"The Informant". The Story Behind The Movie
“The Informant”, starring Matt Damon, opens in cinemas today. From the advertising, it’s impossible to tell what the movie is about. It is actually the story of one of the biggest transnational corporate crimes of the 1990s, one which resulted in huge fines and top executives going to prison (the corporate crimes of the recent global financial crash are much bigger but instead of going to prison, the guilty are rewarding themselves with more bonuses). It is seen through the eyes of Mark Whitacre, the informant of the title (who also ended up in prison, in fact he got the longest sentence, by far). The film is based on a book of the same title and it veers off from the corporate crime into concentrating on the whistleblower, who is portrayed as a pathological liar, big time thief, and fantasist with mental health issues. Which is a pity, because it’s a much bigger and more interesting story than that.
This story is one that CAFCA highlighted nearly a decade ago, when the American company in question - Archer Daniels Midland (ADM), one of the biggest corporations in the world – came to New Zealand. Here is our review (from a 2000 issue of Foreign Control Watchdog) of another, better, book on the case; plus an accompanying article from the same issue about ADM’s arrival in NZ and our unsuccessful attempt to get the then Overseas Investment Commission (now the Overseas Investment Office) to do something about that.
The NZ material is historic, the local references are nearly a decade old, ADM moved on and out (and I wouldn’t guarantee that any of the Web links below still exist). But it’s still a fascinating story, and if you plan to review the movie, then please read this, as you’ll learn a lot more about the case from it than from watching “The Informant”.
"Rats in the Grain:The Dirty Tricks And Trials of Archer Daniels Midland The ‘Supermarket To The World’’.
By James B Lieber. Publisher, Four Walls Eight Windows, New York. 2000. $US26. 418pp, hardback, illustrated.
- Murray Horton
This is one fascinating book. Brand new too, it’s only been available since August 2000. The world is full of fascinating books about corporate miscreants (we first learnt about this book via the excellent American magazine, Multinational Monitor) which we don’t chase up and review in Watchdog. We got this one because its subject – Archer Daniels Midland (ADM) – has just arrived in New Zealand. I refer you to the article below entitled "American Corporate Criminal Comes To NZ", and I won’t repeat the story here.
"Rats In The Grain" is a 400+ page study of the trial of three ADM executives arising from the 1990s price fixing scandal that saw the company plead guilty and be fined $US100 million (followed by similar scale fines in Canada and Europe, also for price fixing). The company had secretly met with its Japanese "competitors" and rigged the price of lysine, an animal feed additive. The same happened with citric acid and high fructose corn syrup, but no charges were ever brought in relation to them. Following the settlement of the civil case, three senior executives – Michael Andreas, Terry Wilson and Mark Whitacre – faced criminal charges arising out of the same international price fixing conspiracy.
Andreas was Executive Vice President, son of ADM Chief Executive Officer, Dwayne Andreas, and heir apparent. Terry Wilson was head of the corn processing division; Whitacre was head of the bioproducts division. Whitacre was also a whistleblower and informant for the Federal Bureau of Investigation (FBI). Corporate whistleblowers enjoy quite a good press in the US (as evidenced by the excellent Hollywood movie, "The Insider", about a tobacco company manager who went public with evidence of a deliberate conspiracy to inculcate nicotine addiction). When Whitacre offered to be an FBI mole, they approached the job as they would any undercover assignment against an organised crime syndicate – he was fitted out with concealed cameras and tape recorders to secure evidence. Those tapes and photos played a key role in convicting Andreas and Wilson (plus some of the Japanese executives, who got very light sentences in exchange for cooperating with the US government). They comprise the most compelling photos in the book.
