schepel plans to utilise the land as the principal place of residence for himself and his family and intends to reside in New Zealand indefinitely.
Origin Energy Resources NZ Limited Australia (100%) received approval to acquire a leasehold interest in 0.4 hectares of land at Siggs Road, Manaia. The vendor was Origin Energy Resources (Kupe) Limited Australia (100%); consideration was $12,330. The OIO states: “The Applicant is extending its current lease of the land to enable continued operation of a warehouse facility which services the Kupe Gas Production Station. The facility provides benefits in terms of lower operating costs due to the sharing of resources and more economic overall stock management”.
Vineyard At Te Awanga Limited Ralf-Roger Weiss, Germany (100%) received approval to acquire a a freehold interest in 19.8 hectares of land at 2290 State Highway 50, Hastings, Hawkes Bay. The vendor was Two Gates Vineyard Limited Robert Hugh Chapman, Channel Islands (35.5%), Ian Hugh Thurston, Channel Islands (35.5%) and Kingsley Norman Tobin, New Zealand (29%); consideration was $3,000,000. The OIO states:” The Applicant intends to grow grapes on the property and supply them to Elephant Hill Holdings Limited, which operates Elephant Hill Winery and Restaurant (together “Elephant Hill”). Mr Weiss is also the sole shareholder and a director of Elephant Hill. The proposed investment will ensure a secure supply of grapes to Elephant Hill”. See our January 2002, October 2010 and May 2012 commentaries for details of Weiss’s purchase of Elephant Hill winery and other property to supply it.
And finally for June, Nirvana Capital (NZ) Limited as trustee of the Verstraete Family Trust Belgium (100%) received approval to acquire a freehold interest in 20 hectares of land being Lot 14 Mataka Station located at Rangihoua Road, Kerikeri. The vendor was Mataka Limited New Zealand (100%); consideration was $1,000,000. The Verstraete family intend to acquire the land to use as a private residence and intends to reside indefinitely in New Zealand.
Campaign Against Foreign Control of Aotearoa,
P.O. Box 2258
Christchurch.