Chinese-backed Crafar buyer faces fraud probe

The Chinese-backed UBNZ group of companies says it will cooperate fully with the Serious Fraud Office (SFO) checks on its commercial dealings with Natural Dairy (NZ) Holdings Ltd in proposed purchase and sale of the Crafar family's 16 dairy farms.

"The SFO now has a job to do and we will cooperate fully with the SFO as we have nothing to hide," said a UBNZ group director, May Wang. "The UBNZ group is confident that the investigation will reveal no wrongdoing".

"We received no notice that this step was being undertaken or that the Overseas Investment Office (OIO) had referred any matters to the SFO," she said. "We are both disappointed and surprised".

She was also concerned as about any possible delay in the OIO making a decision on the application to purchase the farms.

"The delay of this investigation might cause unbearable damages not only to the UBNZ businesses, as well the New Zealand economy," Ms Wang said in a statement.

The UBNZ group would work with the SFO to ensure that the investigation was swiftly resolved.

The farms in the Waikato, King Country, Bay of Plenty, Wanganui, Taranaki and Rangitikei were valued at $206.9 million before they were taken over by receiver KordaMentha who in May said it signed a sale agreement with UBNZ Funds Management, conditional on OIO consent.

The SFO said that acting on information received from the OIO, it had started an investigation into transactions between Natural Dairy (NZ) Holdings Ltd (Natural Dairy) and UBNZ Trustee Ltd; UBNZ Assets Holdings Ltd; UBNZ Funds Management Ltd.

"We have received information from the OIO, together with materials received from other sources, to be satisfied that a 'Part I Investigation' under the SFO Act is warranted; that is to say that an investigation into transactions involving Natural Dairy and the UBNZ group may disclose serious or complex fraud," said SFO chief executive Adam Feeley.

The transactions are the proposed purchase and sale of the Crafar farms.

"After the initial investigation and report, we will decide whether there are reasonable grounds to believe an offence involving serious and complex fraud may have been committed and, if warranted, undertake a further, in-depth investigation under the powers of Part II of the SFO Act," Mr Feeley said.

Separately, the OIO is continuing to look at whether UBNZ Funds Management breached the Overseas Investment Act by not obtaining required consents for purchase of two farms on February 11 at Norsewood in southern Hawke's Bay and Waitotara in south Taranaki, and two others four days later in the Manawatu. Once purchased the farms were transferred to UBNZ Assets Holdings.

UBNZ is 80 percent owned by the New Zealand-based UBNZ Trustee Ltd and 20 percent by Hong Kong-based Natural Dairy (NZ) Holdings. Businesswoman May Wang -- who has been fronting the deal -- has previously said because she is New Zealand citizen and Natural Dairy only has a 20 percent stake -- less than the 25 percent trigger point for an OIO application -- the purchase completely conformed with the Act.

The OIO said it will not make a recommendation to ministers on the applications by Natural Dairy (NZ) Holdings and UBNZ Assets Holdings to purchase the Crafar Farms Crafar farms while until the SFO investigation is concluded.