But, by the time the criminal trial started, in 1998, Whitacre was already in prison on other criminal matters – he had played a double game with the FBI and had been involved in money laundering and embezzling offences at ADM during the time he had been an informant. For this, he had been sentenced to nine years in prison – he was not present during the price fixing trial (having waived his right to be there), and was singled out by the judge for the toughest sentence, having prison time added to his sentence. It was unprecedented for an informant of this stature to be treated so harshly by the courts (the prosecution hadn’t asked for any extra time). By contrast, Andreas and Wilson only got a couple of years each (increased, on Federal appeal, in September 2000, to between 2 ½ and three years). Whitacre was a far from ideal informant (he attempted suicide, at one point) but his undercover work was the winning of the case. Not that he got much thanks for it. He remains philosophical: "Life in prison has been better than life at ADM". Nicholas Hollis, president of the Agribusiness Council, an industry watchdog, saw Whitacre in a different light: "He’s one of the most productive informants in history and one of the most courageous…This was one of the most important antitrust cases of the century. It certainly was the most important in agriculture".
This company is virtually unknown to New Zealanders, but it is one of the very biggest agribusiness transnationals. Not for nothing does it call itself "The Supermarket To The World". It is a company with enormous clout in the US, and globally. Dwayne Andreas, ADM’s patriarch, had assiduously cultivated both the Democrats and Republicans for decades. He was among the first of the corporate CEOs to have 50c either way when it came to political parties (rather like what the beer barons have always done here). He was up to his elbows in the 1970s cesspit that was the Watergate scandal (Republican President Richard Nixon got a very large sum, in cash, for his re-election campaign); he’s been in the thick of the disgraceful business of Big Business buying elections by raining money on candidates. Senior Democrat Party figures were on the ADM board; the law firm that (successfully) represented President Clinton during his impeachment was involved in the trial. Andreas believed in the "key man" school of history. Globally, he cultivated national leaders, to advance the interests of ADM (there’s a photo of him with Mikhail Gorbachev, leader of the former Soviet Union, in the book).
"When It Comes To Agriculture There Is No Such Thing As A Free Market"
That quote from Dwayne Andreas beautifully sums up the philosophy of the Big Business monopolist. ADM had no qualms about price fixing – the FBI investigation recorded the company’s unofficial motto as being: "The competitor is our friend and the customer is our enemy". So, senior management (including Whitacre) went merrily into cooking up deals with Japanese competitors, meeting covertly in hotel rooms around the world. There is an irony in this – ADM initially called in the authorities because the company thought that it was the target of industrial sabotage by rivals. Consistent with its modus operandi, ADM reported this to the Central Intelligence Agency. The CIA, which (theoretically) has no domestic US role, turned it over to the FBI. It was when the FBI was investigating this allegation (unfounded, as it turned out) that Whitacre spoke up about the price fixing and offered to be an undercover informant. The corporate culture at the top was spelled out by Terry Wilson: "The big problem is to remember what lies I’ve told. Always you have to do that. He (Dwayne Andreas) said that you should really write it down". Not that Wilson had any illusions about their prowess as conspirators: "You know, the main thing is if we’re trying to fix prices, we ought to be fired for being so fucking incompetent". The Government and judge disagreed: Wilson and Andreas went to prison.
The book is a fascinating study, one of those courtroom dramas that the Yanks do so well. American capitalism appears quaint viewed from the cowboy frontiers of the New Zealand variety – there’s no possibility of NZ executives going to prison, or even being prosecuted, for anti-trust offences. Price fixing gets a slap on the wrist in the civil courts here. Insider trading has never been prosecuted, and wasn’t even an offence until very recently. But that’s as far as our congratulations to the US system need to go – ADM itself got off scotfree, apart from fines that can be written of as just part of the cost of doing business. Dwayne Andreas, the patriarch, stepped down as CEO earlier than he intended, but nobody else in senior management faced any charges or a short stretch in a country club prison for white collar criminals. It is very much business as usual. And now ADM has got its very dirty hands into New Zealand. Join the queue.
American Corporate Criminal Comes to NZ
OIC Happy With Its "Good Character"
- Bill Rosenberg
Canterbury Malting Co Sold To US TNC Convicted Of International Conspiracy
In July 2000, the Overseas Investment Commission (OIC) gave approval for the International Malting Company LLC to acquire Canterbury (NZ) Malting Company Ltd, the "main New Zealand producer of lager malt", for a suppressed amount. International Malting is owned 60% by Lesaffre Malt Corporation of France and 40% by Archer Daniels Midland Company (ADM) of the USA. Top executives of ADM, one of the largest agribusinesses in the world, are currently making headlines in the US due to their convictions for conspiracy to fix prices on a spectacular international scale. CAFCA has written to the OIC, pointing out that this appears to be in clear breach of the requirement that those controlling investments be of "good character", which is the basis on which this approval has been given (see below for CAFCA’s letter and the OIC’s reply. Ed.).
Canterbury Malting’s previous owners were the two main breweries in Aotearoa, both overseas companies, Lion Nathan and DB (in equal shares). Lion Nathan Ltd is 45% owned by Kirin Brewery Company Ltd of Japan, part of Mitsubishi. The DB Group is 75% owned by Asia Pacific Breweries Ltd, which is 40% owned by Heineken NV of the Netherlands and 40% by Fraser, Neave Ltd of Singapore. The remaining 20% is in small shareholdings in Singapore.
The recent story of Canterbury Malting is a sad one. One of only three surviving malthouses in Aotearoa, its primary customers were the two breweries which owned it. It even commissioned Crown Research Institute, Crop and Food Research, to develop its own high yielding, dual purpose malting and feed barley, Valetta, tailored to local conditions
(see http://www.crop.cri.nz/psp/
However, its Achilles’ heel – which should have been a strength – was its substantial export market to Japan, which took about one third of its output. After Kirin took control of Lion in its controversial raid in 1998, it treated Canterbury Malting’s exports as a threat to its own Japanese production and stopped the exports. The result was the closure of one of Canterbury Malting’s two production facilities, in December 1999. To add insult to injury, it was the Canterbury one, in Heathcote Valley near Christchurch, with 130 years of history. The direct loss was 18 jobs, but that followed another 20 redundancies earlier in the year as a result of the loss of the export market (Press, "End of era as malting company closes", 31/8/99, p3; "Malting facilities sold to USA", 11/7/00, p6;http://www.breworld.com/NEWS/ Price Fixing: $US100 Million Fine, Senior Executives Imprisoned Its new ownership may be even sadder. ADM, as well as being one of the largest agribusinesses in the USA (it is that country’s leading corn processor for example), has one of the dirtiest records for price fixing, and a long history of political meddling. So much so that it has the dubious privilege of recently having had a book published about its latest price-fixing scandal: "Rats in the Grain: The Dirty Tricks and Trials of Archer Daniels Midland, The Supermarket to the World", by James Lieber (Four Walls, Eight Windows, 2000. See our review elsewhere in this issue. Ed.). In a review of the book, Russell Mokhiber (editor of Corporate Crime Reporter) and Robert Weissman (editor of Multinational Monitor) summarised the events it covers as follows: "In October 1996, ADM pled guilty to antitrust crimes and was fined US$100 million. Senior vice presidents Michael Andreas, the son of Chairman Dwayne, and Terrence Wilson were convicted of antitrust crimes in 1999 after a trial in federal court in Chicago. They were sentenced to three years in prison each". That’s fairly serious stuff. The crimes involved the two former ADM executives conspiring with four Asian competitors to rig the US$650 million a year market for lysine, a lucrative livestock feed additive made by ADM: without any exaggeration, an international conspiracy of huge proportions. The US action was not the end of the matter. On 7/6/00, the Wall Street Journal ("EU Fines Archer Daniels Midland And Asian Firms for Price Fixing") reported that: "The European Union on Wednesday fined Archer Daniels Midland Co and four Asian companies a combined 110 million euros (US$105 million) for their involvement in a price-fixing scheme". ADM was fined the lion’s share, at 47.3 million euros. ADM has a history of this sort of behaviour, as the report continued: "The investigation found that the five companies fixed lysine prices worldwide, including in the European Union (EU). The investigation also determined that the companies fixed sales quotas for the EU market and exchanged information concerning those quotas from ‘at least’ July 1990 through June 1995. "The fines stem from a probe that began in 1997 when ADM disclosed the EU was conducting an inquiry into the grain processing giant’s European units and other companies. Wednesday’s announcement is the latest blow to the Decatur, Illinois, agribusiness, which has been found guilty of price fixing in the past. "In 1996, the US Justice Department fined ADM $100 million after the company pleaded guilty to fixing prices for lysine and citric acid. In 1998, ADM also paid a fine of 16 million Canadian dollars (US$10.83 million) for price fixing on the Canadian market". StarLink: ADM’s Genetically Engineered Corn Scandal And the story goes on. Close observer of US agribusiness, Al Krebs, in his 18 October 2000 Agribusiness Examiner (number 91) quotes New York Times reporter, Kurt Eichenwald on "the growing scandal of the genetically engineered corn seed StarLink, which is not fit for nor has it been approved for human consumption". This has recently made the news in Aotearoa, following concerns raised by Green MP, Sue Kedgley, that the contaminated corn might have been in taco products on sale here. Eichenwald wrote: "Millions of bushels of the unapproved corn, known as StarLink, have been found in flour delivered to more than 350 grain elevators around the country… StarLink corn was first found last month in store bought taco shells distributed under the Taco Bell brand by Kraft Foods, which issued a nationwide recall. On Wednesday, a similar finding was made in house brand taco shells sold by the Safeway supermarket chain. The two products were made of yellow corn from the same mill, run by Azteca Milling in Plainview, Texas. "Yesterday, Mission Foods, which produced the Safeway shells, announced a recall of all its tortilla products made with yellow corn on the chance that some might contain StarLink corn. The company, a subsidiary of the Gruma Group of Mexico, which is based in Irving, Tex., sells products under the Mission name as well as numerous private-label brands … Azteca Milling, also a Gruma subsidiary based in Irving, announced its own voluntary recall of all yellow corn flour yesterday". But, Krebs points out, "What Eichenwald does NOT report in his story is that the company, Gruma Group of Mexico, is a joint venture with Archer Daniels Midland whose mills located in Texas ground the corn used to produce the taco shells". He says Eichenwald has claimed that he controls what is printed in the New York Times concerning ADM. Things then get more sinister: "But the StarLink contamination has also raised other questions relative to ADM’s role in this latest scandal. One longtime ADM critic, Nick Hollis of the Agribusiness Council, poses a rather thoughtful question in that regard. "Could ADM, as the nation’s largest corn processor, Hollis asks, ‘be using its ‘inside info’ on which food processors are receiving the tainted flour (from their milling operations) to ‘plant problems’ and sabotage the food from certain companies which had stood up to them several years ago during the civil phase of the pricefixing case on lysine?’ "Hollis notes that Kraft Foods was one of the biggest ‘holdouts’ in the civil case, requesting more damages from ADM as a result of pricefixing. Kraft had led a group of dissenting companies, including Hudson Foods and others in the ‘holdouts’ column and, as a result, they did receive more settlement money. "’While this was underway’, he adds, ‘a story broke in November 1997 in the Chicago Tribune, by Nancy Milman which pointed out Kraft’s efforts to get the US Department of Justice action surrounding allegations that Dwayne Andreas himself had used coercion and bribes to derail a cooperative from building a high fructose corn syrup facility in North Dakota (which would have supplied Kraft). "This story dried up as key witnesses suddenly refused to talk about their meeting with Dwayne. If you look carefully at Aventis, a key focus of the corn shell recall, you may find a similar disturbing pattern since just a few days ago, this company was mentioned within a larger group of firms settling a civil suit on pricefixing of vitamins". Political Meddling: Buying Influence, From Long Ago The intrigue is lent credibility by ADM’s long history of political connections, particularly through its Chairman, Dwayne Andreas. Eichenwald describes it (presumably with considerable understatement) like this: "Since the time of Thomas E Dewey – the former New York Governor and Republican Presidential candidate who, when he was a lawyer in private practice, served as an adviser to Dwayne Andreas – Archer Daniels has been a strong political force. With an ease that bred envy among other corporations, the $9.2 billion food industry giant navigated between the Republicans and Democrats while helping to form this country’s agricultural policies" (New York Times, "Former Archer Daniels Executives Are Found Guilty of Price Fixing", 18/9/98, pA1). "Forming this country’s agricultural policies" includes an important role in gathering subsidies and in forming the US policies in world trade negotiations. Washington Post reporter, Steven Mufson described the politics in more detail (Washington Post, "Andreas Steps Down; ADM Chief Took Politics to a New Level", 26/1/99) when Dwayne Andreas stepped down as Chairman (but remained on the board) in the wake of the scandal. He began his article, "Dwayne O Andreas, the grain company executive who pioneered the art of political campaign contributions and built one of the country’s biggest food-processing empires, stepped aside yesterday as chairman of Archer Daniels Midland Co.". He writes: "’It was a wistful day’, said Democratic insider Robert S Strauss, a long time Andreas friend and ADM director, after the company’s board meeting in Bal Harbour, Florida, yesterday. Strauss said Andreas ‘was a player on the global stage before most people could spell ‘global’. "But to his critics, Andreas cultivated a network of relationships to secure foreign deals for his company and protect direct and indirect US government subsidies for many of his products, such as the corn-based ethanol added to gasoline. "’Andreas has been a truly historical figure, a charter member of the world of campaign finance abuses’, said Fred Wertheimer, a lobbyist for campaign finance reform. ‘He may not have paid the price for it, but the country has – through the corrupt system that undermines public trust and provides improper influence for special interests at the expense of citizens and taxpayers’. "’Archer Daniels Midland . . . has been the most prominent recipient of corporate welfare in recent US history’, said a 1995 study by Cato Institute analyst James Bovard. ‘ADM and its chairman . . . have lavishly fertilized both political parties with millions of dollars in handouts and in return have reaped billion-dollar windfalls from taxpayers and consumers’. "Bovard cited federal protection of the domestic sugar industry, ethanol subsidies, subsidized grain exports and other programs". He gave "lavishly" to both Democrats and Republicans – at one time donating both to Nixon and to his opponent in the 1968 election, Hubert Humphrey. And "Nixon secretary Rose Mary Woods testified in a deposition to the Watergate prosecutors that Andreas delivered an unmarked envelope containing US$100,000 worth of US$100 bills in 1972. As the Watergate investigation closed in on Nixon, the president gave back the money, which had been in a White House safe". He quotes a former ambassador, saying he watched "Andreas hold court for American politicians, Russian apparatchiks and American labour union leaders in his Florida hotel apartment. A Merrill Lynch stock analyst recalls being forced to wait in an outer office while Andreas took a call from Britain’s then Prime Minister". Mufson says ADM "employs 23,000 people worldwide, owns 274 processing plants and has shareholder equity of US$8.5 billion. It possesses one third of the nation’s soybean processing capacity, is the largest producer of natural vitamin E, and makes more than a third of the nation’s ethanol". He quotes a Merrill Lynch analyst saying that ADM "possesses the nation’s largest fleet of barges, state-of-the-art plants, and a completely integrated, very efficient system". ADM’s joint venture with Lesaffre was formed in mid 1998, and combined their malting operations: ADM’s US facilities of Fleischman Malt in Chicago, Milwaukee, and Red Wing, Minnesota, and Lesaffre’s US Froedtert Malt facilities in Milwaukee and Winona, Minnesota (http://www.smallgrains.org/ International Malting Company operates barley malting plants in the United States, Canada and France, according to ADM (Securities and Exchange Commission 10-K filing for 30 June 1998: http://www.secinfo.com/d6T3. Lesaffre is more specialised than ADM, saying on its web site that "the business activities of the Lesaffre group have developed essentially around the culture of yeast and the experience gained in fermentation technology, without forgetting its original activity: ethanol production". It describes itself as the world market leader in yeast production and production of yeast extracts and autolysed yeast, and "one of the world leading malt producers" with operations in France, United States, Canada and Australia. The Lesaffre family in France founded it in 1853 as a major producer of grain and sugar beets. It says it is a "totally independent, privately owned company operating on five continents and in more than 180 countries with nearly 4,000 employees" (http://www.lesaffre.com/Eng/ 9 October 2000 ARCHER DANIELS MIDLAND: LACK OF GOOD CHARACTER Dear Mr Dawe, OIC Decision Number 200020006 (12/7/00) approves the purchase of the Canterbury Malting Company Ltd. by the International Malting Company Ltd. IMC is 40% owned by Archer Daniels Midland Company, of the US. "The Commission is further advised that the persons who exercise control over the applicant are of good character…". We beg to differ. Archer Daniels Midland (ADM), and some of the persons who exercise control over it, has been at the centre of the biggest criminal antitrust case brought against a company, and its highest level executives, by American authorities. It is a current, ongoing case, not old history. The prosecution was successfully brought, not by local, state or specialist environmental or commercial law agencies. No, it was brought by the FBI, using all the modus operandi (covert surveillance, secret witnesses wired for sound and film, etc, etc) that it would use for any other major criminal activity. Here is how it was described by Janet Reno, US Attorney General: "Archer Daniels Midland has agreed to plead guilty and pay a $(US)100 million criminal fine, the largest criminal antitrust fine ever, for its role in two international criminal conspiracies to fix the price of lysine, a feed additive used to ensure the proper growth of livestock, and citric acid, a flavor additive and preservative found in soft drinks, processed foods, detergents and other products. Because of these illegal actions, feed companies, poultry and swine producers, and ultimately America’s farmers, paid millions more to buy the lysine additive. Also, manufacturers of soft drinks, processed foods, detergents and other materials, paid millions more to buy the citric acid additive, which ultimately caused consumers to pay more for these products" ("Rats In The Grain", p38). The matter didn’t end there – Michael Andreas, Executive Vice President, and son of ADM’s CEO, was sent to prison for two years, as was another senior executive. The whistleblowing executive got nine years (because he was embezzling the company, as well as being involved in the conspiracy and informing for the FBI). But that still wasn’t the end of it. As recently as September 2000, a prosecution appeal against the length of the prison sentences was upheld. Andreas, who had been expected to succeed his father, had one year added to his sentence; the other executive got an additional nine months. The trial featured an extensive list of eyebrow raising allegations by the whistleblower about how ADM does business. And, in June 2000, the European Union fined ADM and four Asian companies $US105 million for price fixing (on top of a $C16 million fine for ADM, in 1998, for price fixing in Canada). These are not "technical" offences, but serious criminal matters, "international criminal conspiracies", in the words of the highest law officer in the US. The US authorities certainly thought it was a big enough crime to levy "the largest criminal antitrust fine ever" (to quote the Attorney General again), and imprison senior executives (and then get those prison terms lengthened). The ADM price fixing conspiracy is so notorious in the US that it is the subject of a brand new book – "Rats In The Grain: The Dirty Tricks and Trials of Archer Daniels Midland, The ‘Supermarket to the World’", by James B. Lieber. As corroboration, we enclose a 1998 report from the New York Times; a 1999 Washington Post article; an extract from a 1999 issue of the Agribusiness Examiner; June and September 2000 reports from the Wall Street Journal; and a publisher’s synopsis of "Rats In The Grain". There is more, should you request it, plus plenty available on line. We would recommend a read of the book (copies of these American articles are available upon request. Ed.). The question arises – when this international criminal conspiracy case was so extensively reported in major US media, why did the OIC certify ADM and the persons controlling it as "being of good character" and thus approved for investment in New Zealand? We look forward to your explanation. Even more, we look forward to you withdrawing that approval for ADM, in light of the large body of recent and current evidence against it. Please reply promptly. Yours sincerely, Murray Horton OIC Reply: Nothing To Worry About And, guess what? The OIC doesn’t see anything to get worried about. Peter Hill, Assistant Secretary, replied (1/11/00): "…I believe it does not raise any reasons for the Commission to reconsider our acceptance that the persons exercising control over International Malting Company LLC are of good character. "The material you forwarded relates to offences that occurred prior to June 1995. The offences involved the bio products division of Archer Daniels Midland Company, not the malt or yeast products division, and the persons who were involved are no longer employed by (ADM). "Please note that International Malting Company LLC owns International Malting Company New Zealand Limited, the acquirer of the Canterbury Malting Company business. The directors of International Malting Company New Zealand Limited are Geoffrey Peter O’Connor, Geoffrey Maccan, Maurice Lesaffre, and Patrick Lesaffre. The Commission has been advised that (ADM) exercises no control or influences over the directors. "Thank you for bringing the matter to the Commission’s attention". Let’s briefly consider some of the reasons given by the OIC. We’re not sure what is the significance of the events "occurring before June 1995". Appeals were still being resolved (and prison sentences increased) in September 2000. The Winebox Inquiry considered matters dating back to the 1980s; Dover Samuels lost his Cabinet post because of allegations dating back to the 80s and concealed offences dating back decades earlier; war criminals are still being actively sought and prosecuted for 1940s crimes against humanity. So that one is a bit of a puzzle. As is the reasoning that it involved the bio products division, not the malt or yeast division. For a start, it’s not correct - Terry Wilson, one of the imprisoned executives was head of the corn processing division. Michael Andreas was the Executive Vice President, the son of the boss and heir apparent – the most senior management was in on this, not simply bosses from one division. It was the company that was fined $US100m, not one division. As far the persons concerned being no longer employed by ADM. No, because they’re in prison. Interesting reasoning. The OIC won’t do anything unless it’s proved in court. When it’s proved in court, the OIC will do nothing because those few bad apples are no longer in charge. It’s called turning a blind eye. The fact of the matter is that NZ’s foreign investment law is, quite deliberately, extremely weak. The requirement that applicant investors be of good character is applied entirely in the breach, and is only applicable to the individuals owning or controlling the company, not to the character of the company itself. Even then, there is no limit to whom the OIC will approve – look no further than Tommy Suharto, the 1990s buyer of Lilybank. The OIC will go to any length to facilitate foreign investors – it sees its duty as being to them, not to the New Zealand people, nor even the Government. See the article elsewhere in this issue detailing the incredible lengths it went to in seeking approval for all the prospective foreign buyers of Brierley’s stake in Sealord, despite the Ministry of Fisheries actually recommending to the Government that several of those buyers were not of good character. In every case, the OIC urged the Ministers of Finance and Fisheries to override those recommendations and accept the OIC’s word that the applicants were of good character. In the end the Government banned any offshore sale, but on the issue of national interest, not good character. The point is, the OIC would approve anyone (maybe Slobodan Milosevic should come here, he’s probably got plenty of good old US dollars to invest). The Government needs to substantially tighten up the good character clause, give the OIC powers with real teeth to check out applicants, and if the present Commission won’t exercise those powers, then replace it with people who will. Alternatively, replace the Commission with a monkey with a rubber stamp – it could do the same job, and a damn sight cheaper.
Mr Stephen Dawe, Secretary
Overseas Investment Commission
Box 2498
Wellington
Secretary/Organiser